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Segment Information
 9 Months Ended
Sep. 30, 2022
Segment Reporting [Abstract]  
Segment Information

18. SEGMENT INFORMATION

 

The chief operating decision maker regularly reviews the Company’s financial performance based on two reportable segments: (1) Network Solutions and (2) Services & Support.

 

The Network Solutions segment includes hardware and software products that enable a digital future. The Company's cloud-managed Wi-Fi gateways, virtualization software, and switches provide a mix of wired and wireless connectivity at the customer premises. In addition, its Carrier Ethernet products support a variety of applications at the network edge ranging from mobile backhaul to connecting enterprise customers (“Subscriber Solutions"). The Company's portfolio includes products for multi-gigabit service delivery over fiber or alternative media to homes and businesses. The Company supports traditional chassis-based network solutions, such as the Total Access 5000 and hiX 5600. The Company accelerates the industry’s transition to open, disaggregated fiber access solutions with our SDX Series. Data is aggregated via its XG400 product family and synchronized by its Oscilloquartz offerings (“Access and Aggregation Solutions”). All resulting traffic requires transport through fiber-based networks as supported by its FSP 3000 and MicroMux product families while the underlying infrastructure is monitored by its ALM product offering (“Optical Networking Solutions”). The Company's customers can use its Mosaic and Ensemble software suites to manage and orchestrate its complete portfolio of subscriber solutions, access and aggregation solutions and optical networking solutions. The Mosaic and Ensemble software suites includes a mix of orchestration and management solutions that simplify the deployment and virtualization of next generation fiber networks.

 

The Services & Support segment offers a comprehensive portfolio of network design, implementation, maintenance and cloud-hosted services supporting its Subscriber, Access and Aggregation, and Optical Networking Solutions. These services assist operators in the deployment of multi-vendor networks while reducing their cost to maintain these networks. The cloud-hosted services include a suite of SaaS applications under its Mosaic One platform that manages end-to-end network and service optimization for both fiber access infrastructure and mesh Wi-Fi connectivity. We back these services with a global support organization that offers on-site and off-site support services with varying SLAs. By pairing the Company's network solutions with its global services and support organization, customers can turn to the Company as their single turnkey partner to assist with the deployment and maintenance of modern fiber-based networks to connect homes, businesses and datacenters with the metro or network core.

The performance of these segments is evaluated based on revenue, gross profit and gross margin; therefore, selling, general and administrative expenses, research and development expenses, interest and dividend income, interest expense, net investment (loss) gain, other income, net and income tax benefit (expense) are reported on a Company-wide basis only. There is no inter-segment revenue. Asset information by reportable segment is not produced and, therefore, is not reported.

The following tables present information about the revenue and gross profit of its reportable segments:

 

 

 

Three Months Ended

 

 

 

September 30, 2022

 

 

September 30, 2021

 

(In thousands)

 

Revenue

 

 

Gross Profit

 

 

Revenue

 

 

Gross Profit

 

Network Solutions

 

$

304,940

 

 

$

82,334

 

 

$

120,767

 

 

$

39,738

 

Services & Support

 

 

35,769

 

 

 

20,693

 

 

 

17,314

 

 

 

7,935

 

Total

 

$

340,709

 

 

$

103,027

 

 

$

138,081

 

 

$

47,673

 

 

 

 

Nine Months Ended

 

 

 

September 30, 2022

 

 

September 30, 2021

 

(In thousands)

 

Revenue

 

 

Gross Profit

 

 

Revenue

 

 

Gross Profit

 

Network Solutions

 

$

599,306

 

 

$

186,126

 

 

$

360,025

 

 

$

143,981

 

Services & Support

 

 

67,959

 

 

 

33,723

 

 

 

48,821

 

 

 

19,961

 

Total

 

$

667,265

 

 

$

219,849

 

 

$

408,846

 

 

$

163,942

 

 

Revenue by Category

In addition to its reportable segments, revenue is also reported for the following three categories – Subscriber Solutions, Access & Aggregation Solutions, and Optical Networking Solutions.

Prior to the Business Combination with ADVA on July 15, 2022, ADTRAN reported revenue across the following three categories: (1) Access & Aggregation, (2) Subscriber Solutions & Experience and (3) Traditional & Other Products. Following the Business Combination with ADVA, we have recast these revenues such that ADTRAN’s former Access & Aggregation revenue is combined with a portion of the applicable ADVA solutions to create Access & Aggregation Solutions, ADTRAN’s former Subscriber Solutions & Experience revenue is combined with a portion of the applicable ADVA solutions to create Subscriber Solutions, and the revenue from Traditional & Other products is now included in the applicable Access & Aggregation Solutions or Subscriber Solutions category. Optical Networking Solutions is a new revenue category added to represent a meaningful portion of ADVA’s portfolio.

Our Subscriber Solutions portfolio is used by service providers to terminate their access services infrastructure at the customer premises while providing an immersive and interactive experience for residential, business and wholesale subscribers. This revenue category includes hardware- and software-based products and services. These solutions include fiber termination solutions for residential, business and wholesale subscribers, Wi-Fi access solutions for residential and business subscribers, Ethernet switching and network edge virtualization solutions for business subscribers, and cloud software solutions covering a mix of subscriber types.

Our Access & Aggregation Solutions are solutions that are used by communications service providers to connect residential subscribers, business subscribers and mobile radio networks to the service providers’ metro network, primarily through fiber-based connectivity. This revenue category includes hardware- and software-based products and services. Our solutions within this category are a mix of fiber access and aggregation platforms, precision network synchronization and timing solutions, and access orchestration solutions that ensure highly reliable and efficient network performance.

Our Optical Networking Solutions are used by communications service providers, internet content providers and large-scale enterprises to securely interconnect metro and regional networks over fiber. This revenue category includes hardware- and software-based products and services. Our solutions within this category include open optical terminals, open line systems, optical subsystems and modules, network infrastructure assurance systems, and automation platforms that are used to build high-scale, secure and assured optical networks.

The table below presents revenue information by category. Prior year amounts presented below have been reclassified to conform to the current period revenue category presentation:

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

(In thousands)

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Subscriber Solutions

 

$

133,675

 

 

$

46,867

 

 

$

270,147

 

 

$

152,489

 

Access & Aggregation Solutions

 

 

88,189

 

 

 

91,214

 

 

 

278,273

 

 

 

256,357

 

Optical Networking Solutions

 

 

118,845

 

 

 

—

 

 

 

118,845

 

 

 

—

 

Total

 

$

340,709

 

 

$

138,081

 

 

$

667,265

 

 

$

408,846

 

 

 

Revenue by Geographic Area

 

The following table presents revenue information by geographic area:

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

(In thousands)

 

2022

 

 

2021

 

 

2022

 

 

2021

 

United States

 

$

169,669

 

 

$

91,868

 

 

$

374,470

 

 

$

273,009

 

United Kingdom

 

 

64,234

 

 

 

12,504

 

 

 

123,477

 

 

 

34,006

 

Germany

 

 

46,569

 

 

 

17,782

 

 

 

71,945

 

 

 

50,737

 

Other international

 

 

60,237

 

 

 

15,927

 

 

 

97,373

 

 

 

51,094

 

Total

 

$

340,709

 

 

$

138,081

 

 

$

667,265

 

 

$

408,846