XML 37 R29.htm IDEA: XBRL DOCUMENT v3.23.3
Segment Information
 9 Months Ended
Sep. 30, 2023
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 which support the Company's Subscriber, Access & Aggregation, and Optical Networking Solutions. 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 Services & Support segment offers a comprehensive portfolio of network design, implementation, maintenance and cloud-hosted services supporting its Subscriber, Access & 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 the Company's Mosaic One platform that manages end-to-end network and service optimization for both fiber access infrastructure and mesh Wi-Fi connectivity. The Company backs these services with a global support organization that offers on-site and off-site support services with varying SLAs.

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 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 the Company's reportable segments:

 

 

Three Months Ended

 

 

 

September 30, 2023

 

 

September 30, 2022

 

(In thousands)

 

Revenue

 

 

Gross Profit

 

 

Revenue

 

 

Gross Profit

 

Network Solutions

 

$

228,564

 

 

$

47,277

 

 

$

304,940

 

 

$

82,334

 

Services & Support

 

 

43,767

 

 

 

26,960

 

 

 

35,769

 

 

 

20,693

 

Total

 

$

272,331

 

 

$

74,237

 

 

$

340,709

 

 

$

103,027

 

 

 

 

Nine Months Ended

 

 

 

September 30, 2023

 

 

September 30, 2022

 

(In thousands)

 

Revenue

 

 

Gross Profit

 

 

Revenue

 

 

Gross Profit

 

Network Solutions

 

$

793,984

 

 

$

176,607

 

 

$

599,306

 

 

$

186,126

 

Services & Support

 

 

129,637

 

 

 

77,991

 

 

 

67,959

 

 

 

33,723

 

Total

 

$

923,621

 

 

$

254,598

 

 

$

667,265

 

 

$

219,849

 

For the three months ended September 30, 2023 and 2022, $1.5 million and $1.1 million, respectively, of depreciation expense was included in gross profit for our Network Solutions segment. For the nine months ended September 30, 2023 and 2022, $4.5 million and $1.6 million, respectively, of depreciation expense was included in gross profit for our Network Solutions segment. For the three months ended September 30, 2023 and 2022, $2.4 thousand of depreciation expense was included in gross profit for our Services & Support segment. For the nine months ended September 30, 2023 and 2022, $7.3 thousand and $8.0 thousand, respectively, of depreciation expense was included in gross profit for our Services & Support segment.

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 Adtran Networks 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 Adtran Networks, the Company has recast these revenues such that ADTRAN’s former Access & Aggregation revenue is combined with a portion of the applicable Adtran Networks solutions to create Access & Aggregation Solutions, ADTRAN’s former Subscriber Solutions & Experience revenue is combined with a portion of the applicable Adtran Networks 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 Adtran Networks' 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)

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Optical Networking Solutions

 

$

116,200

 

 

$

118,845

 

 

$

406,952

 

 

$

118,845

 

Access & Aggregation Solutions

 

 

94,646

 

 

 

88,189

 

 

 

294,183

 

 

 

278,273

 

Subscriber Solutions

 

 

61,485

 

 

 

133,675

 

 

 

222,486

 

 

 

270,147

 

Total

 

$

272,331

 

 

$

340,709

 

 

$

923,621

 

 

$

667,265

 

 

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)

 

2023

 

 

2022

 

 

2023

 

 

2022

 

United States

 

$

111,494

 

 

$

169,669

 

 

$

375,254

 

 

$

374,470

 

Germany

 

 

60,347

 

 

 

64,234

 

 

 

212,171

 

 

 

71,945

 

United Kingdom

 

 

41,242

 

 

 

46,569

 

 

 

150,710

 

 

 

123,477

 

Other international

 

 

59,248

 

 

 

60,237

 

 

 

185,486

 

 

 

97,373

 

Total

 

$

272,331

 

 

$

340,709

 

 

$

923,621

 

 

$

667,265