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Segment Information and Major Customers
 12 Months Ended
Dec. 31, 2023
Segment Reporting [Abstract]  
Segment Information and Major Customers

Note 18 – Segment Information and Major Customers

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 and 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 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 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 gain (loss), other income, net and income tax (expense) 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 table presents information about revenue and gross profit of our reportable segments for each of the years ended December 31, 2023, 2022 and 2021:

 

 

 

2023

 

 

2022

 

 

2021

 

(In thousands)

 

Revenue

 

 

Gross Profit

 

 

Revenue

 

 

Gross Profit

 

 

Revenue

 

 

Gross Profit

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Network Solutions

 

$

974,389

 

 

$

227,494

 

 

$

916,793

 

 

$

269,688

 

 

$

498,834

 

 

$

190,993

 

Services & Support

 

 

174,711

 

 

 

105,569

 

 

 

108,743

 

 

 

57,564

 

 

 

64,170

 

 

 

27,384

 

Total

 

$

1,149,100

 

 

$

333,063

 

 

$

1,025,536

 

 

$

327,252

 

 

$

563,004

 

 

$

218,377

 

For the years ended December 31, 2023, 2022 and 2021, $6.5 million, $3.2 million and $1.2 million, respectively, of depreciation expense was included in gross profit for our Network Solutions segment. For the years ended December 31, 2023, 2022 and 2021, $20 thousand, $10 thousand and $14 thousand, respectively, of depreciation expense was included in gross profit for our Services & Support segment.

Revenue by Category

In addition to operating under two reportable segments, the Company also reports revenue across three categories – Subscriber Solutions, Access & Aggregation Solutions and Optical Networking Solutions.

Prior to the Business Combination with Adtran Networks on July 15, 2022, ADTRAN, Inc. 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, Inc’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 was added as a new revenue category 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 customers' 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 following tables disaggregate our revenue by category for the years ended December 31, 2023, 2022 and 2021:

 

 

2023

 

(In thousands)

 

Network Solutions

 

 

Services & Support

 

 

Total

 

 

 

 

 

 

 

 

 

 

 

Subscriber Solutions

 

$

263,192

 

 

$

34,516

 

 

$

297,708

 

Access & Aggregation Solutions

 

 

304,074

 

 

 

54,344

 

 

 

358,418

 

Optical Networking Solutions

 

 

407,123

 

 

 

85,851

 

 

 

492,974

 

Total

 

$

974,389

 

 

$

174,711

 

 

$

1,149,100

 

 

 

 

2022

 

(In thousands)

 

Network Solutions

 

 

Services & Support

 

 

Total

 

Subscriber Solutions

 

$

364,238

 

 

$

26,216

 

 

$

390,454

 

Access & Aggregation Solutions

 

 

326,934

 

 

 

47,068

 

 

 

374,002

 

Optical Networking Solutions

 

 

225,621

 

 

 

35,459

 

 

 

261,080

 

Total

 

$

916,793

 

 

$

108,743

 

 

$

1,025,536

 

 

 

 

2021

 

(In thousands)

 

Network Solutions

 

 

Services & Support

 

 

Total

 

Subscriber Solutions

 

$

189,825

 

 

$

16,385

 

 

$

206,210

 

Access & Aggregation Solutions

 

 

309,009

 

 

 

47,785

 

 

 

356,794

 

Optical Networking Solutions

 

 

—

 

 

 

—

 

 

 

—

 

Total

 

$

498,834

 

 

$

64,170

 

 

$

563,004

 

Additional Information

The following table presents revenue information by geographic area for the years ended December 31, 2023, 2022 and 2021:

(In thousands)

 

2023

 

 

2022

 

 

2021

 

United States

 

$

460,985

 

 

$

517,433

 

 

$

374,600

 

United Kingdom

 

 

214,655

 

 

 

189,685

 

 

 

56,355

 

Germany

 

 

230,922

 

 

 

146,797

 

 

 

65,229

 

Other international

 

 

242,538

 

 

 

171,621

 

 

 

66,820

 

Total

 

$

1,149,100

 

 

$

1,025,536

 

 

$

563,004

 

 

Customers comprising more than 10% of revenue can change from year to year. The Company had one customer comprising more than 10% of revenue in 2023 at 11.0% and was included in both our Network Solutions and Services & Support segments. Single customers comprising more than 10% of revenue in 2022 included one customer at 10.4% and was included in both our Network Solutions and Services & Support segments. Single customers comprising more than 10% of revenue in 2021 included one customer at 18% and was included in both our Network Solutions and Services & Support segments. Other than those with more than 10% of revenue disclosed above, our next five largest customers can change, and have historically changed, from year-to-year. The next five largest customers combined represented 28%, 33% and 38% of total revenue in 2023, 2022 and 2021, respectively.

As of December 31, 2023, property, plant and equipment, net totaled $123.0 million, which included $56.8 million held in the U.S. and $66.2 million held outside the U.S. As of December 31, 2022, property, plant and equipment, net totaled $110.7 million, which included

$56.2 million held in the U.S. and $54.5 million held outside the U.S. Property, plant and equipment, net is reported on a Company-wide, functional basis only.