ADTRAN Reports $450.9 Million Net Loss and 19.7% Revenue Decline for Fiscal Year 2024

ADTRAN Holdings, Inc. reported a net loss attributable to ADTRAN Holdings, Inc. of $450.9 million for the fiscal year ended December 31, 2024, compared to a net loss of $266.3 million in 2023. Total revenue decreased 19.7% year-over-year, falling from $1,149.1 million to $922.7 million. This decline was attributed to decreased sales volume due to customers focusing on inventory reduction and ongoing macroeconomic uncertainties, including elevated inflation and interest rates, and currency fluctuations. Domestic revenue decreased by 13.6%, while international revenue decreased by 23.8%, impacted by reduced shipments to European network operators and unfavorable foreign exchange effects.

Cost of revenue as a percentage of revenue improved, decreasing from 71.0% in 2023 to 64.2% in 2024. This improvement stemmed from decreased amortization of intangible assets, lower acquisition costs, and the impact of the Business Efficiency Program, partially offset by changes in customer and product mix. Gross profit margin increased from 29.0% to 35.8% due to similar factors. However, selling, general, and administrative expenses increased as a percentage of revenue, rising from 22.5% to 25.3%, while research and development expenses increased from 22.5% to 24.0% of revenue. The company recorded a $292.6 million non-cash goodwill impairment charge during the first quarter of 2024.

The company implemented a Business Efficiency Program in November 2023 to reduce operating expenses and improve capital efficiency. This program included salary reductions, an early retirement program, site consolidation, inventory write-downs, and suspension of the quarterly dividend. The program, excluding the planned sale of the company's headquarters, was substantially complete by December 31, 2024. The company also disclosed discontinuation of certain product lines, including copper-based DSL products, fixed wireless access products, and IoT gateways. As of December 31, 2024, the company employed 3,234 people, a 5% reduction from the previous year.

The company's customer base includes large, medium, and small service providers, alternative providers, cable/MSOs, SMBs, and enterprises. In 2024, one international service provider accounted for over 10% of revenue, and the next five largest customers comprised 21.7% of revenue. The company sells its products through a direct sales organization and a distribution network, noting that service providers typically require lengthy product qualification and standardization processes. The company's research and development expenditures totaled $221.5 million in 2024, down from $258.3 million in 2023. The company highlighted its participation in various standards developing organizations and its focus on fiber-based communications infrastructure and SaaS applications.

The company's outlook anticipates increased orders and billings in 2025 due to customers replenishing inventories to meet growing demand. However, the company acknowledges ongoing risks related to macroeconomic conditions, customer spending, competition, and the potential for further goodwill impairment. The company also highlighted the ongoing appraisal proceedings in Germany related to the Domination and Profit and Loss Transfer Agreement (DPLTA) with Adtran Networks, noting the uncertainty surrounding potential future compensation payments to minority shareholders.