Aviat Networks Q2 Earnings Call Highlights

Aviat Networks (NASDAQ:AVNW) reported fiscal 2026 second-quarter results highlighted by what management called its highest second-quarter bookings in the last 10 years, alongside positive operating cash flow and reaffirmed full-year guidance.

Quarter highlights and first-half progress

President and CEO Pete Smith said the company delivered second-quarter revenue of $111.5 million, adjusted EBITDA of $11.3 million, non-GAAP EPS of $0.54, and cash generated from operations of $23.9 million.

Smith also summarized first-half performance, stating that for the first six months of fiscal 2026 Aviat increased total revenue by 5.9%, reduced non-GAAP operating expenses by $3.7 million, increased both GAAP and non-GAAP EPS by more than $1, and increased adjusted EBITDA by $13.2 million. Smith said the improvement was in line with expectations and positioned the company to execute in the back half of the fiscal year.

End markets: private networks, mobile networks, and new offerings

In private networks, Smith said Aviat continues to focus on mission-critical wireless networks serving public safety agencies, utilities, and other critical infrastructure providers, citing growing demand for reliable networks.

He also provided an update on the company’s Aprisa LTE 5G router offering aimed at police, fire, and emergency vehicles. Smith said the product opens “an entirely new segment” for Aviat, which he estimated at approximately $1.6 billion today, and noted the company has received its “first initial order” while remaining engaged in “several critical trials.” In the Q&A, Smith added that Aviat is engaged with about 15 customers and expects uptake to follow proof-of-concept work and customer budget cycles. He said he views the opportunity as potentially becoming material in fiscal 2027.

In mobile networks, Smith said the 5G upgrade cycle remains ongoing in global markets and that changes in the competitive landscape are creating potential openings for Aviat, with possible updates in future quarters.

Aviat also discussed progress in its multi-dwelling unit (MDU) solution for fixed wireless access. Smith said the company announced an initial purchase order from a U.S. Tier One provider for deployments that provide fixed wireless access internet to paying subscribers, calling it a significant step in pursuing a market segment Aviat has worked on for several years. He said Aviat and the customer are still determining the timing of the ramp and the impact and timing of potential future orders. During the Q&A, Smith characterized the initial MDU order as “progress” but “not necessarily a needle mover,” adding that a subsequent order would be a more meaningful milestone.

BEAD program: timing uncertainty, but increased confidence

Smith reiterated that Aviat’s policy is to keep any impact from the Broadband Equity, Access, and Deployment (BEAD) program out of fiscal guidance until timing becomes clearer. He said the company still expects BEAD to be a calendar 2026 event “likely in the back half,” and noted that the NTIA has approved more than 40 state plans, which enables states to begin funding award winners.

Smith said fixed wireless access is capturing, on average, between 10% and 15% of BEAD-served locations, and noted that fixed wireless access tends to use wireless backhaul at a higher rate than fiber-to-the-home approaches. While he did not quantify Aviat’s opportunity, he said the company is encouraged BEAD will have a positive impact in fiscal 2027 based on current plans and timing expectations. In response to an analyst question, Smith said Aviat is “getting more and more bullish,” with a view that BEAD may materialize sometime between July and December 2026.

Financial results: margins, earnings, and cash generation

New CFO Andy Schmidt, who joined after more than 20 years of public company CFO experience, reviewed the quarter’s financial results. Revenue of $111.5 million compared with $118.2 million in the prior-year quarter, while first-half revenue rose to $218.8 million, up $12.2 million, or 5.9%, from the prior-year period.

North America represented 47.5% of quarterly revenue at $52.9 million, while international revenue was 52.5% at $58.6 million. Gross margin was 32.4% on a GAAP basis and 32.9% on a non-GAAP basis, down from 34.6% GAAP and 35.3% non-GAAP a year earlier. Schmidt attributed the change primarily to regional and product mix. For the first six months of fiscal 2026, gross margin improved year over year to 32.8% GAAP and 33.4% non-GAAP, compared with 29.4% GAAP and 30.1% non-GAAP in the prior-year period.

GAAP operating expenses were $28.8 million, down from $32.9 million in the year-ago quarter. Non-GAAP operating expenses were $27.1 million. Operating income was $7.3 million on a GAAP basis and $9.6 million on a non-GAAP basis, compared with $8.0 million GAAP and $12.6 million non-GAAP in the prior-year quarter.

The quarter’s tax provision was $2.4 million. Schmidt noted that as of fiscal 2025 year-end, Aviat had more than $450 million of net operating losses, which he said should support “minimal cash tax payments for the foreseeable future.”

GAAP net income was $5.7 million and non-GAAP net income was $7.0 million. GAAP EPS was $0.44 and non-GAAP EPS was $0.54, both on a fully diluted basis. Adjusted EBITDA was $11.3 million, representing 10.1% of revenue; year-to-date adjusted EBITDA was $20.4 million, up $13.2 million from the prior-year period.

On the balance sheet, Aviat ended the quarter with $86.5 million in cash and marketable securities and $105.4 million in outstanding debt, for net debt of $18.9 million. Schmidt said that improved from $41.7 million in the first fiscal quarter, an improvement of $23.0 million. Cash from operations of $23.9 million reflected “disciplined inventory management” that reduced inventory by $7.4 million and strong cash collections. Schmidt also noted a sequential decrease in unbilled receivables of $20.1 million that contributed partly to higher accounts receivable, which he said creates “actionable cash collection opportunities” in the second half.

Bookings, backlog context, guidance, and capital return

In Q&A, management emphasized strong bookings momentum. Smith said Aviat’s highest bookings quarters are typically the second fiscal quarter and the fourth fiscal quarter, and reiterated that the company posted its highest second-quarter bookings level in 10 years. He also said book-to-bill was over 1 in the prior quarter and remained over 1 in the second quarter, with bookings driven by both service provider and private network businesses. Smith added that the recent bookings strength was broad-based rather than tied to one-off large state network wins.

The company kept fiscal 2026 guidance unchanged, with full-year revenue expected in a range of $440 million to $460 million and adjusted EBITDA in a range of $45 million to $55 million. In response to a question about what is embedded in guidance, Smith said the 5G router contribution is “de minimis,” BEAD is not included, and the MDU project is included only “a little bit” because it is not yet material.

On capital allocation, Smith said Aviat has a little under $6.5 million remaining on its share repurchase authorization and that, following a board meeting earlier in the week, the company anticipates turning the buyback back on, noting it uses a price-level approach for repurchases.

Separately, Smith attributed improved performance in Europe to leadership changes made about five quarters ago, saying a new EMEA leader has driven discipline and focus on private networks and that “success is starting to show.”

About Aviat Networks (NASDAQ:AVNW)

Aviat Networks, Inc is a specialist in wireless transport solutions, designing, manufacturing and selling microwave networking products that enable the secure and reliable transmission of data, voice and video. The company’s offerings address mission-critical communications needs for a broad range of end markets, including telecommunications service providers, utilities, government agencies and enterprises. Its product portfolio spans high-capacity packet microwave radios, IP transport systems and network management software.

Aviat’s core product lines include the WTM series of packet microwave platforms, which deliver scalable throughput and advanced resilience features, and the Eclipse packet microwave systems, which combine broadband capacity with synchronization, security and quality-of-service capabilities.