ADTRAN delivered solid first quarter results with revenue of $286.1 million, up 15.5% year-over-year, and non-GAAP operating margin of 6.9%, up 3% year-over-year. This quarter also marked a meaningful step in our growth strategy as we showcased our expanding portfolio addressing cloud and AI infrastructure connectivity. Optical Networking Solutions revenue was $97.3 million in the first quarter, up 24% year-over-year. Operators across all geographies are expanding wholesale optical capacity to support growing demand for cloud connectivity and higher bandwidth services, reflecting a broad-based trend.

In Europe, high-risk vendor replacement initiatives continue to add to that demand. With growing strength among our cloud and hyperscaler customers and a positive outlook across our service provider base, we expect our Optical Networking Solutions revenue to build throughout the year. Access and Aggregation Solutions revenue was $90.5 million in the first quarter, up 2% year-over-year and 14% sequentially, driven by broad-based strength across the U.S. Subscriber Solutions revenue was $98.2 million in the first quarter, up 22% year-over-year.

Demand remains healthy, supported by continued investment in Fiber to the home, multi-gig Wi-Fi 7, and Carrier Ethernet applications. Stepping back from the details for the quarter, I want to take a moment to talk about our business and the market dynamics that continue to drive demand for our solutions. Service providers are investing across transport, access, and subscriber platforms to scale their networks for long-term demand and improved reliability. Beyond our core service provider business, we continue to see meaningful opportunities to further accelerate growth by expanding our presence in both cloud providers and enterprise customers.

What went well
  • First-quarter revenue of $286.1 million grew 15.5% year-over-year and finished above the midpoint of guidance.
  • Non-GAAP operating margin expanded 300 basis points year-over-year to 6.9%, and non-GAAP gross margin reached 43%, its highest since 2020.
  • Optical networking revenue grew 24% year-over-year to $97.3 million and subscriber solutions grew 22% to $98.2 million.
  • U.S. revenue of $146.2 million (51% of total) grew 42% year-over-year, aided by early BEAD deployment funding.
  • Launched the LiteWave800 for intra-data-center connectivity, designed to cut power consumption by over 90% versus alternatives.
  • The SDG Wi-Fi 7 portfolio received conditional FCC approval exempting it from covered-list restrictions, and Mosaic One Clarity won the FTTH Europe Award for AI Innovation.
What went wrong
  • Free cash flow was negative $3.3 million and operating cash flow was only $12.7 million, reflecting the timing of cash receipts and higher inventory purchases.
  • Cash and equivalents declined to $88.3 million from $95.7 million at year-end 2025.
  • Memory pricing remained elevated industry-wide and freight costs added further margin pressure.
  • Optical networking's sequential performance saw strength from larger customers and hyperscalers offset by seasonal declines with smaller customers and government sales.
  • Non-GAAP operating expenses rose to $103.3 million from $95.5 million a year earlier, largely from foreign-currency effects on the European cost base.
  • DSO increased two days sequentially to 68 days on the timing of quarter-end invoicing.

More on ADTRAN Holdings, Inc.

Reported 2026-05-05 · figures from the ADTRAN Holdings, Inc. Q1 2026 earnings call.

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