Westell’s Communications Network Segment (CNS) is seeing benefits from its service provider customers pursuing Connect America Fund (CAF-II) and C-RAN opportunities.
Sales of the company’s integrated cabinets to wireless operators and a service provider expanding their rural broadband footprint helped drive up revenues in Westell’s CNS segment 41% to $5.5 million.
RELATED: From AT&T to Zayo: Tracking wireline telecom earnings in Q2 2017
While C-RAN is still a relatively new opportunity, Westell is finding wireless operator interest in this network architecture ramping, particularly as carriers prepare for future 5G deployments as well as a more efficient design methodology.
“Where it helps us is in the CNS business, initially with our power products and cabinets,” Minichiello said. “We haven’t sold many cabinets into this network architecture yet, but that’s a possibility, a strong possibility.”
But selling cabinets and power products to traditional providers are just two of several sources of growth for Westell.
The vendor is seeing interest in network monitoring from not only traditional telcos and wireless operators, but also from cable MSOs.
There are "more opportunities to remotely monitor the equipment as you move into this type of a network architecture,” Minichiello said. “So we are seeing small sales of our ISM remotes so far. But those are where, in our product portfolio, where we’re going to see the benefit of this new architecture.”
The ISMS business benefited from growing revenue with what Westell said was a major neutral host operator that it just began doing ISMS business with the quarter before.
Minichiello said Westell sees potential for other service provider customers to use the ISMS products for similar applications.
“We just started in the one instance. It’s good because we are able to sell more software licenses, and that’s high-margin revenue,” Minichiello said. “And then, the customer is continuing to use the software and continuing to expand their monitoring reach with the Optima [management system] that talks straight to our remote.”
Here’s a breakdown of Westell’s key metrics:
In-Building Wireless (IBW) Segment: Higher sales of public safety solutions drove IBW’s slight sequential revenue increase to $7 million. IBW’s segment gross margin increase was driven primarily by a more favorable mix and lower overhead costs.
Intelligent Site Management & Services (ISMS) Segment: ISMS’s sequential revenue was $4.1 million, down $0.4 million due to lower sales of remote units. The segment’s gross margin decrease was primarily due to higher segment cost of goods sold.
Communication Network Solutions (CNS) Segment: CNS’s sequential revenues were $5.5 million, up $1.6 million, due to higher sales of integrated cabinets and power distribution products. CNS’s gross margin decrease was primarily due to increased excess inventory costs.
Financials: Consolidated revenue in Q1 2018 was $16.6 million, and comprised $7 million from the In-Building Wireless (IBW) segment, $4.1 million from the Intelligent Site Management and Services (ISMS) segment, and $5.5 million from the Communication Network Solutions (CNS) segment.