Adtran felt the sting of supply chain issues in Q3, taking a $9 million hit from constraint-related expenses and failing to meet previously set guidance targets.
The company released preliminary results which showed revenue of $138 million, an operating loss of $10.1 million and a non-GAAP gross margin of 34.6% for the quarter. Those figures compared to revenue of $133.1 million and net income of $5.5 million in the year ago quarter, and revenue of $143.2 million with net income of $5.1 million in Q2 2021.
Adtran previously predicted Q3 revenue would fall between $138 million and $158 million and non-GAAP gross margin would range from 41% to 43% during its Q2 earnings call in August. However, at the time, CFO Michael Foliano warned it experienced “extreme constraints in the electronic component market” which were expected to continue into Q3.
The company said in a press release it would have hit its gross margin target were it not for the $9 million in supply chain-related expenses.
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Tom Stanton, Adtran’s CEO, tried to put a positive spin on things in a statement, noting the company is “experiencing record demand” for its products and set record for quarterly bookings in Q3. He added “we secured two additional Tier 1 fiber customers, and previously announced Tier 1 fiber customers significantly increased their bookings for our fiber access platforms” during the quarter.
All told, bookings were up 43% year on year in Q3, the company said.
Adtran insisted it is working closely with suppliers to address supply chain challenges. It said such issues are expected to peak in the second half of this year before beginning to normalize in mid-2022.
“Importantly, we expect the impact on Adtran’s results to be largely transitory,” the company concluded.