ADTRAN Holdings Stock

ADTRAN Holdings, Inc. (ADTRAN) provides open networking and communications platforms, software, systems and services that focuses on the broadband access market worldwide.

The company offers a broad portfolio of flexible network infrastructure solutions, customer premises equipment, software applications, and global services and support that enable service providers to meet their service demands. These products and services enable service providers to transition to a common network supporting the simplified delivery of high-capacity services, regardless of subscriber density, network topology and infrastructure diversity.

In 2022, following the business combination (the Business Combination) with ADVA Optical Networking SE (ADVA), which included the Merger, the company became the sole owner of and successor to ADTRAN, Inc. and the majority shareholder of ADVA. ADTRAN, Inc. is a leading global provider of open, disaggregated networking and communications solutions that enable voice, data, video, and internet communications across any network infrastructure. Its award-winning end-to-end fiber broadband solutions portfolio spans from OLTs (Optical Line Terminals) to in-home services and intelligent SaaS solutions. Together, the company serves customers in a broad range of industries in over 100 countries.

Segments

The company operates through two segments, Network Solutions, and Services & Support.

Network Solutions

The Network Solutions segment includes hardware and software products that enable a digital future. The company’s cloud-managed Wi-Fi gateways, virtualization software, and switches provide a mix of wired and wireless connectivity at the customer premises. In addition, the company’s Carrier Ethernet products support a variety of applications at the network edge ranging from mobile backhaul to connecting enterprise customers (Subscriber Solutions). The company’s portfolio includes products for multi-gigabit service delivery over fiber or alternative media to homes and businesses. The company supports traditional chassis-based network solutions, such as the Total Access 5000 and hiX (ADTRAN Multiservice Access Platform sold in the EU) 5600. The company also accelerates the industry’s transition to open, disaggregated fiber access solutions with its Software Defined Everything (SDX) Series. Data streams are aggregated via the company’s XG400 product family and synchronized by its Oscilloquartz offerings (Access and Aggregation Solutions). All resulting traffic requires transport through fiber-based networks as supported by the company’s FSP 3000 and MicroMux product families while the underlying infrastructure is monitored by its active line monitoring (ALM) product offering (Optical Networking Solutions). The company’s customers can use its Mosaic and Ensemble software suites to manage and orchestrate its complete portfolio of subscriber solutions, access and aggregation solutions and optical networking solutions. The Mosaic and Ensemble software suites include a mix of orchestration and management solutions that simplify the deployment and virtualization of next generation fiber networks.

Services & Support

This segment offers a comprehensive portfolio of network design, implementation, maintenance and cloud-hosted services supporting the company’s Subscriber, Access and Aggregation, and Optical Networking Solutions. These services assist operators in the deployment of multi-vendor networks while reducing their cost to maintain these networks. The cloud-hosted services include a suite of Software-as-a-Service (SaaS) applications under the company’s Mosaic One platform that manages end-to-end network and service optimization for both fiber access infrastructure and mesh Wi-Fi (family of wireless network protocols, based on the IEEE 802.11 family of standards, which are commonly used for local area networking of devices and Internet access) connectivity. The company backs these services with a global support organization that offers on-site and off-site support services with varying service level agreements (SLAs). By pairing the company’s network solutions with its global services and support organization, customers can turn to it as their single turnkey partner to assist with the deployment and maintenance of modern fiber-based networks to connect homes, businesses and datacenters with the metro or network core.

Revenue Categories

In addition to classifying the company’s operations into two reportable segments, it reports revenue across three categories of products and services include Subscriber Solutions, Access & Aggregation Solutions and Optical Networking Solutions.

The company’s Subscriber Solutions portfolio is used by service providers to terminate their access services infrastructure at the customer premises while providing an immersive and interactive experience for residential, business and wholesale subscribers. This revenue category includes hardware and software-based products and services. These solutions include fiber termination solutions for residential, business and wholesale subscribers, Wi-Fi access solutions for residential and business subscribers, Ethernet switching and network edge virtualization solutions for business subscribers, and cloud software solutions covering a mix of subscriber types.

The company’s Access & Aggregation Solutions are solutions that are used by communications service providers to connect residential subscribers, business subscribers and mobile radio networks to the service providers’ metro network, primarily through fiber-based connectivity. This revenue category includes hardware- and software-based products and services. The company’s solutions within this category are a mix of fiber access and aggregation platforms, precision network synchronization and timing solutions, and access orchestration solutions that ensure highly reliable and efficient network performance.

The company’s Optical Networking Solutions are used by communications service providers, internet content providers and large-scale enterprises to securely interconnect metro and regional networks over fiber. This revenue category includes hardware and software-based products and services. The company’s solutions within this category includes open optical terminals, open line systems, optical subsystems and modules, network infrastructure assurance systems, and automation platforms that are used to build high-scale, secure and assured optical networks.

Strategy

The company’s strategy is to provide innovative solutions for its customers that enable them to address their increasing broadband demand.

Customers

The company has a diverse global customer base that includes Tier-1, -2 and -3 service providers, alternative service providers, such as utilities, municipalities and fiber overbuilders, cable/MSOs (multiple system operators), small- to medium-sized businesses (SMBs) and distributed enterprises.

Distribution, Sales and Marketing

The company sells its products through its direct sales organization and its distribution network. The company’s direct sales organization supports major accounts and has offices in domestic and international locations. Sales to most smaller and independent telephone companies are fulfilled through a combination of direct sales and distributors. The company’s services offerings can be purchased directly from it or through one of its service providers, channel partners or distribution partners.

Orders for end-user products are fulfilled through a combination of direct sales and distributors. This is supported by a direct sales organization for major accounts and a channel-based sales organization to facilitate sales to the company’s partners. MSPs, value-added resellers (VARs) and system integrators (Sis) may be affiliated with the company as channel partners, or they may purchase from a distributor in an unaffiliated fashion.

Outside of the U.S., most service provider products are sold through the company’s direct sales organization and end-user products are sold direct or through distribution arrangements customized for each region. Some regions are supported from a field office that offers sales and support functions, and in some cases, warehousing and manufacturing support. The company’s field sales organizations, distributors and service provider customers receive support from regional-based marketing, sales and customer support groups.

The company’s marketing organization promotes all brands associated with it to key stakeholders, including customers, partners and prospects throughout the world.

Research and Development

During the year ended December 31, 2022, the company’s research and development expenses were $173.8 million.

Seasonality

The company experiences quarterly fluctuations in its revenue that occur due to many factors, including the varying budget cycles and seasonal buying patterns of its customers. More specifically, the company’s customers tend to spend less in the first fiscal quarter (year ended December 2022) as they are finalizing their annual capital spending budgets.

Government Regulation

The European Union (EU) issued the Restriction of the Use of Certain Hazardous Substances in Electrical and Electronic Equipment (RoHS) directive, the Waste Electrical and Electronic Equipment; European Community Directive 2012/19/EU on waste electrical and electronic equipment (WEEE) directive and the Registration, Evaluation, Authorization, and Restriction of Chemicals (REACH) regulation. The company continues to implement measures to comply with these and other similar directives and regulations from additional countries.

The company’s development process is conducted in accordance with International Organization for Standardization (ISO) 9001, TL 9000, ISO 14001, and ISO 27001, all of which are international standards for quality and environmental management systems. The company strives to ensure that its corporate practices also conform to General Data Protection Regulation (GDPR) requirements, which protect digital data for all EU residents, and to other applicable data protection laws, including the California Consumer Privacy Act.

Competition

In the Subscriber Solutions & Experience category, the company’s primary competitors include Calix, Cisco, CommScope, Juniper Networks, Ribbon Communications.

In the company’s Access & Aggregation solutions category, key competitors include Calix, Casa Systems, Ciena, CommScope, DZS, Harmonic, Huawei, Nokia, Reliance/Radisys, Vecima Networks and ZTE.

Main competitors of the company’s Optical Networking solutions portfolio are Ciena, Cisco, Ekinops, Huawei, Infinera, Nokia, Ribbon and ZTE.

History

ADTRAN Holdings, Inc. was founded in 1985. The company was incorporated under the laws of Delaware in 1985.