• Quarterly revenues up sequentially to €123.8 m
• Pro forma operating income of €6.1 m (5.0% of revenues)
• Q3 2018 outlook: revenues €123 to €133m; operating income 2% to 6% of revenues
Adva Optical Networking, a developer of open networking solutions for the delivery of cloud and mobile services, has reported financial results for its second quarter of 2018, which ended on June 30.
Revenues for Q2 2018 increased sequentially by 2.7% to €123.8 m from €120.5 m in Q1 2018 but decreased by 14.2% from €144.2 m in the same year-ago period. The company noted that revenues for Q2 2018 were within the guidance forecast the company provided on April 26, of between €120 m and €135 m.
Pro forma operating income for Q2 2018 was €6.1 m (5.0% of revenues), compared to €2.2 million (1.9% of revenues) in Q1 2018 and €9.2 m (6.4% of revenues) in the same year-ago period. Therefore, pro forma operating income for Q2 2018 was at the upper end of the company’s guidance of between 1% and 6%.
Operating income for Q2 2018 increased to €4.1 m, compared to an operating loss of €0.4 m reported for Q1 2018, and down from €8.1 m in the same year-ago period. Net profit for Q2 2018 was €4.6 m compared with €4.5 m in the same year-ago period. At the latest quarter’s end, the company’s cash and cash equivalents increased by 3.4% to €59.7 m compared to €57.7 m in Q1 2018.
The company’s net liquidity increased by €7.6 m to negative €36.6 m from negative €44.2 m at the end of the prior quarter. Net working capital at quarter-end was €121.8 m compared to €122.5 m million at the end of Q1 2018.
‘Market remains competitive’
“Q2 2018 marked the third consecutive quarter of sequential revenue growth along with increasing profitability,” said Ulrich Dopfer, CFO at Adva. “Although the market for optical transmission technology remains highly competitive, our broad and growing customer base and diversification into different network applications provide us with a stable business foundation.
“Our acquisition of MRV, which we completed in August 2017 and have now fully integrated into our business, has delivered the anticipated revenue contributions and synergies. Coupling this with our continued financial discipline and strategic focus, we believe ADVA is on track towards increasing profitability and sustainable growth.”
“Our Q2 2018 financial results underscore yet again the positive effects of our strategic investments over the past three years,” commented Brian Protiva, CEO of Adva. “Our open, programmable, optical transmission technology offers significant value in terms of capacity, flexibility and automation to network operators, large enterprises, and internet content providers.
“Our technological advantage in cloud access solutions and network synchronization is growing, and we are developing a strategic presence with Tier 1 network operators. Both technology pillars are delivering increasing revenue contributions and opening doors to new customers. Altogether, we expect continued positive business development in the second half of the year.”
Q3 2018 outlook
For Q3 2018, the company said it expects revenues to be in the range of €123 m and €133 m and a pro forma operating income of between 2% and 6% of revenues.
The company performs quarterly reviews of expected business development with respect to all intangible assets, including capitalized development expenses. In case of adverse business prospects, these reviews may result in non-cash impairment charges in Q3 2018 and beyond, which are excluded from the above guidance. The company will publish its financial results for Q3 2018 on October 25, 2018.