Revenue growth stalled at 0.6% YoY and guidance for Q4 implies a potential sequential decline, while the company is burning cash and drawing on its revolver. Monitor the Q4 earnings call for updates on supply normalization, cost actions, and whether the optical/hyperscale growth can offset weakness in subscriber solutions.
How the stock moved after the report
⚠ Clustered NEUTRAL VIEWSTOCK BELOW ENTRY AT T+1- T+0 · Nov 3 $5.06entry
- T+1 · yesterday −6.52%α −8.17% · $4.73
- T+2 · todayOpen
- T+5 · in 5d Pending
- T+20 · in 27d Pending
- T+60 · in 3mo Pending
Price Chart
How similar events traded
Executive Summary
ADTRAN reported Q3 2026 revenue of $281.2M, up 0.6% YoY but slightly below the $285.7M consensus, and non-GAAP diluted EPS of $0.09, above the $0.04 consensus. GAAP gross margin improved to 38.5% from 37.0% in Q2, aided by a ~200 bps tariff refund, but non-GAAP operating margin declined to 5.0% from 5.4% a year ago. The company guided Q4 revenue of $272M-$292M and non-GAAP operating margin of 1.0%-5.0%, reflecting ongoing supply and cost headwinds.
Key Financial Metrics
Key Facts
- Q3 2026 revenue of $281.2M, up 0.6% YoY, below consensus of $285.7M
- Non-GAAP diluted EPS of $0.09, above consensus of $0.04
- GAAP diluted loss per share of $0.10, improved from a loss of $0.12 a year ago
- GAAP gross margin of 38.5%, up from 37.0% in Q2 2026, including ~200 bps benefit from IEEPA tariff refunds
- Non-GAAP gross margin of 42.1%, flat YoY
- Non-GAAP operating margin of 5.0%, down from 5.4% a year ago
- Net cash used in operating activities of $24.5M; free cash flow of -$39.4M
- Cash, cash equivalents and restricted cash of $71.7M, down from $79.2M at end of Q2 2026
- Non-current revolving credit agreement balance increased to $83.0M from $25.0M at year-end 2025
- Q4 2026 guidance: revenue $272M-$292M, non-GAAP operating margin 1.0%-5.0%
- Optical networking solutions revenue +11% YoY to $114.5M; hyperscale revenue up more than 200% YoY
- Enterprise/Government/Cloud revenue grew 44% YoY, now 28% of total revenue
- Subscriber solutions revenue declined 13% YoY to $88.1M
Financial Impact
Revenue slightly below consensus; non-GAAP EPS beat consensus by $0.05; free cash flow negative $39.4M; debt increased by $58.0M on revolving credit facility
Segment Breakdown
| Segment | Revenue | Growth |
|---|---|---|
| Network Solutions | $231.2M | -0.6% |
| Services & Support | $49.9M | +6.5% |
Risk Factors
- Revenue growth near zero and below consensus; Q4 guidance midpoint of $282M is essentially flat with Q3
- Negative free cash flow of $39.4M in Q3 and $34.0M year-to-date
- Revolving credit balance increased to $83.0M from $25.0M at year-end 2025, indicating increased leverage
- Non-GAAP operating margin guidance for Q4 of 1.0%-5.0% is below the Q3 result of 5.0%
- Gross margin headwinds from product/customer mix, supply constraints, and component inflation; tariff refund benefit expected to be much smaller in Q4
- Ongoing material weaknesses in internal control over financial reporting disclosed in risk factors
Market Snapshot
Investment Themes
Documents Analyzed
This report is based on 7 SEC documents filed with EDGAR.
| Document | Accession Number |
|---|---|
| 8-K Filing (Primary) | 0001193125-26-444397 |
| Document: adtn-20261102.htm | 0001193125-26-444397 |
| Document: adtn-ex99_2.htm | 0001193125-26-444397 |
| Document: 0001193125-26-444397-index-headers.html | 0001193125-26-444397 |
| Document: 0001193125-26-444397-index.html | 0001193125-26-444397 |
| Document: 0001193125-26-444397.txt | 0001193125-26-444397 |
| 8-K Data (Synthetic) | 0001193125-26-444397 |
Filters
| Type | Now | ||||
|---|---|---|---|---|---|
Nov 3, 2026 2d ago | 8-K | $5.06 | awaiting T+5 | awaiting T+5 | $4.13 (−18.38%) |
Nov 2, 2026 3d ago | 3 | $5.06 | awaiting T+5 | awaiting T+5 | $4.13 (−18.38%) |
Oct 30, 2026 6d ago | SC 13G | $6.53 | awaiting T+5 | awaiting T+5 | $4.13 (−36.75%) |
Oct 29, 2026 7d ago | 8-K | $6.53 | awaiting T+5 | awaiting T+5 | $4.13 (−36.75%) |
Aug 10, 2026 12w ago | 8-K | $7.76 $8.10 | ▲ +4.38% | ▲ +4.79% | $4.13 (−46.78%) |
Aug 8, 2026 12w ago | Institutional Cluster | $7.63 $8.66 | ▲ +13.43% | ▲ +13.48% | $4.13 (−45.87%) |
Aug 7, 2026 12w ago | Insider Buy | $7.63 $8.66 | ▲ +13.43% | ▲ +13.48% | $4.13 (−45.87%) |
Aug 4, 2026 13w ago | 8-K | $8.76 $7.76 | ▼ −11.42% | ▼ −11.32% | $4.13 (−52.85%) |
Jul 22, 2026 15w ago | 8-K | $10.45 $8.33 | ▲ +20.29% | ▲ +17.89% | $4.13 (+60.48%) |
Jul 17, 2026 15w ago | S-3ASR | $11.65 $10.15 | ▼ −12.88% | ▼ −12.19% | $4.13 (−64.55%) |
US Market Status
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