ADTRAN (NASDAQ:ADTN) reported fourth-quarter and full-year 2025 results that management described as a “strong” finish to the year, with revenue and earnings above expectations and sequential and year-over-year growth across its three business categories. Executives also pointed to sustained fiber investment in the company’s core markets and expanding demand for optical networking among cloud providers and large enterprises.
Fourth-quarter results: revenue up 20% year over year
For the fourth quarter, Adtran generated revenue of $291.6 million, up 20% from the prior year and up over 4% sequentially. CEO Tom Stanton said the quarter marked the company’s sixth consecutive quarter of sequential growth and fifth consecutive quarter of year-over-year improvement.
Category performance: optical networking led growth
All three business categories posted year-over-year growth in the quarter, led by optical networking.
- Optical networking solutions grew 33% year over year. Santo said optical was the “largest and fastest contributor,” increasing by $26.9 million from the prior year. Management attributed growth to strong sales to cloud providers and enterprise customers and said it continued to broaden its optical customer base across service providers, cloud providers, enterprises, and public sector networks.
- Access and aggregation revenue rose 9% year over year and 6% sequentially, supported by continued fiber access investment across U.S. and European operators.
- Subscriber Solutions increased 17% year over year and 3% sequentially, driven by demand for residential fiber customer premises equipment as customers connected more subscribers.
Stanton said enterprise and cloud providers represented 25% of revenue in the fourth quarter and 21% for the full year, reflecting what the company sees as a trend of cloud providers expanding data center capacity and enterprises upgrading optical networks.
Margins, EPS and cash flow improved
On profitability, Santo reported non-GAAP gross margin of 42.5%, up 44 basis points sequentially and 122 basis points year over year, driven by scale efficiencies, product mix, and cost discipline. Management reiterated a long-term goal of sustaining gross margin in the 42% to 43% range.
Non-GAAP operating profit was $18.8 million, or 6.4% of revenue, up 103 basis points sequentially and 406 basis points year over year. Non-GAAP EPS came in at $0.16, compared with $0.05 in the third quarter and a loss of $0.02 a year earlier. Santo said EPS included a $0.03 benefit from the acquisition of shares from minority holders during the quarter. Non-GAAP tax expense was $3.8 million, reflecting an effective rate of 22.6%.
Adtran also reported operating cash flow of $42.2 million for the quarter and free cash flow of $22.5 million. For the full year, operating cash flow totaled $129.8 million and free cash flow $60.5 million, increases of 25% and 58%, respectively, compared with 2024.
Working capital metrics improved as inventory declined by nearly $50 million for the year, including $8 million in the fourth quarter. Days inventory outstanding improved by 47 days year over year and 10 days sequentially to 114. Days sales outstanding was 66, down one day year over year but up seven days sequentially due to increased sales and timing of invoicing.
Full-year 2025: revenue topped $1.08 billion
For full-year 2025, Adtran reported revenue of $1.084 billion, up 17.5% year over year. Santo said non-GAAP gross margin expanded by about 90 basis points to 42.1%, and non-GAAP operating margin improved to 4.8% from -0.3% in 2024. Non-GAAP diluted EPS was $0.23 for the year.
Stanton said the company achieved double-digit revenue growth for 2025 and that each of its three revenue categories grew at double-digit rates. He also said the company strengthened its balance sheet by issuing about $200 million of convertible notes at an interest rate “meaningfully lower” than its revolving credit facility.
Adtran continued reducing minority interest in Adtran Networks through share purchases, buying $27.2 million (about 1.2 million shares) during the fourth quarter and $46.6 million (about 2 million shares) during calendar 2025. The company ended the year owning “just over” 70% of Adtran Networks, with minority interest reduced to “less than 30%,” according to management. Adtran ended the quarter with $95.7 million in cash and cash equivalents.
Outlook and themes: fiber investment, software, and Europe dynamics
For the first quarter of 2026, the company guided revenue to a range of $275 million to $295 million and non-GAAP operating margin of 4% to 8%, which management said reflected traditional seasonality and current supply-chain dynamics. Asked about the margin range, Stanton and Santo said it was consistent with historical guidance ranges, despite tightening supply in memory and some optics components.
On demand, Stanton said the company is seeing continued momentum similar to what built through 2025. In fiber-to-the-premises, he said “nothing has slowed down,” and that the company continues adding customers and “operationaliz[ing] carriers in Europe.” He also discussed early signs that BEAD funding is beginning to flow, while cautioning that equipment purchases may lag fiber deployment.
In Europe, management highlighted customer interest in network security and vendor diversification and discussed the impact of Huawei-related dynamics. Stanton said that while replacing existing Huawei installations could take years, ongoing pressure around new awards is influencing carrier behavior, and he characterized Huawei-related annual spending in Adtran’s target product areas as roughly $800 million to $860 million in 2024, based on the company’s prior analysis.
Adtran also emphasized software adoption, noting its software solutions serve more than 1,000 carrier customers, including nearly 500 service providers using its Mosaic One platform and more than 100 deploying its Intellifi cloud-managed Wi-Fi solutions. Stanton said the company is advancing an “agentic AI” platform with Mosaic One Clarity trials underway ahead of an expected launch later in 2026.
Separately, management addressed potential asset actions. Stanton said a leaseback of the East tower building is on hold after receiving offers that did not make financial sense, while a separate tower is being marketed for sale, with management “very optimistic” a deal could occur in 2026. The company is also evaluating non-core assets and plans to reassess in the second half of 2026 after taking steps it believes will improve their value.
About ADTRAN (NASDAQ:ADTN)
ADTRAN, Inc is a global provider of networking and communications equipment, specializing in broadband access solutions for service providers, enterprises and government organizations. Founded in 1985 and headquartered in Huntsville, Alabama, the company develops and delivers hardware and software platforms that enable high-speed Internet access over fiber, copper and wireless networks. Its core offerings include fiber access and aggregation equipment, Ethernet switches, customer premises equipment (CPE) and network management systems designed to support both legacy and next-generation broadband deployments.
The company’s product portfolio encompasses a broad range of optical line terminals (OLTs), optical network terminals (ONTs), multiservice access gateways and virtualized access solutions.
