Aviat's Q4 2025 Earnings Call: Contradictions Emerge in BEAD Program Timelines, OpEx Management, and Growth Outlook

The above is the analysis of the conflicting points in this earnings call

Date of Call: September 10, 2025

Financials Results

• Revenue: $115.3M, down 1.1% YOY (vs $116.7M prior year)
• EPS: $0.83 non-GAAP diluted EPS, up ~15% YOY
• Gross Margin: 34.7% non-GAAP (34.2% GAAP), compared to 35.9% non-GAAP (35.3% GAAP) in the prior year
• Operating Margin: 11.2% non-GAAP (7.7% GAAP), compared to 9.1% non-GAAP (4.7% GAAP) in the prior year

Guidance:

• FY26 revenue expected at $440M–$460M.
• FY26 adjusted EBITDA expected at $45M–$55M.
• Revenue cadence: Q1 lowest; Q2 and Q3 roughly even; Q4 highest.
• BEAD not included in guidance; management expects impact beginning calendar 2026.
• Backlog at FY25 year-end $323M (up 11% YOY) supports outlook.

Business Commentary:

* Revenue and Backlog Growth: - Aviat Networks reported total revenues of $115.3 million in Q4, with a trailing 12-month book-to-bill ratio over 1x, and a backlog of $323 million. - Revenue growth was driven by increased demand in private networks, particularly in public safety and utilities, as well as improved spending from U.S. Tier 1 mobile service providers.

• Record EBITDA and Profitability:
• The company achieved record adjusted EBITDA of $15.1 million, up 26.7% year-over-year, and non-GAAP EPS of $0.83, up 15.3%.

• This was due to disciplined cost management, increased efficiencies, and successfully mitigating the impact of tariffs on profitability.

• Private Networks and Public Safety:

• Aviat Networks experienced growth in private networks, particularly in public safety, with high backlog levels and expanding opportunities due to the One Big Beautiful Bill Act.

• The increase was attributed to growing city and state budgets, enabling upgrades to LMR networks, and increased demand for Aviat's backhaul radios, routers, and services.

• Fixed Wireless Access and Rural Broadband:

• The company observed a rebound in spending from U.S. Tier 1 mobile service providers and strong revenues from APAC countries.

• This trend is supported by the increasing utilization of wireless solutions in rural broadband due to the cost and speed advantages over fiber, notably in BEAD programs.

• International Expansion and Product Innovations:

• Aviat introduced a new European Telecom Standards Institute Compliant (ETSI) radio, expanding market opportunities in international markets.
• The new radio, featuring industry-leading power and all-indoor design, enhances safety and provides a cost-effective solution for mission-critical applications, opening new markets and reducing total cost of ownership.

Sentiment Analysis:

• Record quarterly adjusted EBITDA ($15.1M, up 26.7% YOY) and backlog up 11% support a constructive view. However, revenue declined 1.1% YOY and management disclosed material weaknesses in internal controls. FY26 guide implies modest mid-single-digit growth with a conservative stance due to prior Q1 underperformance.

Q&A:

• Question from Theodore O'Neill (Litchfield Hills Research, LLC): What’s driving fixed wireless access momentum for business/MDUs—copper shutdowns, BEAD, lack of fiber—and why is it working now?
  Response: MDUs are being prioritized with attractive price points; fiber suits dense urban areas, but wireless is more economical and practical outside urban centers.

• Question from Theodore O'Neill (Litchfield Hills Research, LLC): Are there BEAD delays, or is it progressing as expected?
  Response: Process remains uneven, but states are embracing tech-neutrality that favors wireless; impact expected in calendar 2026 and not in guidance yet, though signs are the most positive to date.

• Question from Timothy Savageaux (Northland Capital Markets, Research Division): With backlog up 11% and funding tailwinds, why guide to ~4% mid-range FY26 growth—what offsets this?
  Response: Conservatism due to last year’s weak Q1; management wants to execute through the comparable before raising expectations.

• Question from Timothy Savageaux (Northland Capital Markets, Research Division): Outlook for Tier 1 carriers NA vs global and private networks vs carriers in FY26?
  Response: Private networks should outgrow carriers; NA Tier 1s show slight growth in the back half; emerging-market carriers look favorable but remain project-driven and variable.

• Question from Scott Searle (ROTH Capital Partners, LLC, Research Division): Q4 revenue mix skewed to services—what drove that and margin dynamics?
  Response: Services were strong with improved margins across all regions; mix reflected higher services share in projects this quarter.

• Question from Scott Searle (ROTH Capital Partners, LLC, Research Division): Is FY26 outlook just conservative, and how should we think about near-term cadence?
  Response: Business is lumpy/project-based; expect build through the year with Q1 lowest, Q2–Q3 similar, and Q4 highest, reflecting portfolio seasonality.