Financial Report Insights

ADTRAN Holdings, Inc. (ADTN) Q2 2026 Earnings: Revenue $281M (+6.1%)

ADTN — Q2 2026 Financial Report Analysis

Q2 · Fiscal year 2026 · Published Sep 30, 2026 by Pham Hop

ADTRAN revenue rose 6.1% to $281.1M on 22% optical growth but missed guidance on a single-customer project delay; adjusted gross margin fell to 40.7% and GAAP swung to a $10.1M operating loss.

Revenue: $281M; +6.1% YoY
Net income: -$11M
Diluted EPS: $-0.13
Operating margin: -3.6%

This period vs a year ago

Same period last year
This period

Revenue+6.1%

≈$265M

$281M

Year-ago figures (≈) are worked out from the growth rate the company reported. Each row has its own scale.

Optical grew 22%, but one delayed customer project and thinner margins pushed ADTRAN back to a loss

ADTRAN Holdings sells the equipment telecom operators use to run fiber networks: boxes that connect homes and businesses (Subscriber Solutions), the gear that gathers that traffic onto the operator's network (Access & Aggregation), and optical systems that carry data between cities and data centers (Optical Networking, largely from its German subsidiary Adtran Networks, formerly ADVA). In the quarter to June 30, 2026, revenue rose 6.1% to $281.1 million, but it fell short of the company's own $283–303 million guidance. ADTRAN warned about the shortfall early, on July 21, blaming "a project delay from a single customer" and "the current elevated component and freight cost environment." The GAAP result swung back to an operating loss of $10.1 million, after a small $6.4 million operating profit in Q1 2026.

At a glance

Optical Networking revenue: $109.7 million, up 21.7%. It is now 39% of sales, up from 34% a year ago, and the 10-Q credits "high-risk vendor displacement across Europe" (operators replacing Chinese suppliers) plus more sales to enterprise, government and internet content provider customers.
Adjusted operating margin: 3.8%, below the 5–9% guided. That is still better than 3.0% a year ago, but well down from 6.9% in Q1. Adjusted gross margin fell from 43.0% in Q1 to 40.7%.
Free cash flow: $8.7 million, down from $18.3 million. For the first half it was only $5.4 million, against $42.8 million a year earlier, and cash fell to $79.2 million from $95.7 million at year-end.

The numbers

Metric	Q2 2026	Q2 2025	YoY Change
Revenue	$281.1M	$265.1M	+6.1%

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The $20.7 million gap between GAAP and adjusted operating profit is mostly non-cash. GAAP shows a $10.1 million operating loss; the adjusted figure is a $10.6 million profit. The difference is $11.6 million of amortization of intangible assets from past acquisitions (mainly ADVA), $5.5 million of deferred-compensation adjustments, $2.9 million of stock-based pay and $0.7 million of one-off fees and employee exit costs. The deferred-compensation line needs care. It is the rise in value of investments held for employees' deferred pay, booked as an expense in SG&A. A matching $5.2 million gain appears lower down as investment income, so it roughly cancels out at the bottom line. Stock-based pay, however, is a real and recurring cost.
The narrower net loss owes a lot to items below the operating line. Pre-tax loss improved from $17.2 million to $7.9 million, a $9.3 million improvement. Only $3.2 million of that came from operations. The rest came from a $5.3 million net investment gain (up from $3.1 million), other income of $0.7 million versus a $2.6 million expense a year earlier (mainly currency transaction gains and losses), and interest expense falling to $4.2 million from $4.6 million. Interest fell because the company refinanced debt that cost 8.6% with 4.7% convertible notes due 2030.
Cash conversion is positive, but it has weakened. Q2 operating cash flow of $25.9 million compares with a $8.7 million net loss. The gap comes mostly from depreciation and amortization, which were $50.5 million for the half and use no cash. Free cash flow is operating cash flow minus capital spending and capitalized development costs, and it was $5.4 million for the half against $42.8 million a year ago. Last year's half was inflated by a $29.6 million cut in inventory and a $25.8 million fall in receivables. This year inventory fell only $3.4 million, and the higher accounts payable of $10.9 million helped. The 2025 comparison was flattered by one-time working-capital releases, so the fall is not as bad as the headline suggests. Even so, $5.4 million of free cash in six months is thin.
Working capital is under control. Receivables stood at 67 days of sales, against 66 at year-end. Inventory fell to $208.8 million from $215.7 million, and turnover improved to 3.4 times from 2.8. Receivables and inventory are not building faster than sales.
Cash is still going to buying out Adtran Networks' minority holders. ADTRAN controls Adtran Networks through a German domination agreement (a "DPLTA"). Under it, ADTRAN must pay the remaining outside shareholders either an annual payment ($8.9 million paid in June) or a buyout ("exit compensation") if they tender their shares. In the first half $13.8 million went to buyouts. If every remaining holder tendered, ADTRAN says it would owe about €292.6 million ($334.2 million). A German court case over the buyout price is not expected to be decided until late 2027 or 2028. For comparison, cash on hand was $79.2 million, with $201.3 million of convertible notes and $25 million drawn on the revolving credit line. On July 21 ADTRAN replaced its Wells Fargo facility with a new $350 million J.P. Morgan credit agreement.
Tariffs affect costs, with one possible refund not yet counted. In February the Supreme Court struck down the IEEPA tariffs. ADTRAN has not booked any refund, because it judges recovery "not probable" while the process remains unclear. Any refund would therefore be upside that is not in these numbers. Meanwhile, new Section 301 tariffs of 10–12.5% announced on July 23 now apply to most imported goods.
The company still has open control problems. The 10-Q repeats that material weaknesses in internal control over financial reporting (gaps in the checks that make the accounts reliable) are not yet fully fixed.