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Aviat Networks Inc. (AVNW) reported its fourth-quarter 2025 earnings, surpassing expectations with an EPS of $0.83 compared to the forecasted $0.5567. This represents a 49.09% surprise. However, the company’s revenue slightly missed projections, coming in at $115.3 million against an expected $116.95 million. Despite the revenue shortfall, Aviat’s stock rose 9.1% in after-hours trading, closing at $23.55, reflecting a positive market response to the earnings beat.
Key Takeaways
- Aviat Networks reported a significant EPS beat, with a 49.09% surprise.
- Revenue fell short of expectations by 1.38%.
- The stock surged 9.1% in after-hours trading following the earnings report.
- North American revenue increased by 3.2%, while international revenue decreased by 5.2%.
- The company introduced new products and reduced operating expenses.
Company Performance
Aviat Networks demonstrated resilience in Q4 2025, with a 15% year-over-year increase in non-GAAP EPS. Despite a 1.1% decrease in total revenues compared to the previous year, the company achieved a record adjusted EBITDA of $15.1 million, marking a 27% year-over-year rise. Aviat’s strong performance in North America, with a 3.2% revenue increase, contrasted with a 5.2% decline in international markets. InvestingPro data reveals a robust 5-year revenue CAGR of 11% and an overall Financial Health Score of 2.26 (FAIR), suggesting stable operational performance. Get access to 12+ additional exclusive ProTips and comprehensive analysis through InvestingPro’s detailed research reports.
Financial Highlights
- Revenue: $115.3 million, a 1.1% decrease year-over-year.
- Earnings per share: $0.83, a 15% increase year-over-year.
- Non-GAAP gross margin: 35%.
- Adjusted EBITDA: $15.1 million, a 27% increase year-over-year.
- Backlog: $323 million, an 11% increase.
Earnings vs. Forecast
Aviat Networks exceeded EPS expectations with a reported $0.83, compared to the forecasted $0.5567, resulting in a 49.09% surprise. However, revenue fell short by 1.38%, with actual figures at $115.3 million versus the forecasted $116.95 million.
Market Reaction
Following the earnings announcement, Aviat’s stock price rose by 9.1%, closing at $23.55. This upward movement reflects investor optimism driven by the significant EPS beat, despite the revenue miss. The stock is trading closer to its 52-week high of $26.83, indicating positive sentiment. Analyst consensus is notably bullish, with a high target of $42, suggesting significant upside potential. InvestingPro subscribers can access detailed valuation metrics, comprehensive financial health analysis, and expert insights through the Pro Research Report, available for over 1,400 US stocks.
Outlook & Guidance
Looking forward, Aviat Networks projects fiscal 2026 revenue between $440 million and $460 million and adjusted EBITDA between $45 million and $55 million. The company anticipates the strongest revenue in Q4, with growth opportunities in private networks and emerging markets.
Executive Commentary
CEO Pete Smith expressed satisfaction with the results, stating, "We are happy that we were able to deliver another set of strong results for shareholders." He highlighted the potential in emerging markets, noting, "Many emerging market operators are still early in building out their 5G networks."
Risks and Challenges
- Supply chain adjustments could impact future costs.
- International revenue decline may affect growth.
- Market volatility and macroeconomic pressures could influence investor sentiment.
- Dependence on project-based business may lead to revenue fluctuations.
Q&A
During the earnings call, analysts inquired about fixed wireless access opportunities and the BEAD program funding expectations. The management addressed concerns about revenue mix and seasonality, emphasizing growth potential in private networks.
Full transcript - Aviat Networks Inc (AVNW) Q4 2025:
Conference Operator: Hello, everyone, and welcome to Aviat Networks Fourth Quarter Fiscal Year twenty twenty five Earnings Call. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. Please note, this conference is being recorded. I will now turn the conference over to your host, Mr.
Andrew Fredriksen, Vice President of Corporate Finance and Interim CFO. Thank you, and you may begin.
Andrew Fredriksen, Vice President of Corporate Finance and Interim CFO, Aviat Networks: Thank you, and welcome to Aviat Networks fourth quarter fiscal twenty twenty five results conference call and webcast. You can find our press release and updated investor presentation in the IR section of our website at www.aviatnetworks.com along with a replay of today’s call. As a reminder, during today’s call and webcast, management may make forward looking statements regarding Aviat’s business, including but not limited to statements relating to fiscal guidance, financial projections, business drivers, new products and expansions and economic activity in different regions. These and other forward looking statements reflect the company’s opinions only as of the date of this call and webcast and involve assumptions, risks and uncertainties that could cause actual results to differ materially from those statements. Additional information on factors that could cause actual results to differ materially from the statements expressed or implied on this call can be found in our most recent annual report on Form 10 ks filed with the SEC.
The company undertakes no obligation to revise or make public any revisions of these forward looking statements in light of new information or future events. Additionally, during today’s call and webcast, management will reference both GAAP and non GAAP financial measures. Please refer to our press release, which is available in the IR section of our website at www.aviatnetworks.com and the financial tables therein, which include a GAAP to non GAAP reconciliation and other supplemental financial information. At this time, I would like to turn the call over to Aviat’s President and CEO, Pete Smith. Pete?
Pete Smith, President and CEO, Aviat Networks: Thanks, Andrew, and good afternoon. Let’s review the highlights from the fourth quarter. Total revenues of $115,300,000 non GAAP gross margin of 35%, record adjusted EBITDA of $15,100,000 up 27% versus the year ago period. This marks our third consecutive quarter of setting a new record adjusted EBITDA figure. Non GAAP EPS of $0.83 up 15% year over year.
These quarterly results are a testament to our entire team and reflect the hard work, dedication and commitment we have to our customers and our shareholders. Let’s discuss our end markets and key developments. In private networks, Aviat continues to deliver for our public safety and critical infrastructure companies, including utilities and oil and gas companies with our reliable secure backhaul complemented by our access and routing portfolio. In public safety, we remain a leader with sustained share of demand and expect a good environment in the year ahead. Industry research shows that overall city and state budgets for fiscal year twenty twenty six are growing by 46%, respectively.
Even more relevant for Aviat, allocations to city police and fire budgets are growing by 5% and states are growing public safety budgets by 8%. This backdrop of funding growth aligns with land mobile radio or LMR network upgrades to better support video and data communications, which creates growing demand for Aviat’s suite of backhaul radios, routers and services. Our backlog in North America remains high, thanks to multiple large statewide public safety networks. Although our federal business is relatively small compared to our state and local government business, there are expanding opportunities as a result of the One Big Beautiful Bill Act, which has allocated $17,000,000,000 for the support of state and local law enforcement of border security and $6,000,000,000 for border technology. This will create opportunities for Aviat given our leadership in public safety networks.
Moving on to our mobile service provider market. The fourth quarter represented a rebound in spending from U. S. Tier one versus earlier in the fiscal year and strong revenues from certain APAC countries. Our revenues from PassLink are in line with our goal of $140,000,000 in annualized revenues.
We made a commitment to our shareholders that PassLink revenues would be at this level exiting fiscal twenty twenty five, and we are happy to have delivered. Looking ahead, we believe that fiscal twenty twenty six will have a broader set of opportunities for Aviat to grow versus fiscal twenty twenty five based on mobile service providers’ CapEx plans globally. Many emerging market operators are still early in building out their five gs networks, and we believe there will be opportunities for Aviat to participate in these network build outs. The North American Tier one market should also be stronger than in previous years, thanks to efforts to build out fixed wireless access. Regarding our rural broadband business and the broadband equity access and deployment program, we see increasing utilization of wireless solutions for this segment compared to initial estimates, which we think is wise given the speeds and capacity delivered and the cost and speed to deploy wireless versus fiber.
For example, New Mexico’s final Bead proposal awards 40% of serviceable locations to fixed wireless access providers and Washington State awarded 39%. Kansas awarded 50% of locations to hybrid and fixed wireless access solutions. This technologically neutral approach will create more opportunities for wireless backhaul, and we look forward to working closely with the states and rural broadband providers to service this program. We continue to believe that we will not see revenue impact from Bead until calendar year 2026 and will not include it in any financial guidance until we have better visibility. Last quarter, we said that we anticipated an impact to Aviat from tariffs, but it had the goal of offsetting most, if not all, of the impact on our bottom line.
Thanks to the tireless work by our operations, finance and sales teams, we have indeed seen minimal impact to Aviat’s profitability as a result of tariffs thus far. We have moved nearly $1,500,000 worth of supply purchases from China. We continue to execute on our plans to mitigate the impact of tariffs and are pleased with the progress Aviat has made. On the product development side, Aviat Networks recently introduced our new European Telecom Standards Institute compliant or Etsy radio. This opens up a new market opportunity for us, thanks to industry leading power, which allows customers to build networks over longer distances with fewer towers and smaller antennas, which substantially reduces total cost of ownership.
The radio’s all indoor design also simplifies maintenance, enhances safety, providing a reliable and cost effective solution for mission critical applications. This radio has been a leading solution in North America, and we are excited to bring it to our international markets. I would now like to turn the call over to Michael and Andrew to review the financial results of the quarter before coming back for closing remarks and our fiscal twenty twenty six guidance. Michael?
Andrew Fredriksen, Vice President of Corporate Finance and Interim CFO, Aviat Networks: Thank you very much, Pete. I would like to say a few words before turning it over to Andrew. When I decided to join Aviat, it was because the company was successfully executing its strategy to scale in the wireless communication industry, had a strong technical offering for its customers and was made up of great team members. All of these things remain true today. Aviat is in very good hands with Pete and Andrew at the helm.
Andrew, over to you. Thanks, Michael. I’ll review some of the key fiscal twenty twenty five fourth quarter results. Please note that our detailed financials can be found in our press release and all comparisons discussed are between the 2025 and the 2024 unless otherwise noted. For the fourth quarter, we reported total revenues of $115,300,000 as compared to $116,700,000 for the same period last year, a decrease of $1,300,000 or 1.1% year over year.
North America, which comprised 50% of our total revenues for the quarter, was $58,000,000 an increase of $1,800,000 or 3.2% from the same period last year due to growth in private networks. International revenues were $57,300,000 for the quarter, a decrease of $3,100,000 or 5.2% from the same period last year. This was driven by timing of certain international mobile network projects. Our trailing twelve month book to bill was over one in the quarter. Backlog as of the end of fiscal twenty twenty five was $323,000,000 versus $292,000,000 a year ago, up 11%.
This growth signals continued demand for Aviat’s products and services and sets the company up to execute on our growth plans in fiscal twenty twenty six and beyond. Gross margins in Q4 were 34.2% on a GAAP basis and 34.7% on a non GAAP basis. This compares to 35.3% GAAP and 35.9% non GAAP in the prior year. The change in gross margin is primarily due to regional and customer mix in the quarter. Fourth quarter GAAP operating expenses were $30,600,000 versus $35,700,000 in the year ago period.
Non GAAP operating expenses, which exclude the impact of restructuring charges, share based compensation and deal costs were $27,100,000 a decrease of $4,100,000 versus the prior year. This decrease is due to disciplined cost management and increased efficiencies at Aviat. Fourth quarter operating income was $8,900,000 on a GAAP basis and $12,900,000 on a non GAAP basis. This compares to $5,500,000 GAAP and $10,600,000 non GAAP in the year ago period. GAAP income before taxes in the fourth quarter was $10,200,000 versus $4,600,000 in the year ago period.
This is an increase of $5,600,000 or 121% and represents a quarterly record for Aviat. The fourth quarter tax provision was $5,000,000 As a reminder, the company has over $450,000,000 of net operating losses or NOLs that will continue to generate shareholder value via minimal cash tax payments for the foreseeable future. Fourth quarter GAAP net income was $5,200,000 and non GAAP net income, which excludes restructuring charges, share based compensation, M and A related and other nonrecurring expenses and the noncash tax provision was $10,700,000 Fourth quarter non GAAP earnings per share came in at $0.83 on a fully diluted basis, up by $0.11 or 15.3% versus the year ago period. Adjusted EBITDA for the fourth quarter was $15,100,000 or 13% of revenues, an increase of $3,200,000 or 26.7% versus last year. This is our third consecutive quarter of setting a new record on quarterly adjusted EBITDA for Aviat.
This achievement is thanks to the execution of the entire Aviat team. Moving on to the balance sheet. Our cash and marketable securities at the end of the fourth quarter were $59,700,000 Our outstanding debt was $87,600,000 bringing our net debt position to $27,900,000 With that, I’ll turn the call back to Pete for some final comments. Pete?
Pete Smith, President and CEO, Aviat Networks: Thanks, Andrew. We are happy that we were able to deliver another set of strong results for shareholders and close out fiscal twenty twenty five with momentum heading into fiscal twenty twenty six. As part of our year end audit, we did identify material weaknesses in our controls environment. While we made progress in improving our controls environment over last year and remediating two material weaknesses identified last year, we still have more work to do in the year ahead. We will continue to invest further to improve our resources, processes and testing to remediate our material weaknesses.
Moving on to our fiscal twenty twenty six guidance. Based on our current outlook we see, Full year revenues to be in the range of $440,000,000 to $460,000,000 Full year adjusted EBITDA to be in the range of 45,000,000 to $55,000,000 We expect that our business will build throughout the year with the first quarter being the lowest revenue quarter and the fourth quarter being the strongest revenue quarter. With that, operator, let’s open up for questions.
Conference Operator: Thank you so much. One moment for our first question. It comes from the line of Theodore O’Neill with Litchfield Hills Research. Please proceed.
Theodore O’Neill, Analyst, Litchfield Hills Research: Great. Thanks very much. I wanted to go back and ask about fixed wireless access for business and multi dwelling unit opportunities. It seems like every telco is promoting this right now. And I’m wondering is that do you have any sense if that’s because they’re all discontinuing DSL over copper or it’s bead funding or there’s no fiber access?
What’s driving that and what’s making that work right now?
Pete Smith, President and CEO, Aviat Networks: Well I think one, the buildings in The US are single family housing is not being emphasized, but multi dwelling units or what when I was a kid was known as apartment buildings are being preferred, and they achieve price points. So with that, that’s what’s driving residential units. And then beyond that, with respect to access, in dense cities, fiber makes sense. But as you get away from the urban center, wireless applications become more interesting or more prevalent. Is that helpful, Theo?
Theodore O’Neill, Analyst, Litchfield Hills Research: Yes. And on the Bead program, are you seeing any delays in there that are come about by the government trying to delay certain funding of different programs? Or is that just moving along as you expect?
Pete Smith, President and CEO, Aviat Networks: It’s hard to say that the Bead program is moving along as anyone would expect, but in our script we noted several states that are taking advantage of the technological neutrality and changing the mix from fiber to wireless. So we’re extraordinarily encouraged by that. With that said, we would also say the Bead funding will be impactful in calendar year 2026. One of the problems with BEAT is it’s always been a tomorrow story, tomorrow story. We’ve never put it into our guidance.
It’s still not in. But we’re seeing the most positive signs around BEAT funding flowing that we’ve seen since the program was announced.
Theodore O’Neill, Analyst, Litchfield Hills Research: Okay. Thanks very much.
Conference Operator: Thank you. One moment for our next question that comes from the line of Tim Savageaux with Northland Capital Markets. Please proceed.
Tim Savageaux, Analyst, Northland Capital Markets: Hey, good afternoon and congrats on another strong quarter. My question was relative to your outlook for fiscal twenty twenty six. And in the middle of that range, I think you’re at sort of 4% type growth. And I want to try and relate that to some of the commentary earlier in the call. I think I can’t remember the exact metrics, but you talked about funding increases 5% to 8% in state and local, 11 backlog growth, where it looks like you got basically three quarters in backlog.
So I guess, is there anything out there that’s going the other way that might meet that growth outlook, especially given the weakness you had in September a year ago that you would point us to in relative to what appears
Scott Searle, Analyst, ROTH Capital: to
Tim Savageaux, Analyst, Northland Capital Markets: be a stronger environment? Thanks.
Pete Smith, President and CEO, Aviat Networks: Yes. Tim, it’s a fair question. A year ago, our Q1, we underperformed. And until we put that year over year quarter in the rearview mirror, we want to be conservative. I think you properly noted the environmental drivers and we want to acknowledge that.
And we also want to prove ourselves one more quarter another quarter before we would get ahead of ourselves.
Tim Savageaux, Analyst, Northland Capital Markets: Okay, understood. And then with regard to the Tier one carrier environment, and you could take this both North America and globally, Do you see any kind of differing trends if you look at North American Tier 1s versus your global five gs customers from PASILINK? And then maybe any comments about the carrier versus private network market? Do you see any meaningful difference in growth rates there in 2026?
Pete Smith, President and CEO, Aviat Networks: Okay. Let me start with the last one first. We would think we would anticipate better growth from the private network space compared to the carrier market. Unfortunately, I think we finished up the year a little bit over 55% private networks, 45% that’s about 50 five-forty 5%. So fortunately, our portfolio is aligned with the higher growth segment.
The North American wireless declined going back in 2024, and we see the back half of this year into next year a slight growth. And it’s harder to answer the international segment, but we are weighted towards emerging markets, which don’t have the connectivity that, say, more mature economies have. So that looks to be favorable and that will be we’re project based, so I think some quarters will be good and some quarters will be the demand will be digested. But we think there’s a setup we made a remark in the script about the setup for this year being better than last. And I would say it comes from public safety and utilities in our private network segment and the emerging economies and their connectivity, and that would be on the network operator side.
Conference Operator: Our next question is from Scott Searle with ROTH Capital. Please proceed.
Scott Searle, Analyst, ROTH Capital: Hey, good afternoon. Thanks for taking my questions and congrats on record EBITDA quarter. And Mike, I just want to say it’s been a pleasure working with you and congrats and best of luck in your future endeavors. Guys, maybe to just dive in on the quarter, the revenue mix was heavily skewed towards services and higher gross margins on that front. I’m wondering if you could talk us through some of the dynamics in the June that got us to that point.
And then as we look out immediately into the September, how are you seeing the product revenue correct and gross margins on that front? And then I had a follow-up.
Andrew Fredriksen, Vice President of Corporate Finance and Interim CFO, Aviat Networks: Okay. Yes, Scott, so this is Andrew. On the services versus product for the quarter, services was strong and really the margins were good across all regions and has improved sequentially across all regions. And so part of it is just a mix of the products that we had sorry, the projects we had in the quarter for being higher as a portion of overall revenue. I’d note there particularly that margins improved on our services really across all regions.
Scott Searle, Analyst, ROTH Capital: Got you. And Andrew, looking forward into the September, how does that correct? And maybe to follow-up on Tim’s question earlier, it sounds like there’s a lot of good in what you’re seeing. It sounds like demand environment seems pretty healthy. Private networks seem like they’re starting to build both from a government federal standpoint, local standpoint as well as private as well.
And it seems like the carrier environment is even recovering at least from a Tier one North American standpoint. So is it conservatism that you’re just looking at the fiscal twenty twenty six outlook? Or is there something specifically going on from the services and more project based revenues that just is for translates to some more immediate caution in the September and December quarters? Thanks.
Pete Smith, President and CEO, Aviat Networks: Yes. Look, Scott, our business is lumpy or episodic or project based. And we see the builds quarter over quarter. We see Q1 to be the low point in the quarter. Q2 and Q3 are likely to be even with each other and Q4 should be the highest.
So I mean, it could be Q1 low, Q2 high, Q3 a little bit back and Q4 the highest to get, which is our emerging pattern as we have as our portfolio, we lap year over year, we’re getting more used to operating core well, let’s go back in time core Aviat, the PassLink portfolio and the four hour F Priza. So that’s why understanding the revenue cycles for each of those customer bases has a bit of a challenge with respect to the seasonality or calendarization, and this is what we’re feeling comfortable with given our history with the whole portfolio.
Scott Searle, Analyst, ROTH Capital: Okay. Thanks. Congrats on the quarter again. I’ll get back in the queue.
Conference Operator: Thank you. As I see no further questions in the queue, I will conclude the Q and A session and pass it back to Mr. Smith for concluding comments.
Pete Smith, President and CEO, Aviat Networks: Okay. Thanks everyone for jumping on the call on short notice. We look forward to updating you after our September gets done and we get ready to publish our next set of results. Again, thanks everyone. Bye.
Conference Operator: And with that, we thank you for participating in today’s conference. You may now disconnect.
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