Vecima Networks Q4 2026 Earnings Call Transcript

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September 24, 2026

Key Takeaways

  • Positive Sentiment: Record fourth-quarter performance—revenue rose 36% year over year to CAD 91 million, adjusted EBITDA more than tripled to CAD 18.9 million, and adjusted EBITDA margin reached 20.8%.
  • Positive Sentiment: The VBS segment was the primary growth engine, with revenue up 38% to CAD 80.1 million and Entra sales up 42% to CAD 77.3 million, driven by accelerating DAA deployments, including increased deliveries to Charter Communications.
  • Positive Sentiment: Management raised its outlook to 27%–32% revenue growth for calendar 2026 and 30%–35% growth for fiscal 2027, while targeting approximately 20% adjusted EBITDA margins in both periods.
  • Positive Sentiment: Vecima cited a broadening customer and product base, including 77 Entra customers, seven vCMTS wins, growing fiber-access demand, and new opportunities in Terrace IQ, XGS-PON, DOCSIS 4.0, and 50G-PON.
  • Neutral Sentiment: Cash flow and leverage improved, with quarterly operating cash flow of CAD 24.8 million and net debt declining to CAD 40.7 million; however, management said vCMTS, XGS-PON, and BEAD-related contributions should be limited in fiscal 2027 and become more meaningful from fiscal 2028 onward.
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Earnings Conference Call
Vecima Networks Q4 2026
00:00 / 00:00

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Operator

Hello, this is the chorus call conference operator. Welcome to Vecima Networks' fourth quarter and full-year fiscal 2026 results conference call and webcast. As a reminder, all participants are in a listen-only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. Analysts and institutional investors who wish to join the question queue, simply press star and one on your touchtone phone. You will hear a tone acknowledging your request. If you are using a speakerphone, please pick up the handset before pressing any keys. Should you need assistance during the conference call, you may signal the operator by pressing star and zero. Presenting today on behalf of Vecima Networks are Sumit Kumar, President and CEO, and Judd Schmid, Chief Financial Officer.

Operator

Today's call will begin with executive commentary on Vecima's financial and operational performance for the fourth quarter and full-year fiscal 2026 results. Lastly, the call will finish with a question and answer session period for analysts and institutional investors. The press release announcing the company's fourth quarter and full-year fiscal 2026 results, as well as detailed supplemental investor information, are posted on vecima.com under the investor relations heading. The highlights provided in this call should be understood in conjunction with the company's audited annual consolidated financial statements and accompanying notes for years ended June 30, 2026 and 2025. Certain statements in this conference call and webcast may constitute forward-looking statements within the meaning of applicable securities laws, from which Vecima's actual results could differ. Consequently, attendees should not place undue reliance on such forward-looking statements.

Operator

All statements other than statements of historical fact are forward-looking statements. These statements include, but are not limited to, statements regarding management's intentions, beliefs or current expectations with respect to market and general economic conditions, future sales and revenue expectations, future costs, and operating performance. These statements are not guarantees of future performance and involve risks and uncertainties that are difficult to predict and/or are beyond our control. Vecima disclaims any intention or obligation to update or revise any forward-looking statements as a result of new information, future events, or otherwise, except as required by law. Please review the cautionary language in the company's fourth quarter and full-year fiscal 2026 earnings report and press release, as well as its annual information form dated September 24, 2026, regarding the various factors, assumptions and risks that could cause actual results to differ.

Operator

These documents are available on vecima.com under the investor relations heading and on SEDAR at www.sedarplus.ca. At this time, I would like to turn the conference over to Mr. Kumar to proceed with his remarks. Please go ahead.

Sumit Kumar
Sumit Kumar
President and CEO at Vecima Networks

Good morning and welcome everyone. Thank you for joining us. We closed out Vecima's fiscal 2026 year with a breakthrough fourth quarter that included our best ever quarterly financial results and another increase to our outlook. I will start today with an overview of our Q4 highlights and of course, some of the high level achievements all through the past year. Judd will provide our fourth quarter financial review. Then I will return to discuss the significant growth we see out ahead before opening the call to your questions. As a result of the divestiture of the telematics business in July, our remarks today are going to focus on the remaining continuing operations of our VBS and CDS segments only. Fourth quarter was the strongest in Vecima's history.

Sumit Kumar
Sumit Kumar
President and CEO at Vecima Networks

As widescale DAA rollouts gained momentum, our Q4 consolidated revenues climbed 36% year-over-year to a record CAD 91 million, and 45% sequentially quarter-over-quarter. Q4 adjusted EBITDA more than tripled year-on-year to an all-time high of $18.9 million, achieving adjusted EBITDA margins of 20.8% in the quarter. These were deeply satisfying results, but I want to emphasize that they reflect just the early returns on Vecima's long-term strategy. As you know, broadband operators worldwide have been preparing for a once in a generation technology transition to Distributed Access Architecture and DOCSIS 4.0 for many years now they have been preparing. Vecima has played a key role in this evolution, leveraging our deep experience and technical strengths and partnering closely with customers to provide them the innovative, interoperable technologies that underpin these network transformations.

Sumit Kumar
Sumit Kumar
President and CEO at Vecima Networks

It has taken sharp focus, significant investment, and an unwavering strategy to build the industry's most comprehensive portfolio of DAA cable broadband, and fiber to the home broadband access platforms. Today, we have emerged as a leading global force in the next generation broadband access. As widescale rollouts of these network upgrades, those widescale rollouts translate into ramp in demand for our solutions, and that is part of a wave that is really just starting to build. In our Video and Broadband Solutions segment, fourth quarter revenue climbed to a record $80.1 million, up 38% year-over-year as demand and sales for our next gen Entra DAA products accelerated. This was driven in part by a significant ramp-up of deliveries to Charter Communications as we support the expansion of their DAA rollout under our multi-year cable and fiber agreement with this leading tier one operator customer.

Sumit Kumar
Sumit Kumar
President and CEO at Vecima Networks

It also reflects our growing relationships with a large and ever-expanding base of operators worldwide. By year-end, we had broadband engagements with 150 customers, an increase of more than 100 customers over just a few short years. The expansion and deepening of our customer base also contributed to very strong sales for our Entra Optical products, led by our SF-4X Optical Line Terminals for fiber to the home. Vecima was already the number one global market leader for Remote OLT terminals, so this further builds on our position, and it underscores Vecima's increasingly important role as a critical supplier in the fiber to the home space, supported by our 10 gig-plus fiber broadband capabilities. Shipments of our new ERM3 Remote PHY modules also rose sharply in the quarter as we supported our customers' ongoing network upgrades. Demand continued to grow for our highly successful EN9000 GAP nodes.

Sumit Kumar
Sumit Kumar
President and CEO at Vecima Networks

As we've discussed previously, the EN9000 provides operators with a flexible foundation that supports evolving DOCSIS and fiber to the home technologies while reducing the need for future hardware replacements. This underscores a significant network incumbency advantage that our very broad footprint of deployed access platforms has now established. Combined, Entra platforms are now providing multi-gigabit broadband connections to tens of millions of homes, and we expect this increasingly deep footprint to evolve through multiple generations of further broadband investment, allowing Vecima to monetize our widely deployed base of Entra platforms for years to come. Keep in mind that while achieving all-time record results from our existing Entra portfolio in Q4, we're also advancing new technologies that we expect will become a major new series of growth engines for Vecima.

Sumit Kumar
Sumit Kumar
President and CEO at Vecima Networks

We made significant progress with our vCMTS solution in Q4, progressing trials with our lead tier one customer, while also signing new agreements with additional major customers, including Videotron, a large tier one operator in Canada. We now count seven vCMTS wins, including two tier ones so far, with many new customers engaged, including several more tier ones, twos, and threes. In our commercial video portfolio, our next gen Terrace IQ solution has also been gaining broad traction. Subsequent to year-end, a major North American tier one operator selected Terrace IQ for a broad commercial video network modernization spanning thousands of locations and properties. In just the last year, we secured multiple new design wins for Terrace IQ and other customers as well, including three tier ones and an additional tier two.

Sumit Kumar
Sumit Kumar
President and CEO at Vecima Networks

Taken together, these achievements are setting the stage for sustained growth in the VBS segment, both in the near and the long term, and we fully expect to build further on the all-time highs we just produced. I'll talk more about that a little later in the call. Turning to Content Delivery and Storage, the segment generated double-digit Q4 revenue growth, both year-over-year and quarter-over-quarter, as uptake of managed IPTV installations expanded. We also made excellent progress with our targeted dynamic ad insertion solution as we continue to deploy phase II with our lead customer, Hotwire Communications. DAI enables operators to deliver targeted, personalized advertising experiences, increasing video ARPU without having to increase the rates to customers. Overall, it was an outstanding quarter for Vecima, and one that marked a major milestone as we now embark on a significant new phase of growth.

Sumit Kumar
Sumit Kumar
President and CEO at Vecima Networks

To ensure that we're positioned to take advantage of the exciting opportunities ahead, we've also undertaken some important strategic initiatives in recent months. In July, we divested our telematics business, enabling us to sharpen our focus on the fast-growing broadband access and streaming video businesses while also boosting our balance sheet. In August, we announced two executive leadership appointments that'll help support us on our path forward. While I'll remain, of course, the CEO of Vecima, we've elevated Clay McCreery to President and Chief Operating Officer focused on Vecima's strategic performance and long-term growth. Ryan Nicometo, who previously led our VBS segment as GM, has been promoted to the newly created Chief Product Officer role, where he's focused on executing a unified product strategy all across our platforms.

Sumit Kumar
Sumit Kumar
President and CEO at Vecima Networks

These appointments not only strengthen our leadership structure, they also recognize the important contributions Clay and Ryan have made to Vecima for many years now. I'll turn the call over to Judd to discuss our fourth quarter results financials in more detail. Judd?

Judd Schmid
Judd Schmid
CFO at Vecima Networks

Thanks, Sumit. Good morning, everyone. I'll walk through our fourth quarter financial performance in more detail. For the purposes of this call, I'll assume that everyone has seen our Q4 fiscal 2026 news release, MD&A, and financial statements posted on Vecima's website. Please refer to today's news release and our MD&A for definitions and reconciliations of the non-IFRS financial measures I'll be referencing. As we've said over the past few months, we expected the fourth quarter of fiscal 2026 to mark the start of an accelerated growth period for Vecima, and that's exactly what played out. This quarter's results came in as we anticipated. As Sumit noted, the results I'll be discussing today reflect the continuing operations of our VBS and CDS segments. Results from our telematics segment, which we sold in July 2026, are reported as discontinued operations and are not part of my commentary today.

Judd Schmid
Judd Schmid
CFO at Vecima Networks

Starting with consolidated sales, fourth quarter revenue grew sharply to a record $91 million, an increase of 36% year-over-year and 45% quarter-over-quarter. Our video and broadband solutions segment contributed a record $80.1 million of this revenue, up 38% year-over-year and 53% higher than in Q3. Our next generation Entra DAA products remained the key revenue driver in our VBS segment, with record Entra sales of $77.3 million, growing 42% year-over-year and 57% on a sequential quarterly basis. Commercial video sales added another $2.8 million to our VBS results in the quarter, reflecting the continued transition to next generation platforms, as well as some of our newer DAA-driven commercial video products now included in our Entra family revenues.

Judd Schmid
Judd Schmid
CFO at Vecima Networks

In our Content Delivery and Storage segment, fourth quarter revenues came in at $10.8 million, up 26% from the same period last year and 1% higher than in Q3. Fourth quarter CDS revenue included $4.9 million in product sales and $5.9 million in service revenues. As we typically note, quarterly fluctuations are typical for the CDS segment. Gross margin improved significantly in the fourth quarter to 45.4%, up from 26.3% in the fourth quarter last year. Adjusted gross margin rose to 45% in Q4, up from 36.7% in the fourth quarter of fiscal 2025. That strong year-over-year improvement largely reflects the absence of last year's significant inventory write-down and unfavorable product mix, along with a greater proportion of higher margin Entra Optical and software sales in this year's mix.

Judd Schmid
Judd Schmid
CFO at Vecima Networks

Sequentially, both gross margin and adjusted gross margin were somewhat lower than in Q3, reflecting a modestly less favorable product mix. Turning now to fourth quarter operating expenses on a year-over-year basis, OPEX of $29 million was down $5.7 million year-over-year, and on a sequential basis, increased slightly by $600,000 from Q3. R&D expenses for the fourth quarter increased to $12.6 million, or 14% of sales, from $11.7 million or 18% of sales last year. This was primarily a result of higher amortization of deferred development cost as more of our development investments moved into commercial production. This is offset by higher capitalized development costs related to our future product offerings.

Judd Schmid
Judd Schmid
CFO at Vecima Networks

As we mention each quarter, we defer some of our R&D expenditures to future periods until our products begin commercialization, and so reported R&D expense in a period is typically different than the actual cash outlay. Adjusting for this, our actual cash R&D investment was $16.9 million or 19% of revenues in the fourth quarter, up from $15.3 million or 23% of revenues a year ago as we continue to prioritize our investment in future product development and our innovation pipeline. Sales and marketing expenses decreased slightly to $9.2 million or 10% of sales from $9.4 million or 14% of sales last year, reflecting operating leverage in our sales and marketing cost base and continued discipline in variable selling costs. G&A expenses of $6.7 million or 7% of sales were up from $6.2 million or 9% of sales in the same period last year.

Judd Schmid
Judd Schmid
CFO at Vecima Networks

We remain focused on closely monitoring our operating expenses, and we don't anticipate significant OPEX increases in the near term. Continued discipline on our OPEX is a key part of how we get to our bottom line financial goals. We continue to incur interest expense related to our revolving line of credit, other debt, and accounts receivable factoring programs. With debt levels expected to come down and cash flow continuing to improve, we anticipate lower interest expense in 2027. A quick note on taxes. Our effective tax rate of 41% is higher than usual, primarily due to the write-offs of the B.C. generated investment tax credits in Canada related to our telematics business and provision to return adjustments in both Canada and the U.S.

Judd Schmid
Judd Schmid
CFO at Vecima Networks

That being said, we pay virtually no cash taxes in fiscal 2026 thanks to our substantial bank of tax attributes in Canada, and also changes to the U.S. tax laws regarding the deductibility of R&D expenses. We may see some cash taxes in the U.S. in fiscal 2027, depending upon how results come in, but we expect our effective tax rate to be much lower than this past quarter. Turning to the bottom line, we significantly strengthened fourth quarter operating income to $12.3 million, compared with a loss of $17.1 million in the same period last year. The $29.4 million improvement primarily reflects higher VBS segment sales, combined with lower impairment expense and inventory allowances as compared with a year ago.

Judd Schmid
Judd Schmid
CFO at Vecima Networks

Net income also improved this quarter, coming in at $5.4 million or $0.22 a share from a net loss of $13.3 million or $0.55 loss per share in the fourth quarter of fiscal 2025. A huge improvement. Adjusted earnings per share for the fourth quarter grew to $0.21 per share from a loss of $0.06 per share last year. Turning to the balance sheet, working capital continues to improve, with working capital being $62.9 million at June 30, 2026, which increased from $51.2 million at June 30, 2025, reflecting our efforts to pay down our debt. Cash flow provided by operations for the fourth quarter increased to $24.8 million from $18.9 million during the same period last year, driven mainly by current period results rather than changes in working capital.

Judd Schmid
Judd Schmid
CFO at Vecima Networks

Finally, our net debt position, defined as total debt less cash and lease liabilities, continues to improve. At year-end, our total net debt stood at $40.7 million, which is down from $54.4 million at the end of Q3. Going forward, we will keep focusing on strengthening our balance sheet through further debt reductions. On a final note, the board of directors approved a quarterly dividend of $0.055 per common share, payable on November 9 to shareholders of record as of October 16, 2026. It is important to note that this dividend will be designated as an eligible dividend for Canadian income tax purposes. Now back to Sumit.

Sumit Kumar
Sumit Kumar
President and CEO at Vecima Networks

Thank you, Judd. Our long-term strategy of positioning Vecima at the forefront of a transforming industry is translating into the strong and profitable growth we saw in the fourth quarter, and we are confident this is just the beginning of the growth ahead. You will recall that in our last outlook, we raised our projection for calendar 2026 revenue growth to 22.5%-30%. Today, we increased that further, with calendar 2026 revenue expectations now rising to 27%-32% growth versus calendar 2025. Looking further ahead, we expect our momentum to keep building through fiscal 2027, with a revenue growth outlook of 30%-35% versus fiscal 2026. Based on our projected demand profile, we are also anticipating a very strong adjusted EBITDA margin of approximately 20% in both calendar 2026 and fiscal 2027.

Sumit Kumar
Sumit Kumar
President and CEO at Vecima Networks

We expect, of course, our growth to be led by our video and broadband solutions segment as we continue to support both our lead tier one and 76 other customers in their widescale DAA network deployments. These are major multi-year upgrade programs encompassing our Entra Remote PHY products, including our EN9000 and ERM RPD platforms, and our Entra Optical fiber access platform centered around fiber to the home Remote OLT nodes. We are building on our revenue base as we increase deployment of newer Entra products across multiple customers. Those include, for example, the EN3400, a new smaller version of the EN9000 GAP node, the EEM210 standalone 10G-EPON module, and our Power over Ethernet modules. As we move forward, our fiber access products are playing an increasingly important role as operators expand fiber to the home deployments and invest in next gen architectures.

Sumit Kumar
Sumit Kumar
President and CEO at Vecima Networks

As a recognized leader in Remote OLT technology, and with support for standards like XGS-PON and the emerging 50G-PON and all PON architectures, we are ideally positioned to be a major player in the global expansion of fiber to the home networks. In our Content Delivery and Storage segment, we are anticipating steady overall operating performance as we continue to focus on driving revenue growth through both managed IPTV expansions and our rollout of DAI. Beginning next quarter, results in this segment will encompass our commercial video portfolio, including Terrace IQ, which is expected to start providing meaningful contribution as the 2027 fiscal year progresses.

Sumit Kumar
Sumit Kumar
President and CEO at Vecima Networks

That change in the segments aligns our reporting segments going forward with the sales execution and the market characteristics that are common between our MediaScale IP video platforms and the Terrace portfolio, while also providing some more direct visibility into results for our cable and fiber broadband platforms. As of next quarter, the two operating segments we report under will be Content Delivery Solutions and Broadband Access Solutions. As we enter fiscal 2027, fresh off all-time highs in revenue and adjusted EBITDA, we see a broad and compelling growth runway ahead. Vecima's continued expansion across new platforms, design wins, and customer relationships, together with a network footprint that is underpinning broadband access for millions of homes and businesses worldwide, positions us for continued momentum for years to come.

Sumit Kumar
Sumit Kumar
President and CEO at Vecima Networks

Notably, our 30%-35% growth outlook for fiscal year 2027 contemplates only the early stages of contribution from Entra vCMTS and DOCSIS 4.0 RPDs, XGS-PON, and several other platforms now entering the market, which we expect will be increasingly meaningful drivers of performance in fiscal 2028 and beyond. Our broad and innovative portfolio of interoperable cable and fiber broadband access products and IPTV solutions gives us multiple engines for growth, with Vecima at the forefront of the technology shaping future network architectures. Against that backdrop of accelerating widescale multi-gig broadband adoption, Vecima is really ideally positioned to remain a leader in a multi-year infrastructure investment pipeline as it grows to greater scale. We have never been more confident in Vecima's future.

Sumit Kumar
Sumit Kumar
President and CEO at Vecima Networks

The opportunities before us are substantial, with multiple catalysts across our product portfolio and customer base still in the early stages of realization, and we look forward to executing on them and reporting on our progress in the periods ahead. That concludes our formal comments for today. We would now be happy to take questions. Operator?

Operator

Thank you. We will now begin the question and answer session for analysts and institutional investors. To join the question queue, you may press star then one on your telephone keypad. You will hear a tone acknowledging your request. If you are using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, please press star then two. We will pause for a moment as callers join the queue. The first question will come from Jim Byrne with Acumen Capital. Please go ahead.

Jim Byrne
Jim Byrne
Analyst at Acumen Capital

Yeah, good morning, guys. Just thinking about production capacity, and your exposure to U.S. tariffs. I know you would move some manufacturing down there in the past couple of years, pushing here $400 million in sales annualized. Just thoughts on further requirements to move manufacturing down there or maybe just commentary on production capacity today and how that positions you for the tariff situation.

Sumit Kumar
Sumit Kumar
President and CEO at Vecima Networks

Yeah. Thanks, Jim. I think I've said for some time that we've envisioned the growth upcoming here and the production capacity is well situated for that, both in our Canadian operations as well as our international partners in contract manufacturing. We believe we've set up for the scale that's required very well there, and then there's room to add further shifts into that manufacturing operation. And that team's been built up to do so. From the perspective of the revenue envelope, we've got a lot of growth that we can work towards ahead. I think on the tariff side, like many other companies, not just those with this large Canadian presence, but all around the world, global companies have faced a bit of this heightened uncertainty since early 2025 with how the U.S. is shifting their approach to trade.

Sumit Kumar
Sumit Kumar
President and CEO at Vecima Networks

While the nature of our industry does mean at the moment that a high amount of our sales, of course, are to U.S. customers, I think what I've tried to outline since the beginning of that changing environment is that Vecima has always been very strategically well positioned by design. For almost 40 years now, we've been this broadband technology leader. We've always maintained full control and ownership, and in-house designed IP in our manufacturing process. In addition, of course, to the IP in our design and product designs and software and hardware. That's a bit of a contrast to other organizations that might completely outsource their manufacturing. But Vecima's always owned that process and all the designs thereof.

Sumit Kumar
Sumit Kumar
President and CEO at Vecima Networks

The reasons for that have been many, not just on the trade side, but we have this complete agility in volumes and the production and product mix, quick turns on design changes, and the ability that we have to manage through and pivot around some of the supply chain challenges that we've seen in recent years between the pandemic and the memory stuff that is going on. The integration of acquisitions we have done, where we have already exercised that capability to move a manufacturing several times and as we have digested and integrated those acquisitions. I think all that is to say is, as this heightened trade uncertainty came up in the U.S., we had this very strong inherent capability to manage it as in the way that we have always built our products, again, where we own that complete design manufacturing process.

Sumit Kumar
Sumit Kumar
President and CEO at Vecima Networks

The most recent situation with the tariffs that came into effect in the summer, we have already made any needed adjustments, and those are actually quite minor in practice. As unpredictable as that environment may be going forward region by region and how the U.S. is doing trade, given where we are at today, what we have said with our outlook, it encompasses anything that is applicable. It is quite narrow in scope in terms of exposure there. Our overall sales profile has got that well managed and in isolated cases that there are some tariffs that are in effect. Our ASPs have handled that well and with a small exposure while still being totally competitive, and gaining the market share anyway. Overall, we are quite satisfied with our position and this core competency again has allowed us to be agile there.

Jim Byrne
Jim Byrne
Analyst at Acumen Capital

Okay, that is really helpful. Then maybe for you, Judd, just thinking about, with this ramp up in growth and sales, maybe just talk about the working capital here for FY 2027. I would assume that you probably need some investment, maybe just in inventories, and change in AR, but maybe just help me understand that working capital situation.

Judd Schmid
Judd Schmid
CFO at Vecima Networks

Yeah, Jim, we see a steady growth over the quarters of the year with really not a lot of growth in inventory other than to just make sure we have the goods on hand to get them back out the door, but it is not going to be anything like it was a couple of years ago where things got a little large on that side. AR will naturally grow depending upon timing of when those sales take place, but overall, we should be generating cash, paying down our debts and using those funds to reinvest in the company. But we do see some working capital improvements throughout the year.

Jim Byrne
Jim Byrne
Analyst at Acumen Capital

Okay, and then maybe just lastly, Sumit, I guess obviously visibility must be good with your revised outlook. Maybe what could go wrong? We've had some hiccups in the past with some major customers shifting their plans. Would that potentially happen again? Or you just feel like you've got enough of a broad-based exposure now that no single customer can really sideline this outlook?

Sumit Kumar
Sumit Kumar
President and CEO at Vecima Networks

No, I think it's more on the latter side, that we've got this broad base. I think I mentioned that, we have 77 customers into the Entra platforms today. Yeah, I think you're right. It's taken a lot of time for the industry to get to this phase, where we're accelerating the rollout of cable access and fiber access all across the industry. Of course, I think, complex programs, a lot of planning, a lot of qualification that the industry has gone through, our customers have gone through, over the last several years. That's behind us and you've seen that show up in our results. We think that the industry is on the move on this transformation. It's mandatory to go to multi-gig, it's mandatory for operators to be competitive with their offerings. AI traffic is doubling the capacity need of the broadband access network going forward.

Sumit Kumar
Sumit Kumar
President and CEO at Vecima Networks

The industry has to move. We're on that now. 77 customers and we expect things to be more broad-based and some of those challenges have been overcome that we encountered in the past as an industry.

Jim Byrne
Jim Byrne
Analyst at Acumen Capital

Okay. Thanks, Chris.

Sumit Kumar
Sumit Kumar
President and CEO at Vecima Networks

Thanks, Jim.

Operator

The next question will come from Steven Li with Raymond James. Please go ahead.

Steven Li
Steven Li
Analyst at Raymond James

Hey, thanks. Can I ask you about BEAD? Is there any activity at this point?

Sumit Kumar
Sumit Kumar
President and CEO at Vecima Networks

BEAD has gone through its scenarios in terms of the differing U.S. administrations and their handling of that. Some awards have been made in the last year and a half or so. Our customers are also participating. We do expect some contribution to enter the picture through fiscal 2027. I think still, predominantly, the ARPA program is ongoing. That's a primary subsidy program that our customers are leveraging and doing really well with. I also want to point out that some of the greenfield fiber build has become a very meaningful component of our Entra Optical sales and uptake from customers today. We're also seeing new subdivisions. We're seeing areas where it makes commercial sense for them to have a close drop of fiber all the way to the premise. That's happening at a broader pace today. Subsidy activity is ongoing.

Sumit Kumar
Sumit Kumar
President and CEO at Vecima Networks

BEAD is yet to come, but probably not too consequential for us within the boundary of fiscal 2027. I think it is reaching the culmination of all this churn in terms of getting to the point of the U.S. rolling out.

Steven Li
Steven Li
Analyst at Raymond James

Can it become consequential beyond 2027? Or just relative to RDOF it is not going to be the same kind of, for your customers, it is not going to be the same kind of magnitude?

Sumit Kumar
Sumit Kumar
President and CEO at Vecima Networks

I think our customers are viewing it as an incremental piece that helps for some subsidies. I do not think it is going to be as material for them as RDOF. As a whole, lots of new capacities are going to roll out on BEAD. We have got a very broadly applicable platform, both our 10G-EPON and our XGS-PON moving to 50G-PON solutions. The current customer set, may be a little more focused on greenfield and RDOF, but as the BEAD rollout starts to happen, we are excited about how that plays into the overall TAM for ITU PON, XGS-PON, and how we can participate there in that much larger TAM.

Steven Li
Steven Li
Analyst at Raymond James

Okay. Got it. Thanks. I missed what you said on vCMTS, how many customers in trials? I guess you have two tier ones generating revenues, is that right?

Sumit Kumar
Sumit Kumar
President and CEO at Vecima Networks

Oh, yeah, we talked about seven overall customers, design wins you could call them. The tier ones are moving forward in deepening trials through calendar 2026, leading to likelihood of some, in fact, customer-facing market trials in some major markets this year. I think you need to think about. When I said seven, there's the two tier ones we've talked about, the lead. We announced Videotron recently, that has selected us as well, with an agreement there for vCMTS. That's all in the future. Actually, I think when we talk about the 30%-35% growth envelope for fiscal 2027, actually there's not too much contribution from vCMTS, or even XGS within those results yet. That we see as being a more meaningful growth driver in fiscal 2028 and beyond. The five other customers are some smaller customers.

Sumit Kumar
Sumit Kumar
President and CEO at Vecima Networks

We're racking those up pretty quickly today. Some of those are already into deployment.

Steven Li
Steven Li
Analyst at Raymond James

Okay. Thank you.

Sumit Kumar
Sumit Kumar
President and CEO at Vecima Networks

Thanks, Steven.

Operator

Once again, analysts and institutional investors who would like to ask a question should press star and one on their touchtone phone. We will pause for a moment so any additional callers may join the queue. As there appear to be no further questions, this concludes today's conference call. You may now disconnect your lines. Thank you for participating and have a pleasant day.

Executives
    • Sumit Kumar
      Sumit Kumar
      President and CEO
    • Judd Schmid
      Judd Schmid
      CFO
Analysts
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