Vecima Networks Q1 Earnings Call Highlights

Key Points

• Vecima posted record Q1 revenue, up 37.5% year over year to CAD 95.1 million, while adjusted EBITDA rose 72% to CAD 18.7 million. Growth was led by broadband access sales, including Charter-related demand, and shipments of its TerraceIQ video platform.
• The company maintained its fiscal 2027 outlook for 30%–35% revenue growth and an approximately 20% EBITDA margin, though some Entra deliveries shifted from late Q2 to early Q3. It expects calendar 2026 revenue growth of about 20%.
• Margins face pressure from product mix and elevated memory costs: Vecima expects fiscal 2027 gross margin to be below its long-term 45%–49% target range, with software and fiber contributions expected to help in fiscal 2028.

Vecima Networks TSE: VCM reported record revenue for its fiscal first quarter as broadband equipment demand and a commercial video upgrade helped drive growth, while the company reiterated its full-year revenue outlook despite a shift in some customer deliveries.

Revenue from continuing operations rose 37.5% year over year to CAD 95.1 million for the quarter ended September 30, 2026. Adjusted EBITDA increased 72% to CAD 18.7 million, with the margin expanding to 19.7% from 15.7% a year earlier.

President and CEO Sumit Kumar said the results were led by broadband access products, including sales to Charter under a multiyear agreement supporting its network rollout. Revenue also grew in Vecima’s content delivery business as it began shipping its TerraceIQ commercial video platform to a major North American operator.

Broadband and Video Sales Climb

Broadband access solutions revenue increased 39% to CAD 76.5 million, just below the segment’s record CAD 77.3 million in the preceding quarter. Content delivery solutions revenue rose 32% year over year to CAD 18.6 million and increased 36% sequentially.

Vecima said it had broadband engagements with 162 customers at quarter-end, up 22 from a year earlier. Kumar said the company had more than 300 individual product engagements across cable broadband and fiber-to-the-home technologies.

Demand was strong for the EN9000 node platform, while deliveries of the smaller EN3400 node increased. Kumar said sales also rose significantly for the next-generation ERM3 Remote PHY devices used with those platforms. He described the EN9000 as a lower-margin product on its own, but one that can support sales of higher-margin access modules in future periods.

In software, Kumar said Vecima had secured multiple wins for its virtual cable modem termination system, including two North American tier-one operators. The company made progress toward field trials with its lead tier-one customer and expanded trials with Canadian operator Vidéotron.

For TerraceIQ, Vecima delivered the first tranche of platforms to a major North American tier-one operator during the quarter. Kumar said that customer’s modernization is expected to span thousands of locations. Vecima has design wins with five tier-one operators and numerous tier-two operators, he added.

Margins and Earnings

Reported gross margin edged up to 41.6% from 41.4% a year earlier but fell from 45.4% in the preceding quarter. CFO Judd Schmid attributed the sequential decline to a less favorable broadband product mix and lower margins in content delivery. Adjusted gross margin was 41.9%, down from 43.3% a year earlier.

Operating expenses rose to CAD 30.7 million from CAD 26.9 million, but fell as a share of revenue to 32% from 39%. Operating income increased to CAD 8.8 million from CAD 1.7 million.

Net income from continuing operations was CAD 5.9 million, or CAD 0.24 per share, compared with CAD 100,000, or nil per share, a year earlier. Including CAD 5.6 million of income from discontinued operations, primarily reflecting the gain on the sale of the Telematics business, total net income was CAD 11.5 million, or CAD 0.47 per share.

Cash flow provided by operations rose to CAD 13.2 million from CAD 6.8 million. Net debt decreased to CAD 24.9 million from CAD 40.7 million at the end of the prior quarter, helped by initial proceeds of CAD 14.5 million from the Telematics sale.

Delivery Timing and Outlook

Vecima continues to expect fiscal 2027 revenue growth of 30% to 35% and an EBITDA margin of approximately 20%. However, Kumar said some Entra deliveries previously expected late in the fiscal second quarter have shifted to early in the third quarter because of customer timing.

The company revised its calendar 2026 outlook to approximately 20% revenue growth from calendar 2025, with an adjusted EBITDA margin of about 18%. Kumar characterized the shift as a timing change rather than a broader delay in the rollout and said the company’s largest customer remains in the early stages of its network upgrade.

Kumar also said elevated memory costs and product mix are pressuring margins. Vecima expects fiscal 2027 gross margin to be somewhat below its long-term target range of 45% to 49%, with a greater software and fiber product contribution expected to support margins in fiscal 2028.

Vecima’s board approved a quarterly dividend of CAD 0.055 per common share, payable December 21, 2026, to shareholders of record on November 27.

About Vecima Networks (TSE:VCM)

Vecima Networks Inc. TSX: VCM builds the intelligent infrastructure powering the next generation of connectivity. Through broadband access, content delivery, cloud-native software, automation, and AI-enabled solutions, Vecima helps service providers modernize cable and fiber networks, deliver exceptional broadband and video experiences, and operate more intelligent, efficient networks. As operators evolve toward AI-enabled, software-driven architectures, Vecima's platforms simplify operations, accelerate innovation, and enable the reliable, high-performance networks that connect homes, businesses, and communities around the world.

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