Vecima Networks Q4 Earnings Call Highlights

Key Points

• Record quarterly performance: Vecima Networks’ Q4 revenue increased 36% year over year to C$91 million, while adjusted EBITDA more than tripled to C$18.9 million. Net income was C$5.4 million, reversing a loss of C$13.3 million in the prior-year quarter.
• Broadband demand drove growth: Video and Broadband Solutions revenue rose 38% to C$80.1 million, led by a 42% increase in Entra DAA sales and expanding deployments with cable and fiber operators, including Charter Communications.
• Outlook strengthened: Vecima raised its calendar 2026 revenue-growth forecast to 27%–32% and expects fiscal 2027 revenue growth of 30%–35%, with continued momentum from DAA upgrades and emerging platforms such as vCMTS and XGS-PON.

Vecima Networks TSE: VCM reported record fourth-quarter revenue and adjusted EBITDA for fiscal 2026, driven by accelerating deliveries of its distributed access architecture, or DAA, broadband products and higher demand from cable and fiber network operators.

President and CEO Sumit Kumar said the company’s fourth quarter marked the beginning of an accelerated growth period as operators move toward DAA and DOCSIS 4.0 network upgrades. The company’s results discussed on the call exclude its telematics business, which Vecima divested in July.

Consolidated fourth-quarter revenue rose 36% year-over-year and 45% sequentially to a record C$91 million. Adjusted EBITDA more than tripled from the prior-year period to C$18.9 million, producing an adjusted EBITDA margin of 20.8%.

Broadband segment leads quarterly growth

Vecima’s Video and Broadband Solutions segment generated record revenue of C$80.1 million in the fourth quarter, up 38% from a year earlier and 53% from the preceding quarter. Sales of Entra DAA products reached C$77.3 million, increasing 42% year-over-year and 57% sequentially.

Kumar attributed the increase partly to a ramp in deliveries to Charter Communications under the companies’ multiyear cable and fiber agreement. He also cited the company’s broader operator relationships, saying Vecima had broadband engagements with 150 customers at year-end, up by more than 100 customers over several years.

Sales were also supported by demand for Entra Optical products, including SF-4X Optical Line Terminals used in fiber-to-the-home deployments. Kumar said shipments of ERM3 Remote PHY modules rose sharply during the quarter, while demand continued for the company’s EN9000 GAP nodes.

In addition to existing products, Vecima said it advanced trials of its virtual cable modem termination system, or vCMTS, platform with a lead Tier 1 customer and signed agreements with additional customers, including Canadian operator Videotron. Kumar said the company has seven vCMTS design wins, including two Tier 1 customers. He said vCMTS is expected to become a more meaningful contributor in fiscal 2028 and beyond rather than fiscal 2027.

Following the end of the fiscal year, a major North American Tier 1 operator selected Vecima’s Terrace IQ platform for a commercial-video network modernization covering thousands of locations and properties, Kumar said. During the past year, the company secured multiple Terrace IQ design wins, including three Tier 1 customers and another Tier 2 customer.

Margins, earnings and cash flow improve

Chief Financial Officer Judd Schmid said fourth-quarter gross margin rose to 45.4%, from 26.3% a year earlier. Adjusted gross margin increased to 45%, from 36.7%. The year-over-year improvement reflected the absence of significant inventory write-downs and unfavorable product mix from the prior year, as well as a greater share of higher-margin Entra Optical and software revenue, Schmid said.

Operating expenses totaled C$29 million, down C$5.7 million from a year earlier. Research and development expense was C$12.6 million, while actual cash R&D investment was C$16.9 million, or 19% of revenue. Schmid said the company continues to prioritize future product development while maintaining discipline over operating expenses.

Operating income was C$12.3 million, compared with an operating loss of C$17.1 million in the prior-year quarter. Net income reached C$5.4 million, or C$0.22 per share, compared with a net loss of C$13.3 million, or C$0.55 per share, a year earlier. Adjusted earnings were C$0.21 per share, compared with an adjusted loss of C$0.06 per share in the fourth quarter of fiscal 2025.

Cash flow from operations was C$24.8 million, up from C$18.9 million a year earlier. Net debt declined to C$40.7 million at June 30 from C$54.4 million at the end of the third quarter. Schmid said Vecima expects to continue generating cash, reducing debt and reinvesting in the business during fiscal 2027.

The board approved a quarterly dividend of C$0.055 per common share, payable Nov. 9 to shareholders of record on Oct. 16.

Company raises 2026 outlook and targets further growth

Vecima raised its calendar 2026 revenue-growth outlook to 27% to 32% from its prior projection of 22.5% to 30%. The company forecast fiscal 2027 revenue growth of 30% to 35% compared with fiscal 2026 and said it expects adjusted EBITDA margins of about 20% in both calendar 2026 and fiscal 2027.

Kumar said fiscal 2027 growth is expected to be led by Video and Broadband Solutions, supported by ongoing DAA deployments among the company’s lead Tier 1 customer and 76 other Entra customers. He said the forecast assumes only early contributions from vCMTS, DOCSIS 4.0 Remote PHY devices, XGS-PON and other newer platforms.

Vecima expects steady operating performance in its Content Delivery and Storage business as managed IPTV installations expand and its dynamic ad insertion deployment with Hotwire Communications progresses. Beginning next quarter, the company will reorganize its reporting segments into Content Delivery Solutions and Broadband Access Solutions, with the commercial-video portfolio, including Terrace IQ, moving into Content Delivery Solutions.

Addressing manufacturing capacity and tariffs during the question-and-answer session, Kumar said Vecima believes its Canadian operations and contract manufacturing partners can support anticipated growth. He said the company has made required adjustments related to tariffs that took effect during the summer and that its outlook incorporates applicable exposure.

On U.S. broadband subsidy programs, Kumar said the company expects some contribution from the Broadband Equity, Access and Deployment program during fiscal 2027, though it is not expected to be consequential within that period. He said customers continue to use American Rescue Plan Act funding, while greenfield fiber construction has become a meaningful part of Entra Optical demand.

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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