Vecima Networks Q3 Earnings Call Highlights

Key Points

• Vecima raised its calendar 2026 outlook, now expecting revenue growth of 22.5% to 30% versus 2025, up from 20% to 30%, with an adjusted EBITDA margin target of 20%. Management said improving customer purchase orders and broadband upgrade demand are driving the stronger forecast.
• Broadband demand, especially from Charter, is fueling the upgrade cycle, including deployments of Vecima’s Entra Remote PHY and fiber access products and a new multi-year DOCSIS 4.0 agreement. The company said its rollout is underway and could support a new quarterly revenue high in the near term.
• Third-quarter results were mixed but margins improved: revenue rose 1.3% year over year to CAD 64.8 million, while adjusted EBITDA margin increased to 17.4% and adjusted gross margin reached 50.7%. Vecima still posted a small net loss, but cash flow from operations improved sharply and the board approved a quarterly dividend.

Vecima Networks TSE: VCM said it raised its calendar 2026 growth outlook as customer demand for broadband network upgrade products strengthens, while reporting fiscal third-quarter revenue that was slightly higher than a year earlier but lower sequentially.

President and CEO Sumit Kumar said the company now expects calendar 2026 revenue growth of 22.5% to 30% compared with calendar 2025, up from its prior expectation of 20% to 30%. Vecima also expects an adjusted EBITDA margin of 20%, which Kumar said would imply year-over-year adjusted EBITDA growth of 74% to 85%.

“With increased demand coalescing, our raised outlook is underpinned by customer purchase orders and forecasts with clear visibility into increased volumes in the near term,” Kumar said. He added that the company is seeing revenue momentum entering the fourth quarter of fiscal 2026 that positions it “to reach a new quarterly high in the near term,” with sustained growth expected afterward.

Broadband Demand Drives Updated Outlook

Kumar said Vecima’s outlook is being supported by several broadband growth drivers, including supply to Charter Communications as Charter expands its distributed access architecture, or DAA, network deployment using Vecima’s cable and fiber access technologies.

The programs include Vecima’s Entra Remote PHY products, such as its EN9000 GAP node and ERM RPD platforms, as well as its Entra Optical fiber access portfolio, including fiber-to-the-home Remote OLT nodes. Kumar said the rollout was “fully underway” as of the third quarter and is driving “significant long-term waves of demand.”

Vecima also pointed to new Entra products being launched across multiple customers, including the EN3400, the EEM210 standalone two-port 10G EPON module and Power Holdover Modules. In commercial video, Kumar said the company is preparing to roll out its next-generation Terrace IQ platform as a lead Tier 1 customer undertakes a wholesale upgrade of its national commercial video network.

During the quarter, Vecima signed a multi-year DOCSIS 4.0 agreement with Charter for its Spectrum operations. Kumar said the agreement covers deployment of the Entra ERM422, which he described as the world’s first DOCSIS 4.0 dual downstream service group RPD, and includes continued nationwide fiber-to-the-home deployment for the Entra SF-4X Remote OLT.

At the end of the third quarter, Vecima was engaged with 147 multiple-system operators worldwide, Kumar said. He also said the company’s current outlook includes only a minimal contribution from its virtual cable modem termination system, or vCMTS, cloud solutions, which Vecima views as a major incremental growth opportunity.

Third-Quarter Revenue Rises Slightly Year Over Year

For the fiscal third quarter, Vecima reported consolidated revenue of CAD 64.8 million, up 1.3% from the prior-year period and down 12.1% from the second quarter. Kumar said the sequential decline was expected and reflected industry consolidation activity and the initiation phase ahead of major customer program acceleration.

Chief Financial Officer Judd Schmid said Video and Broadband Solutions revenue was CAD 52.2 million, up 9.6% year over year and down 12.3% sequentially. Entra sales were CAD 49.3 million, increasing 13.3% from a year earlier and declining 12.6% from the prior quarter. Commercial video sales contributed CAD 2.9 million, down 29.5% year over year and 9% sequentially, reflecting a transition to next-generation platforms and certain DAA-driven commercial video products being included in Entra revenue.

Vecima’s Content Delivery and Storage segment generated revenue of CAD 10.7 million, consisting of CAD 4.7 million in product sales and CAD 5.9 million in services revenue. Segment revenue fell 24.1% from a year earlier and 13.2% from the prior quarter. Kumar and Schmid both said quarterly fluctuations are typical for the segment due to project and order timing, and Kumar said the company expects higher revenues in the fourth quarter.

Telematics revenue was CAD 1.9 million, down 15.8% year over year, which Schmid attributed to a one-time CAD 200,000 accounting adjustment for certain mobile asset tracking products in the prior-year period. Sequentially, Telematics revenue increased 2.7%. Kumar said the segment added 12 new customers and booked 137 new subscriptions for its NERO asset tracking platform, bringing asset tags under management to almost 125,000.

Margins Improve, But Vecima Reports Small Net Loss

Vecima reported third-quarter gross margin of 47.3%, compared with 47.7% a year earlier and 44.9% in the second quarter. Adjusted gross margin was 50.7%, up from 47.4% in the prior-year period and 46.4% in the previous quarter. Schmid said the improvement reflected a higher-margin product mix in the Video and Broadband Solutions segment, as well as efforts to reduce manufacturing costs and improve efficiencies.

Adjusted EBITDA was CAD 11.3 million, representing a margin of 17.4%, up from 14.4% in the second quarter and 16.1% in the same quarter last year. Operating income was CAD 1.1 million, compared with CAD 3.3 million a year earlier. Vecima reported a net loss of CAD 200,000, or CAD 0.01 per share, compared with net income of CAD 1.2 million, or CAD 0.05 per share, in the prior-year quarter. Adjusted earnings per share were CAD 0.06, up from CAD 0.05 a year earlier.

Operating expenses were CAD 29.5 million, down slightly from CAD 29.8 million in the second quarter but CAD 2.3 million higher than a year earlier. Schmid said research and development expense increased to CAD 13.5 million, or 21% of sales, from CAD 11.5 million, or 18% of sales, a year earlier, primarily due to higher amortization of deferred development costs and increased salaries, wages and benefits.

Cash Flow Improves and Dividend Approved

Schmid said cash flow provided by operations was CAD 19.5 million in the quarter, compared with CAD 4.4 million used in operating activities in the same period last year, primarily due to favorable changes in working capital. Working capital was CAD 51.8 million at quarter-end, up from CAD 51.2 million at June 30, 2025, and CAD 49.3 million at Dec. 31, 2025.

Net debt, defined as total debt less cash and lease liabilities, was CAD 54.4 million at the end of the third quarter, down from a peak of CAD 92 million in the third quarter of fiscal 2024. Schmid said the company remains focused on paying down debt and improving its net debt position.

The board approved a quarterly dividend of CAD 0.055 per common share, payable June 22, 2026, to shareholders of record as of May 29, 2026. Schmid said the dividend will be designated as an eligible dividend for Canadian income tax purposes.

No analysts or institutional investors asked questions during the question-and-answer portion of the call.

About Vecima Networks TSE: VCM

Vecima Networks Inc delivers scalable software, services, and integrated technologies for broadband access, content delivery, and telematics. The company operates in three segments: Video & Broadband Solutions, Content Delivery & Storage, and Telematics. The Video & Broadband Solutions segment delivers scalable, flexible broadband and video networks for cable and telecommunications operators to meet tomorrow's bandwidth demands. The Content Delivery & Storage segment develops advanced applications that protect, transform, and deliver visual media.

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