Aviat Networks, Inc. (NASDAQ:AVNW) Q1 2024 Earnings Call Transcript

Peter Smith: So, we gave that in the past, we said that we expect there to be $150 million in revenue the first year after close. We’re still comfortable with that. So we did model in some attrition and perhaps some global Tier 1 operator softness. So we factored that into the price we paid for the transaction, the deal. Then with respect to the customer engagement, I think the customers see a broad end portfolio from the combined entities. NEC has an incredible split-mount architecture. And Aviat brings routers, some standalone software and access products. So we have been factored that into the model. What we learned from the red line transaction to get revenue synergies is probably 12 months after close. And the initial conversations with customers would indicate that that’s a real possibility.

Scott Searle: Great. Thanks so much. Nice job on the quarter, and I’ll get back in the queue.

Operator: Thank you. One moment for our next question, please. Our next question comes from the line of Jaeson Schmidt with Lake Street. Your line is now open.

Jaeson Schmidt: Hey guys, thanks for taking my questions. Pete, just curious if you could provide an update on what you’re seeing from that Huawei funnel. I think last quarter you mentioned the current funnel was over $80 million. Has there been any change?

Peter Smith: I would say the route change we’d like to report is we increased our bookings from the Huawei share gain funnel by a little bit under 10%. So our bookings went up $3.3 million, so that continues to be a fruitful area for us.

Jaeson Schmidt: Okay. That’s helpful. And then just with your commentary on India being more of a kind of January, June impact. Would it be fair to expect gross margin to remain a relatively flat here in the December quarter just given your mix expectations?

Peter Smith: Yes, so our gross margin was made progress versus the prior quarter and prior year as we said, the highest in six quarters. We expect the continued improvement. And like we said, alluded to last quarter, we expect a 100 basis point roughly improvement for the full-year. Project-based nature, it’s not going to be a straight line, but we expect for the full-year to be about a 100 basis points above.

David Gray: Yes, so Jaeson, that’ll depend on kind of the Indian project timing. As the quarter it comes in, it’ll be a little bit lower. The quarter doesn’t come in, it’ll be grow as far as it’ll be a little higher.

Jaeson Schmidt: Okay. Perfect. And then just the last one from me, and I know you guys have sort of outlined it in the past, but just want to get another confirmation that I mean you’re not seeing any sort of pockets of excess inventory pop-up in any of the segments that you play in?

Peter Smith: Absolutely not. And my comment in the script was that we covered that [indiscernible] in the last session, everything that we said about the ability to get for the likelihood of having double orders. It’s not in the microwave place. And that’s why we emphasize this quarter that we’re 90% direct. We do installs on our biggest customers. So we would know if there was an inventory problem. So I want to say unequivocally, we do not have that problem.

Jaeson Schmidt: I appreciate the caller. I’ll jump back into queue. Thanks a lot, guys.

Operator: Thank you. One moment for our next question, please. Our next question comes from the line of Erik Suppiger with JMP Securities. Your line is now open.

Erik Suppiger: Yes, thanks for taking the questions. First off, you said that you had record bookings in Q1 for North America. I think you also had record revenues. Can we assume that you had a healthy backlog on top of the revenues that you had a healthy addition to the backlog on top of having record revenues? And then secondly, you talked about some of the technology development. Can you give us an update on the modem chip that you’ve been developing with MaxLinear?