Despite sales drop, EXFO says that some ‘well-funded’ companies are increasing capex
Network testing and analytics company EXFO said that the temporary shut down of its manufacturing center in China impacted its sales in the most recent quarter, but as a key supplier for the telecom industry, it is also seeing network operators and webscale companies increasing their capital expenditures to adapt to the global increase in telecommuting.
However, the company also suspended giving guidance for its quarterly and annual financial performance, citing the “uncertainty surrounding the breadth and duration of the coronavirus pandemic.”
EXFO reported an overall loss of $9 million. Sales were $55.3 million in the second quarter of this year, down from nearly $74 million in the same period in 2019. Sales in its test and measurement segment during 2020’s second quarter were $37.4 million, down from $50.4 million in the year-ago period; and in service assurance, systems and services, revenues fell year-over-year from $23.7 million to $17.9 million.
However, the company said that it is observing network investments being made by large players and CEO Philippe Morin noted that the company had solid bookings in the second quarter that included double-digit bookings growth for T&M.
“As the coronavirus outbreak has evolved into a global pandemic, EXFO has become a key supplier to the essential telecommunications industry. Several well-funded network operators and webscale companies have increased capital spending to meet the global trend of telecommuting from home,” the company said in its quarterly release.
EXFO’s test and measurement segment accounted for 68% of its revenues, with service assurance, systems and services making up 32% of revenues. EXFO made 48% of its revenues in the Americas, 31% in Europe, the Middle East and Africa, and 21% in the Asia-Pacific region. Three customers accounted for nearly 20% of its sales, the company reported.
Morin said that all EXFO sites are now fully operational.
“More than ever, the telecom industry is mission-critical in which network capacity, reliability, and scalability will play a growing role in creating real opportunities for EXFO’s innovative solutions,” he added.
