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The Edge

Vecima rides record revenues but grapples with the supply chain

Vecima Networks isn't immune to the supply chain constraints hitting sectors far and wide, but the Canadian cable access and video tech supplier still managed to pull in record revenues in its fiscal second quarter.

Revenues of C$43.6 million ($34.29 million) in the period were the best in Vecima's 32-year history, up 47% year-over-year and up 35% from the prior quarter. Sales from its video and broadband solutions unit jumped 65%, to C$27.2 million ($21.39 million).

On the cable access end, Vecima's distributed access architecture (DAA) business was consistent but somewhat constricted by the supply chain issues. Vecima said its DAA business, which includes a new breed of advanced nodes for the edges of the hybrid fiber/coax (HFC) network, delivered record revenues of C$18.5 million ($14.55 million), up 130% year-over-year, but up just 2% from the prior quarter.

Supply chain-driven backlogs prevented Vecima from fulfilling the "natural demand" it is seeing with DAA, said Sumit Kumar, Vecima's president and CEO, on Thursday's earnings call.

Vecima said total customer engagements for its Entra product line have risen to 80 operators worldwide versus 77 at the end of the prior quarter, with 43 having placed orders, up from 39 last quarter.

Recent wins include Alaska-based GCI and Liberty Latin America. Vecima was also involved in Charter Communications' recent DOCSIS 4.0 trial which pumped out speeds of 8.5 Gbit/s downstream and 6 Gbit/s upstream.

DOCSIS drives DAA

The DAA market is picking up as operators start to position their access networks to deliver enhanced services via DOCSIS 3.1 or prepare for DOCSIS 4.0.

"We're just at the beginning of a once-in-a-generation network transition to distributed access architecture," Kumar said. "We anticipate a multi-year cycle of investment into the broadband access network."

Vecima's content delivery and storage (CDS) business notched sales of C$15 million ($11.8 million), up 27% from a year ago and up 121% sequentially. The company attributed the surge to operators forging ahead on IP video deployments, with Breezeline (formerly Atlantic Broadband) among recent wins.

Supply chain constraints have had less of an impact on CDS, which relies heavily on commercial off-the-shelf servers. Vecima's DAA business relies on more customized hardware, such as nodes, and the use of contract manufacturers.

Kumar estimated that Vecima is about at the midway point with respect to getting to a "new normal" on the supply chain as it continues to work through the issue with customers and its suppliers. In the second half, the company saw lead times expand from a typical range of 16 to 20 weeks, to a range of 52 to 70 weeks, which created some forecasting challenges.

Those issues are starting to loosen up to the point that some fresh orders are starting to roll through, Kumar said.

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— Jeff Baumgartner, Senior Editor, Light Reading

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