Vecima Reports Strong Third Quarter Results Generating Expanding Gross and Adjusted EBITDA Margins

Q3 Revenue $64.8M; Gross Margin 47.3%; Adjusted EBITDA Margin 17.4%; Calendar 2026 Revenue Growth Outlook Increased to 22.5%-30.0% (previously 20%-30%)VICTORIA, British Columbia--(BUSINESS WIRE)--Vecima Networks Inc. (TSX: VCM) today reported financial results for the three and nine months ended March 31, 2026. FINANCIAL HIGHLIGHTS (Canadian dollars in millions except percentages, employees, and per share data) Q3 FY26 Q2 FY26 Q3 FY25 Revenue $64.8 $73.7 $64.0 Gross Margin 47.3% 44.9% 47.7% Net Income (Loss) $(0.2) $0.1 $1.2 Earnings (Loss) Per Share1 $(0.01) $0.00 $0.05 Adjusted Gross Margin2,3 50.7% 46.4% 47.4% Adjusted Earnings (Loss) Per Share1,2,4,5 $0.06 $0.04 $0.05 Adjusted EBITDA2 $11.3 $10.6 $10.3 Employees 612 611 582 1) Based on weighted average number of shares outstanding. 2) Adjusted Gross Margin, Adjusted Earnings Per Share and Adjusted EBITDA do not have a standardized meaning under IFRS and therefore may not be comparable to similar measures provided by other issuers. Starting in Q4 fiscal 2025, we have changed our definition and calculation of Adjusted EBITDA and Adjusted Earnings Per Share. For a reconciliation of Adjusted Earnings Per Share, investors should refer to Vecima’s Management’s Discussion and Analysis for the three and nine months ended March 31, 2026. 3) Adjusted gross margin adds back the impact of a non-cash write-down of inventories to net realizable value and warrant expense (recovery) of $1.8 million and $0.4 million, respectively, for the three months ended March 31, 2026, and $0.8 million and $(1.0) million, respectively, for the three months ended March 31, 2025. 4) Adjusted earnings per share includes non-cash share-based compensation of $0.4 million or $0.01 per share for the three months ended March 31, 2026, and $0.5 million or $0.02 per share for the three months ended March 31, 2025. The non-cash share-based compensation primarily reflects certain performance-based vesting thresholds achieved under the Company’s Performance Share Unit Plan. 5) Adjusted earnings per share and Adjusted EBITDA include foreign exchange loss of $0.2 million or $0.01 per share for the three months ended March 31, 2026, and $0.3 million or $0.01 per share for the three months ended March 31, 2025. "The third quarter fully aligned with our expectations as we prepared for a significant resurgence of growth in fiscal Q4 and beyond," said Sumit Kumar, Vecima's President and Chief Executive Officer. "The customer forecast-driven visibility into robust upcoming demand across the next several periods has continued to be reinforced and began to materialize late in the third quarter, tied to scale network deployment programs. With increased demand coalescing, we are now increasing our revenue growth outlook for calendar 2026. We now anticipate 22.5% to 30.0% revenue growth in calendar 2026 as compared to calendar 2025, above our previous projection of 20% to 30% growth. Based on Management's projections, we continue to expect adjusted EBITDA margins to break through 20% for this same period, driving adjusted EBITDA growth of 74% to 85% compared to calendar 2025. Our confidence in our increased forecast further strengthened in the third quarter as our customers are providing purchase orders and forecasts with clear visibility into increased volumes in the near term. At the same time, we believe new design wins, deepening customer engagements, and achieving important product milestones underscore the long-term nature of our anticipated growth trajectory." "Financially, we generated third quarter sales of $64.8 million, representing a year-over-year increase of 1.3% in a quarter in which we anticipated temporary and modest delivery constraints related to the short-term effects of industry consolidation activity, as well as the normal initiation phase in the lead up to major network evolution programs. Third quarter results reflected strengthening performance in our Video and Broadband Solution segment, partially offset by a lower revenue quarter for our Content Delivery and Storage segment year-over-year, related to the timing of orders and projects. Our Video and Broadband Solutions results included robust demand for our high-value, fiber-to-the home access solutions, which have grown to become a key component of Vecima's product mix and represented close to half of our Q3 Entra sales." "Consolidated third quarter results included an impressive gross margin percentage of 47.3% (adjusted gross margin of 50.7%), representing our third consecutive quarter of margin improvement. Notably, Adjusted EBITDA climbed 9.2% year-over-year and 6.4% quarter-over-quarter to $11.3 million, reflecting operational efficiencies throughout the organization and resulting in a strong Adjusted EBITDA margin of 17.4%, as compared to 16.1% in the same period last year." "Highlights of the quarter included the announcement of a major, multi-year DOCSIS 4.0 agreement with Charter Communications' Spectrum, one of North America's largest broadband service providers. The agreement further deepens our relationship with Charter and focuses on deployment of our new ENTRA ERM422, the world's first DOCSIS 4.0 Dual Downstream Service group RPD. The announcement also reaffirms the partnership related to Charter's continued nationwide fiber-to-the-home deployment of our global market-leading Entra SF-4X Remote OLT." "In other parts of the Entra portfolio, we significantly advanced our vCMTS cloud solution, securing design wins and initial orders from four European customers, signing a paid proof-of-concept agreement with an international Tier 1 operator, and making important progress on vCMTS trial activity with our Lead Tier 1 North American customer. In our Commercial Video portfolio, we also progressed lab trials for TerraceIQ as our lead Tier 1 customer prepares for a major network-wide upgrade using the next-generation solution." “Against the backdrop of accelerating, wide-scale DAA adoption, Vecima’s decisive execution positions the company for substantial value creation. Our momentum is expected to begin ramping in Q4 fiscal 2026, helping to set the stage for new quarterly revenue records. We expect Entra fiber and cable-access products, including Entra RemotePHY, EN9000, and Entra Optical solutions, will lead our near-term performance gains. We also see a clear long-term growth trajectory as our high-value new DOCSIS 4.0 and vCMTS offerings, and in the CDS segment, IPTV and DAI solutions, become more significant contributors. Our strategy to build the industry's broadest and deepest portfolio of innovative, interoperable next-generation fiber and cable access products and IPTV solutions, paired with our expanding focus on software-centric products and platforms that will prepare customers for the 50G future, has positioned Vecima for upcoming sustained growth, with financial performance scaling to new heights," concluded Mr. Kumar. Financial and Corporate Generated third quarter consolidated sales of $64.8 million, up 1.3% from $64.0 million in Q3 fiscal 2025, and 12.1% lower than $73.7 million in Q2 fiscal 2026. Third quarter gross margin of 47.3% (adjusted gross margin of 50.7%), compared to 47.7% (adjusted gross margin of 47.4%) in Q3 fiscal 2025 and 44.9% (adjusted gross margin of 46.4%) in Q2 fiscal 2026. Generated strong adjusted EBITDA (non-IFRS) of $11.3 million, an increase of 9.2% from $10.3 million in Q3 fiscal 2025, and up 6.4% from $10.6 million in Q2 fiscal 2026. Net loss of $0.2 million or $0.01 per share (adjusted net income of $1.6 million or $0.06 per share) compared to net income of $1.2 million or $0.05 per share (adjusted net income of $1.2 million or $0.05 per share) in Q3 fiscal 2025, and net income of $0.1 million or $0.00 per share (adjusted net income of $0.9 million or $0.04 per share) in Q2 fiscal 2026. Ended the third quarter in a strong financial position with working capital of $51.8 million at March 31, 2026, compared to $51.2 million at June 30, 2025. Continued focus on debt reduction has lowered total net debt (non-IFRS) to $54.4 million in Q3 fiscal 2026, from a high of $92.0 million in Q3 fiscal 2024. Video and Broadband Solutions (VBS) Third quarter Video and Broadband Solutions segment sales increased 9.6% to $52.2 million, from $47.7 million in Q3 fiscal 2025, and decreased 12.3% from $59.6 million in Q2 fiscal 2026. VBS gross margin strengthened to 42.1% (adjusted gross margin of 46.2%), from a gross margin of 40.3% (adjusted gross margin of 39.8%) in Q3 fiscal 2025 and 39.9% (adjusted gross margin of 41.6%) in Q2 fiscal 2026, reflecting continued margin improvement based on Vecima's product mix. DAA (Entra Family) Third quarter deployments of Entra DAA products generated revenue of $49.3 million, up 13.5% from $43.5 million in Q3 fiscal 2025, and a decrease of 12.4% from $56.3 million in Q2 fiscal 2026. Total customer engagements stood at 147 MSOs (Multiple Systems Operators) worldwide at quarter-end, compared to 127 a year earlier, with customer engagements continuing to deepen. Seventy-three of these customers have ordered Entra products as broader DAA deployment progresses. Announced a major, multi-year DOCSIS 4.0 agreement with Charter Communication's Spectrum, one of North America's largest broadband operators. The announcement highlights the extension of Vecima's collaborative partnership with Charter and includes: Deployment of the Entra ERM422, the world's first DOCSIS 4.0 Dual Downstream Service Group RPD, which seamlessly integrates into Vecima Access Nodes, including the EN9000 GAP node and the EN8000 series nodes, and can be combined with Entra EEM210, a two-port fiber-on-demand module to provide fiber-to-the-home services from the same node platforms. Continued nationwide fiber-to-the-home deployment using Vecima's Entra SF-4X Remote OLT, which provides a migration path to 50G-PON by simultaneously supporting 10G-EPON and 50G-PON. Achieved highest quarterly revenue in over three years for Entra Optical products, led by Vecima's industry-leading SF-4X remote optical line terminals for fiber-to-the-home (FTTH). This achievement highlights the growing demand for Vecima's fiber-to-the-home access solutions, including 10G EPON and XGS-PON, and Vecima's leadership in this market. Fiber-to-the-home access solutions have grown to represent a material portion of Vecima's broadband product sales, enriching our comprehensive scope in global broadband networks and providing major new growth pathways, both in the near and long term. Further accentuating Vecima's leadership in the fiber-access market, Dell'Oro Group, a leading industry market researcher, ranked Vecima #1 globally for PON Remote Optical Line terminals (R-OLTs), both XGS-PON and 10G EPON, in its 2025 Broadband Access & Home Networking market share reports. This marks the fifth consecutive year that Vecima has been named the global market share leader in the Fiber R-OLT segment. Industry adoption of our EN9000 GAP node expanded again in the third quarter. The industry's only GAP node, the EN9000, is widely seeding broadband networks with a future-proof platform capable of being upgraded with multiple successive generations of DOCSIS and/or fiber-to-the-home technology. Launched the ERM312, a new compact 1x2 module for the EN9000 and EN3400 platforms. Continued to advance vCMTS trial activity with the Lead Tier 1 North American customer while expanding roster of engagements for this next-generation cloud solution. During the quarter, secured a paid proof-of-concept agreement with an international Tier 1 customer, while continuing to expand lab trials and initial orders with three additional operators in Europe. Vecima's vCMTS solution is part of the Entra Cloud platform which enables operators to transform their networks for next-generation broadband access, including DOCSIS 4.0. Dell'Oro Group forecasts the global market for vCMTS will be worth approximately US$350 million annually by calendar 2029. Currently, Vecima is just one of three vendors worldwide offering a vCMTS solution. Commercial Video (Terrace Family) Commercial Video product sales were in line with expectations and included third quarter sales of $2.9 million (Q3 fiscal 2025: $4.2 million; Q2 fiscal 2026: $3.2 million). These results reflect the continued transition to next-generation platforms, together with some of Vecima’s newer DAA-driven Commercial Video solutions now being accounted for as part of Entra family sales. TerraceIQ Commercial Video solution continued to gain traction with key customers in the Americas, setting the stage for substantial anticipated growth in the next twelve months. Continued progress with the lead Tier 1 customer for TerraceIQ. As part of a multi-year program, this customer has selected Vecima's TerraceIQ solution to support the evolution of its commercial video footprint nationally, encompassing both the upgrade of its existing TerraceQAM platforms which are currently deployed within thousands of commercial properties, along with rollouts for new commercial video services contracts going forward. Content Delivery and Storage (CDS) The Content Delivery and Storage segment generated third quarter sales of $10.7 million, a decrease of 24.1% from $14.1 million in Q3 fiscal 2025 and 13.2% from $12.3 million in Q2 fiscal 2026. Quarterly sales fluctuations are typical in the CDS segment and reflect project and order timing. Achieved strong third quarter CDS gross margin performance of 68.0% (Q3 fiscal 2025: 70.0%; Q2 fiscal 2026: 65.1%). Successfully deployed Phase 2 of Vecima's targeted Dynamic Ad Insertion (DAI) solution with Hotwire Communications during the quarter. Vecima's DAI solution enables operators to deliver targeted and personalized advertising experiences, increasing video average revenue per user (ARPU), without necessitating customer rate increases. The Phase 2 deployment included the first production launch of Vecima's advertising asset workflow manager, replacing third-party systems with a more dynamic, feature-rich solution, driving higher product margins. During the third quarter, a Tier 2 customer selected MediaScale Origin to replace a competitor's solution. MediaScale Origin serves as a unified origin system for live, video-on-demand and network DvR services, allowing operators to streamline video delivery to traditional cable set-top boxes and IP devices simultaneously. Continued progress with content providers and operators, including Tier 1 customers, on dh/KeyFrame, a Vecima-marketed generative AI-powered video optimization platform that enhances video quality while simultaneously reducing the required bitrate considerably, allowing for improved streaming efficiency. Telematics The Telematics segment generated third quarter sales of $1.9 million, a decrease of 15.8% from $2.2 million in Q3 fiscal 2025, but 2.7% higher than the $1.8 million achieved in Q2 fiscal 2026. Added 12 new customers for the NERO asset tracking platform during the third quarter, booking an additional 137 new subscriptions and bringing total asset tags under management to approximately 125,000. Achieved an exceptional gross margin percentage of 72.9% (Q3 fiscal 2025: 65.4%; Q2 fiscal 2026: 71.4%). Trade and Tariffs Trade actions had a negligible impact on the 86% of Vecima's sales made to the US in Q3 fiscal 2026. The Company's manufacturing is predominantly domiciled in Canada, exempting that portion of its production from tariff actions under the Canada-United States-Mexico Agreement (CUSMA). While renegotiation of the CUSMA could result in the introduction of new tariffs affecting Vecima's products, the Company is one of the few competitors in the industry that fully "owns" its manufacturing process. This provides the advantageous flexibility to adapt quickly to changing macroeconomic conditions, including the ability to rapidly transition manufacturing to different countries as Vecima has demonstrated in the past. CONFERENCE CALL A conference call and live audio webcast will be held today, Thursday, May 14, 2026 at 1:00 p.m. ET to discuss the Company’s third quarter results. Vecima’s unaudited interim consolidated financial statements and management’s discussion and analysis for the three and nine months ended March 31, 2026 are available under the Company’s profile at www.sedarplus.ca, and at https://vecima.com/investor-relations/financial-reports/. To participate in the Q3FY26 teleconference, dial 1-833-752-3965 or 1-647-849-3105. The webcast will be available in real time at https://event.choruscall.com/mediaframe/webcast.html?webcastid=euEs4EjY and will be archived on the Vecima website at https://vecima.com/investor-relations/earnings-call-archive/. About Vecima Networks Vecima Networks Inc. (TSX: VCM) is leading the global evolution to the multi-gigabit, content-rich networks of the future. Our talented people deliver future-ready software, services, and integrated platforms that power broadband and video streaming networks, monitor and manage transportation, and transform experiences in homes, businesses, and everywhere people connect. We help our customers evolve their networks with cloud-based solutions that deliver ground-breaking speed, superior video quality, and exciting new services to their subscribers. There is power in connectivity – it enables people, businesses, and communities to grow and thrive. Learn more at www.vecima.com. Forward-Looking StatementsRead the full story here

Vecima Reports Strong Third Quarter Results Generating Expanding Gross and Adjusted EBITDA Margins

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