Ekinops’ Q4 gains in access, software offset by optical networking declines

Ekinops reported $30.6 million in fourth quarter 2024 earnings, down two percent year-over-year.

The company saw an uptick in access and software while optical networking challenges continued due to service provider spending.

In the second half of 2024, Ekinops posted a consolidated half-year revenue of $61.9 million, up +4% from the same period a year earlier. Sequentially, in the second half of 2024, revenue was up 5% from the first half of 2024.

Ekinops' annual consolidated revenue was $121 million in 2024, down 9% yearly, but identical at constant exchange rates.

Access Software shows strength

Access and software were again the clear strong performers in the fourth quarter.

The company reported an 11 percent revenue increase in Access Solutions and gains in Software & Services, which accounted for 18 percent of Group revenue, up from 17 percent in 2023.

“We are delighted with Access's performance in 2024,” said Didier Brédy, Chairman and CEO of Ekinops, in prepared remarks on its earnings page. “It significantly outperformed the market, achieving double-digit sales growth.”

Brédy added that cloud and AI applications could produce new opportunities for their products.

“Despite this adverse economic climate, we have continued to invest in taking advantage of a new wave of massive investment by operators in new applications such as the large-scale deployment of Cloud architecture, AI, which will generate huge traffic, as well as virtual and augmented reality and cybersecurity,” he said.

Optical challenges

While Ekinops saw growth in Access and Software, optical networking remained challenging in the fourth quarter.

The company attributed the decline to various factors, including service provider customers’ delayed spending patterns due to the ongoing inventory correction and challenging economic conditions.

As a result, Ekinops’ Optical Transport solutions fell over 30 percent year-on-year.

“After strong growth in 2023, our sales of Optical Transport solutions decreased sharply,” Brédy said. “Several factors explain this trend: massive investment by operators and businesses post-pandemic leading to overcapacity, a slowdown in Internet traffic growth, a rise in the cost of money adversely affecting the financing of investment plans, and a delay on large orders.”

Despite the decline, Ekinops noted that there are signs of positive light. With the first deliveries of its new 800G solution, Ekinops said the end of 2024 was marked by what it called “a slightly more sustained activity” with 38 percent sequential growth.

The company added that the fourth quarter was the most substantial 2024 for Optical Transport, encouragingly pointing toward a rebound for this business line in 2025.

Regional fluctuations

From a regional perspective, results continued to vary.

France continued to lead growth. Driven by strong sales in Access Solutions, France's revenue rose 18%. As of the end of December 2024, France accounted for 41% of the Group's revenue, up from 32% a year earlier.

Outside France, sales declined 21%, representing 59% of its overall activity, against 68% a year earlier.

In North America, where Optical Transport solutions mainly drive sales, revenue was $22.9 million, down -26% year-on-year. This region accounted for 20% of Group revenue in 2024, down from 25% a year earlier.

Ekinops said the US market was “characterized by a significant wait-and-see attitude among operators, due to the economic context, a slowdown in bandwidth demand, and the slow rollout of the BEAD (Broadband Equity, Access and Deployment) federal program expected by operators at the end of the year.”

Asia-Pacific, which accounts for only 2% of Group revenue generated with just a few clients, was down -32% over the year.

The EMEA (Europe—excluding France—Middle East, and Africa) region accounted for 37% of Group revenue (vs. 41% in 2023) and posted revenue of $45 million in 2024, which declined 18% year-on-year.

Besides the unfavorable base effect, EMEA suffered from a sharp decline in sales of Optical Transport solutions. The company noted that EMEA is “gradually returning to growth in the region, with sequential growth of over 37% between the first and second half of 2024.”

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