Clearfield’s President and CEO Cheri Beranek stated at the recent Needham Growth Conference that the broadband equipment industry has reached a good ‘turning point’. Focusing on third tier telecom companies, community providers, and second tier telecom companies such as Frontier, Clearfield has observed that the accumulated inventory surplus during the pandemic is gradually being corrected.
Beranek said, “What we are seeing is that the inventory accumulated during and after the pandemic is gradually being digested. We can see the results of the past two years’ work.” Although the company’s consolidated net sales in the fourth quarter of its fiscal year were $46.8 million, a year-on-year decrease of 6%, and the consolidated net sales for the entire fiscal year were $166.7 million, a decrease of 38% from 2023, Clearfield is transitioning to a more balanced supply and demand state, with construction and procurement more closely matching actual demand.
She pointed out that the company’s delivery time is now three to four weeks, which means service providers do not need to give high order visibility, and this also allows Clearfield to discuss with customers their real needs and how many products they need. When fiber optic cables are successfully connected to households, the company’s revenue opportunity will increase from $50 per household to approximately $250. This is because approximately 40% of potential users would choose to upgrade to fiber optic services.
In addition, Clearfield is also transitioning towards providing fiber to the home solutions. The company was initially known for cabinets and is now striving to become a platform supplier, providing not only cabinets that pass through homes, but also products such as hanging cables, spools, and home deployment kits for connecting homes. This helps service providers control labor costs in network deployment.
Customized solutions for rural markets are a major focus of Clearfield. Unlike operators that primarily serve large primary markets such as AT&T and Verizon, Clearfield is committed to providing tailored, scalable, and capital equipment adapted products for small fiber optic operators, recognizing the unique needs and challenges of rural market providers.
Beranek emphasized the opportunities brought by the FCC’s Alternative Connectivity America Cost Model (ACAM) project and the Broadband Equality, Access, and Deployment (BEAD) fund. In the US market, approximately 29 million households located in rural third tier environments have not yet connected to fiber optic broadband, of which approximately 11 million households will be served by providers accessing ACAM or BEAD funding, while nearly 18 million households will receive fiber optic services without government assistance.
Beranek stated that this is a new market opportunity for Clearfield, as it not only helps address inventory reserve issues but also enables the company to participate in the $42.5 billion BEAD program. She added that although the plan took longer than expected due to too many management levels, it is finally starting to make progress now. For example, Louisiana recently received approval from NTIA for its initiative to begin disbursing funds, and 95% of the state’s funds will be used for fiber optic projects.
Overall, Beranek is optimistic about Clearfield’s prospects in the broadband market and believes that with the upgrade of fiber optic networks and the launch of new projects, the company will usher in more development opportunities.
