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1. Company Snapshot

1.a. Company Description

Vecima Networks Inc.provides technology solutions that empower network service providers and content providers to connect people and enterprises to information and entertainment worldwide.It offers products for the cable and broadcast industries, which provides video and broadband access to service providers, content creators, and broadcasters.


The company operates through three segments: Video and Broadband Solutions, Content Delivery and Storage, and Telematics.The Video and Broadband Solutions segment offers platforms and modules that process data from the cable network and deliver in formats suitable to be consumed on televisions and Internet devices.Its principal products include Terrace and TerraceQAM, which are designed to meet the needs of the business services verticals, such as multi-unit dwellings, hotels, motels, and resorts; and Entra distributed access platform that addresses the network migration to a distributed access architecture.


The Content Delivery and Storage segment offers solutions and software for industries and customers that focus on ingesting, producing, storing, delivering, and streaming video content for live linear, video on demand, network digital video recorder, and time-shifted TV services under the MediaScaleX and ContentAgent brands.The Telematics segment provides information and analytics for the fleet managers to manage their mobile and fixed assets under the Contigo, Nero Global Tracking, and FleetLynx brands.The company was founded in 1988 and is headquartered in Victoria, Canada.


Vecima Networks Inc.is a subsidiary of 684739 B.C. Ltd.

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1.b. Last Insights on VCM

Vecima Networks' recent performance was negatively impacted by a Q2 fiscal 2025 adjusted loss, despite a 15% revenue increase. The company's preliminary results announced on February 7, 2025, hinted at a challenging quarter, which was later confirmed on February 13, 2025. Vecima's net loss and margin pressures, as mentioned in the Q2 earnings call highlights on February 14, 2025, likely contributed to the negative performance.

1.c. Company Highlights

2. Vecima Networks' Q1 Fiscal 2026 Results: A Strong Start to the Year

Vecima Networks reported a solid first quarter fiscal 2026, with consolidated revenues increasing 3.4% quarter-over-quarter to $71.1 million, building on the 7.5% sequential growth achieved in Q4. The company's adjusted EBITDA margin expanded to 16.2% from 9.8% in the previous quarter, driven by a more favorable product mix and reduced foreign exchange volatility. Adjusted EBITDA reached $11.5 million, up 71.2% compared to Q4. The reported EPS was $0.05, beating estimates of -$0.12. Gross margin also improved, reaching 42.1% compared to 27.3% in Q4 of fiscal '25 and 41.7% in Q1 of fiscal '25. As Judd Schmid noted, "Our reported first quarter gross margin increased to 42.1% from gross margin of 27.3% in Q4 of fiscal '25 and 41.7% in Q1 of fiscal '25," highlighting the company's ability to maintain a strong gross margin profile.

Publication Date: Nov -21

📋 Highlights
  • Sequential Revenue Growth:: Q1 revenue rose 3.4% to $71.1M, building on Q4’s 7.5% sequential increase.
  • Adjusted EBITDA Surge:: Achieved $11.5M, up 71.2% from Q4, with margin expansion to 16.2% from 9.8%.
  • Entra Customer Expansion:: Engagements increased to 140 (from 123 YoY), including a new European customer win in Q1.
  • Product Innovation Momentum:: EN9000 GAP node adoption grew, with initial orders for the compact EN3400 variant and Remote MACPHY growth in a U.S. Tier 2 network.
  • Full-Year Guidance:: Anticipates improved gross margins, VBS-led performance, and adjusted EBITDA exceeding 2025 levels due to balanced product mix and FX normalization.

Segment Performance

The Video and Broadband Solutions segment continued to drive growth, with customer engagements for Entra increasing to 140 from 123 a year ago. Revenues were supported by the depth and breadth of Vecima's industry-leading cable and fiber access solutions. The company also saw strong contribution from its EN9000, the industry's only GAP node, and received initial orders for the new Entra EN3400. The Content Delivery and Storage segment is expected to see a stronger year ahead, driven by contributions from new DAI solutions and continued IPTV expansions.

Outlook and Valuation

Vecima expects continued strong financial and operational performance in fiscal '26, driven by broad Entra product rollouts in the VBS segment and growing demand for IPTV and DAI solutions in the CDS segment. The company anticipates improved gross margins and strong adjusted EBITDA performance, surpassing last year's levels. With a P/S Ratio of 0.85 and an EV/EBITDA of 29.08, the market appears to be pricing in moderate growth expectations. Analysts estimate revenue growth at 3.6% for next year, which is relatively conservative given Vecima's industry-leading position and growth prospects. The company's ROE is currently -7.77%, and the Net Debt / EBITDA ratio stands at 5.66, indicating some leverage.

Growth Prospects

Vecima is well-positioned to benefit from the global adoption of DAA and the continued expansion of IPTV. The company's industry-leading portfolio of innovative, interoperable cable and fiber access products, combined with its growing momentum in the VBS segment, lays the foundation for growth and increased profitability in the years to come. RDOF deployments are also expected to contribute to growth, with Vecima's Remote royalties and Entra Optical platform gaining traction with customers.

3. NewsRoom

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Vecima Networks (TSE:VCM) Will Pay A Dividend Of CA$0.055

Nov -18

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Vecima Networks Inc (VNWTF) Q1 2026 Earnings Call Highlights: Strong EBITA Growth Amid Mixed ...

Nov -14

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Vecima Reports Q1 Fiscal 2026 Results

Nov -13

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Vecima Declares Quarterly Dividend

Nov -11

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An Intrinsic Calculation For Vecima Networks Inc. (TSE:VCM) Suggests It's 43% Undervalued

Nov -07

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Vecima Announces Q1 Fiscal 2026 Results Earnings Call Thursday, November 13, 2025 at 1 pm ET

Oct -30

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Coast Communications Deploys Vecima Remote MACPHY Solution to Upgrade Broadband on Washington’s Coast

Sep -30

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Liberty Global Using Vecima Automation Solutions to Drive Network Simplification and Efficiency

Sep -29

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4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (11.87%)

6. Segments

Video and Broadband Solutions

Expected Growth: 12%

Vecima Networks Inc.'s 12% growth in Video and Broadband Solutions is driven by increasing demand for high-speed internet and streaming services, fueled by cord-cutting and remote work trends. Additionally, Vecima's innovative solutions for cable operators and telecommunications companies, such as its Entra remote PHY and DAA products, are gaining traction, contributing to the segment's growth.

Content Delivery and Storage

Expected Growth: 11%

Vecima Networks Inc.'s Content Delivery and Storage segment growth is driven by increasing demand for high-quality video streaming, rising adoption of cloud-based services, and growing need for efficient content delivery networks. Additionally, the shift towards 5G networks and IoT devices is fueling growth, as well as the company's strategic partnerships and innovative product offerings.

Telematics

Expected Growth: 14%

Vecima Networks' Telematics segment growth is driven by increasing demand for connected vehicles, government regulations for vehicle safety and emissions, and rising adoption of IoT and 5G technologies. Additionally, the company's strategic partnerships and expanding presence in key markets contribute to its 14% growth.

7. Detailed Products

Entra

A hybrid fiber-coaxial (HFC) access network solution that enables cable operators to deliver high-speed broadband services

Terrace

A remote PHY device that enables cable operators to deploy DOCSIS 3.1 and future DOCSIS standards

TerraceIQ

A cloud-based network monitoring and analytics platform for HFC networks

Vecima Networks' DOCSIS 3.1 Cable Modems

High-speed cable modems that support DOCSIS 3.1 standards for residential and business customers

Vecima Networks' Fiber Products

A range of fiber-based products for fiber-to-the-home (FTTH) and fiber-to-the-premises (FTTP) deployments

8. Vecima Networks Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Vecima Networks Inc. operates in a niche market, providing specialized products and services, which reduces the threat of substitutes. However, the company's reliance on a few key customers and the increasing competition from new entrants may lead to some substitution risks.

Bargaining Power Of Customers

Vecima Networks Inc.'s customers, primarily telecommunications companies, have significant bargaining power due to their large size and purchasing power. This may lead to pricing pressure and affect the company's revenue.

Bargaining Power Of Suppliers

Vecima Networks Inc. has a diversified supplier base, which reduces the bargaining power of individual suppliers. The company's long-term relationships with suppliers also mitigate the risk of supply chain disruptions.

Threat Of New Entrants

The threat of new entrants in Vecima Networks Inc.'s market is moderate, as the company operates in a niche market with high barriers to entry. However, the increasing trend of digitalization and the growing demand for specialized products and services may attract new entrants.

Intensity Of Rivalry

The intensity of rivalry in Vecima Networks Inc.'s market is high, with several established players competing for market share. The company's ability to differentiate its products and services and maintain its competitive edge will be crucial in this competitive landscape.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 14.49%
Debt Cost 7.19%
Equity Weight 85.51%
Equity Cost 7.19%
WACC 7.19%
Leverage 16.95%

11. Quality Control: Vecima Networks Inc. passed 4 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

9.94$

Current Price

9.94$

Potential

-0.00%

Expected Cash-Flows