Clearfield (NASDAQ:CLFD) reported fiscal third-quarter 2026 net sales of $43.9 million, up 13% from $38.8 million a year earlier and 28% sequentially, as the company advanced its push into data center connectivity while confronting continued delays in broadband-network deployment.
Net income from continuing operations totaled $3 million, or $0.22 per diluted share, compared with $2.3 million, or $0.16 per share, in the prior-year quarter. The company said it ended the quarter with approximately $155 million in cash, short-term and long-term investments and no debt.
Hyperscale Order Supports Data Center Strategy
Beranek said Clearfield became involved early in the project’s design process and worked with the end customer on a tailored connectivity solution. The collaboration resulted in an expansion of Clearfield’s NOVA platform, including a new panel developed with the customer that the company plans to standardize and introduce more broadly to the data center market later this calendar year.
“This initial engagement demonstrates that our strategy is resonating with customers and broadening our addressable market,” Beranek said, while cautioning that it remains too early to project the size or timing of future data center opportunities.
During the question-and-answer session, Beranek said the $22 million commitment is an order in hand and represents the first stage of the first building on a hyperscale campus. She said the products will be used inside the data center rather than in an outside-plant campus application.
Beranek said the opportunity also reflects Clearfield’s experience serving telecom central offices and its reputation for scalable products, labor savings, quality and customer responsiveness. She said personnel with broadband-market experience are increasingly being drawn into the data center market.
Broadband Deployment Remains Constrained
Clearfield lowered its full-year outlook, citing industry demand constraints. Beranek said the slow pace of the federal Broadband Equity, Access and Deployment, or BEAD, program continues to affect customer planning, including both BEAD-supported and other commercial projects.
According to Beranek, customers are delaying capital decisions as they await greater clarity around BEAD funding, creating what she described as a “double-edged sword” in which funds that could support commercial projects are being held back in anticipation of BEAD-related opportunities.
She also pointed to limited availability of fiber in the U.S. market. While fiber activity is occurring, Beranek said national carriers and data centers have been receiving much of the available supply, leaving smaller community broadband providers and tier-two multiple-system operators with reduced allocations. She said some projects are being pushed into next year or reduced in size and scope.
Despite the near-term conditions, management maintained that the long-term case for fiber deployment remains intact. Beranek highlighted the company’s recently announced Fault Managed Power portfolio, designed to provide fiber connectivity and power through a coordinated solution for hard-to-reach locations.
Margins and Expenses
Third-quarter gross margin was 31.8%, compared with 35.3% in the same period a year earlier and 32.5% in the fiscal second quarter. Chief Financial Officer Dan Herzog said several one-time items reduced gross margin by approximately 1.8 percentage points on a net basis.
Operating expenses from continuing operations fell 6% year over year to $11.4 million, or 25.9% of net sales, from $12.1 million, or 31.3% of sales. Expenses were also down 14%, or $1.8 million, from the second quarter.
Clearfield repurchased approximately 31,000 shares for $897,000 during the quarter under its share repurchase program.
In discussing a backlog adjustment, Beranek said a longtime Community Broadband customer had changed its business focus from network expansion toward growing subscribers on its existing network. The customer told Clearfield it would not need certain cabinets for several quarters or potentially years, she said.
The customer-specific product change resulted in an approximately $2.6 million inventory write-off for custom or unique inventory, according to Beranek. She said Clearfield continues to sell other products to the customer and does not view the development as a broader demand trend.
Outlook Reduced for Fiscal 2026
For the fiscal fourth quarter, Clearfield expects continuing-operations net sales of $38 million to $42 million, operating expenses relatively consistent with its fiscal second-quarter level, and diluted earnings per share ranging from break-even to $0.07.
The company reduced its full-year fiscal 2026 outlook to:
- Net sales from continuing operations of $151 million to $155 million.
- Net income per diluted share of $0.14 to $0.21.
Clearfield sold its Nestor Cables business in November, and management said financial results for fiscal 2025 and prior periods have been presented with the Clearfield segment as continuing operations and Nestor as discontinued operations.
Beranek said Clearfield remains confident it is maintaining its share of business in the broadband market, even as it acknowledges that it will not meet its previous annual guidance. She said management is encouraged by the early response to its data center initiative and plans to provide an update on progress in November.
About Clearfield (NASDAQ:CLFD)
Clearfield, Inc (NASDAQ: CLFD) is a Minneapolis-based company specializing in fiber management products for broadband network deployments. The company’s core offerings include fiber distribution hubs, enclosures, splice trays, patching panels and connectivity accessories designed to simplify installation and maintenance of fiber-optic networks. Clearfield’s modular FieldSmart™ platform provides a scalable approach for service providers, utilities and enterprise organizations looking to expand or upgrade their fiber infrastructure.
Clearfield serves a diverse customer base that includes cable and internet service providers, telecommunications operators, wireless carriers, utilities and municipalities.
