TipRanks Smart Growth Portfolio #22: Signal Lift Off
Dear Investors,
Welcome to the 22nd edition of the Smart Growth Portfolio and Newsletter.
1
1
Portfolio News
❖Alkami Technology (ALKT) delivered mixed Q2 results. Revenue surged to $112.1 million – an impressive 36 % year‑over‑year increase – driven by strong subscription sales and the integration of its newly acquired MANTL platform. This fueled a robust adjusted EBITDA of $11.9 million, more than doubling from a year ago, reflecting both top‑line growth and improving operational leverage. Registered users climbed to 20.9 million, up 2.3 million from Q2 2024, while annual recurring revenue (ARR) hit $424 million, up ~32 %. However, the company reported a loss of $0.13 per share versus expected earnings of $0.08 per share.
Looking ahead to the third quarter, Alkami Technology issued guidance that fell slightly short of Wall Street expectations. The company projected revenue of approximately $113.3 million at the midpoint, trailing the consensus estimate of $116 million. Adjusted EBITDA for the quarter is expected to reach $13.5 million at the midpoint, signaling continued progress in profitability despite the more modest top-line outlook. For the full year 2025, Alkami anticipates revenue of $445 million and adjusted EBITDA of $52.8 million, both at their respective midpoints. The Q2 EPS miss and lower-than-expected guidance spooked investors, pressuring the stock.
❖ Itron (ITRI) reported its second-quarter results on July 31, 2025, after market close, demonstrating solid execution despite ongoing macro headwinds. The company delivered adjusted EPS of $1.62 – well ahead of expectations – driven by record gross margins of 36.9% and robust free cash flow of $91 million, reflecting strong operational discipline. However, revenue came in slightly below estimates at $607 million, missing consensus by a narrow margin.
Looking ahead, Itron revised its full-year 2025 revenue guidance to $2.38 billion at the midpoint, down from its prior estimate of $2.5 billion, reflecting softer top-line expectations. At the same time, it raised its EPS outlook to $6.10 from $5.40, signaling improved profitability. For Q3, the company expects revenue between $570 million and $585 million, with adjusted EPS in the range of $1.45 to $1.55.
Despite the strong earnings beat, the market reacted negatively to the reduced revenue outlook, sending shares down roughly 10% in pre-market trading. While short-term sentiment remains pressured by an ongoing client capex downcycle, Itron’s margin resilience and free cash flow strength highlight the durability of its model. Acknowledging near-term challenges, we continue to believe in its long-term proposition.
❖ Innodata (INOD) delivered a striking set of Q2 2025 results, transforming near-term momentum within its generative AI–driven business. Revenue jumped 79% year-over-year to approximately $58.4 million, well above expectations, while adjusted EBITDA surged to $13.2 million, a leap from $2.8 million a year ago, showcasing impressive operating leverage.
Net income reached $7.2 million, or $0.20 per diluted share, reversing a break-even stance from the previous year. Innodata raised its full-year 2025 guidance, and now expects at least 45% organic revenue growth, up from the 40% projected last quarter. The revision reflects finalized deals and a strong near-term pipeline, with management expressing confidence that additional wins will be closing soon.
❖ Micron (MU) has reinforced its leadership in data center storage with the launch of three next-generation solid state drives (SSDs), all built on its proprietary G9 NAND. The new lineup includes a trio of industry-first innovations: the world’s first PCIe Gen6 NVMe SSD, the highest-capacity E3.S SSD, and the lowest latency mainstream PCIe Gen5 SSD tailored for AI data centers. These products are engineered for peak performance, energy and space efficiency, and seamless integration, having been validated with key ecosystem partners to accelerate deployment.
Designed to meet the evolving and diverse demands of AI workloads, the SSDs deliver a new standard in speed and scalability. The launch marks a significant leap in performance, density, and efficiency for next-gen infrastructure.
1
1
Under Review
❖ We are keeping Alkami Technology (ALKT) under review due to softening analyst sentiment and negative market perception of macro-exposed fintech stocks.
Over the past quarter, the average 12-month price target has been revised downward, with Needham, Lake Street, and JPMorgan all trimming their estimates. While no downgrades have occurred, there haven’t been any upgrades since March, and the broader tone from Wall Street has grown increasingly cautious.
That caution was underscored by Alkami’s second-quarter results, which led to a sharp 15% drop in its stock. The sell-off followed an EPS miss and softer-than-expected guidance – surprising not just investors but analysts as well. In hindsight, we should have probably sold instead of keeping Alkami under review, but few predicted this miss, analysts included. Given the extent of the damage, it would be wrong to panic-sell, so we will wait – hoping for some reversal.
Alkami’s long-term strategy continues to emphasize reinvestment in innovation and growth rather than near-term profitability. While this positions the company well for future upside, the current environment favors profitable, cash-generating tech names. As a result, “growth-at-all-costs” models like Alkami’s have fallen out of favor amid ongoing volatility and macro uncertainty.
With the stock under pressure, a sustained rebound may prove difficult in the near term, despite solid fundamentals. As such, we’ll continue to monitor price action closely over the coming days and reassess shortly, to make a more informed decision on timing. For now, Alkami remains in the Smart Growth Portfolio, though under strict surveillance.
1
❖ We are keeping Clearwater Analytics (CWAN) under review as the stock navigates short-term volatility tied to its ambitious acquisition strategy.
While CWAN has declined roughly 22% year-to-date, this appears to stem more from investor anxiety over integration challenges than from any fundamental deterioration. In 2025, Clearwater announced a transformative wave of M&A, acquiring Enfusion, Beacon, and BISTRO to build a unified front-to-back investment operations platform. These deals are ambitious and will reshape the business, but they also introduce complexity: Clearwater must integrate disparate technologies, cultures, and clients. Additionally, the acquisitions were financed with stock and debt, resulting in dilution and a more leveraged balance sheet – factors that are weighing down near-term sentiment amid elevated interest rates.
However, analysts remain optimistic, overwhelmingly assigning CWAN a “Buy” rating. There have been no downgrades in the past two months; on the contrary, Piper Sandler initiated coverage with a “Buy” in late June. Although Oppenheimer slightly lowered its Street-high price target, it now matches Morgan Stanley’s and implies an upside of ~50% from current levels. Morgan Stanley, RBC Capital, and D.A. Davidson recently reaffirmed their “Buy” rating and $36 price target.
Meanwhile, CWAN’s business momentum remains positive, tilting our sentiment toward continuing to hold the stock in the Portfolio. Three weeks ago, Clearwater announced that Versicherungskammer Group – Germany’s largest public insurer – selected its platform to modernize middle-, back-office, and risk operations following a rigorous review. This high-profile win validates Clearwater’s strategy and demonstrates its ability to deliver an integrated, cloud-native solution leveraging its recent acquisitions.
In addition, McCormick & Company has recently adopted Clearwater’s commercial paper (CP) workflow solution, showing demand for its platform in corporate treasury and liquidity management use cases. This adoption underlines a shift in financial services toward tech‑enabled liquidity tools in volatile rate environments and validates Clearwater’s role in a ~$1.4 trillion U.S. CP market. Each new enterprise client, especially large corporates like McCormick, raises the potential for recurring SaaS revenue and upsell opportunities. The partnership aligns with trends steering corporations toward cloud-based investment data platforms, reinforcing Clearwater’s position in investment accounting and risk reporting SaaS.
Moreover, Clearwater recently announced a strategic partnership with Bloomberg, incorporating CWAN’s accounting platform into Bloomberg’s enterprise investment solutions to create a comprehensive offering for asset owners and managers. This is a major milestone, strengthening Clearwater’s competitive position against larger full-stack providers and enhancing its value proposition as an open, interoperable platform built on best-of-breed partnerships. Through this collaboration with Bloomberg’s global institutional footprint, CWAN gains access to an expanded client base – potentially accelerating client acquisition and driving earnings growth beyond its current trajectory.
To support this momentum, Clearwater has bolstered its leadership team with experienced executives from top-tier firms. Barrie Mellin joins as Head of Insurance and Asset Owners, bringing over 20 years at BlackRock. Dennis Lee, with 30 years in senior roles at EY, PwC, and Deloitte, joins as Head of Insurance Solutions. Raheel Syed becomes Global Head of Professional Services, bringing 25 years of experience including as a Partner at EY and senior roles at Manulife and RBC.
While we remain mindful of potential integration shortfalls, we view Clearwater’s stock underperformance as temporary – though we are choosing to remain vigilant for now. CWAN is scheduled to release its Q2 earnings on August 6.
1
1
1
This Week’s Top Growth Pick: Aviat Networks (AVNW)
Aviat Networks, Inc. is a wireless transport and access solutions provider serving communications service companies, utilities, public safety agencies, and private network operators worldwide. Its portfolio spans microwave radios, multi‑band systems, private LTE/5G solutions, and network management software that reduce costs and simplify operations. Aviat’s technology is used in mission‑critical networks where reliability, scalability, and performance are essential. The company combines decades of expertise with a focus on modular hardware, integrated routing, and innovative software to address growing demand for bandwidth and low‑latency connectivity. Positioned at the intersection of private networks, 5G expansion, and rural broadband buildouts, Aviat leverages its global footprint, supply chain agility, and customer‑centric services to support the design, deployment, and operation of next‑generation wireless infrastructure.
1
Microwave Momentum
Aviat Networks traces its operational roots to a 2007 merger of Harris Corporation’s microwave division and Stratex Networks, rebranding as Aviat in 2010. But the real acceleration began in the past five years, when the company transformed from a niche transport vendor into a broader industrial wireless player.
In early 2020, Pete Smith was appointed CEO, ushering in a refocused strategy that blended legacy microwave leadership with untapped growth in private LTE/5G and rural broadband markets. Since then, Aviat has significantly stepped up its R&D investment – with roughly $35 million spent in fiscal 2024 alone – to enhance RF performance, spectrum efficiency, and its software stack including cloud-based network management tools.
Growth picked up the pace in 2022 and beyond through strategic acquisitions. In July 2022, Aviat completed the acquisition of Redline Communications, expanding its footprint in wide-area industrial wireless infrastructure for mission‑critical applications in harsh or remote environments. Then, in July 2024, Aviat closed the acquisition of 4RF Limited, bringing in narrowband radios and Private LTE/5G routers used heavily in utilities, oil and gas, mining, public safety, and SCADA systems. That deal opened new cross‑sell opportunities with an extensive industrial customer base and provided immediacy to margin accretion and adjusted EBITDA growth.
The most transformative development came in November 2023, when Aviat finalized a $65.5 million acquisition of NEC’s Wireless Transport business (Pasolink). That expanded its scale dramatically – giving Aviat a broader product portfolio, global reach across more than 20 Tier‑1 service providers, and raising it to the position of the third‑largest microwave transport vendor worldwide.
Alongside these acquisitions, Aviat has broadened its customer‑driven innovation – combining NEC and Redline technologies with its ProVision Plus network software, Multi‑Band radios, and Health Assurance Software to deliver higher capacity at lower cost across more than 170 countries.
Aviat has also strengthened its market position through targeted partnerships with industry leaders. Collaborations with NEC and Smartfren, along with undisclosed partnerships in North America, have supported expansion in private networks, 5G transport, and rural broadband deployments. These alliances, combined with an expanded edge‑capable hardware and software roadmap, enhance Aviat’s ability to integrate with cloud‑enabled and AI‑driven network operators. Together with its recent acquisitions and product innovations, these efforts position Aviat to capture a growing share of mission‑critical wireless infrastructure investments worldwide.
Source: Aviat Networks, Inc. Fiscal Q3 2025 Investor Presentation
1
Backhaul Boom
Aviat Networks generates revenue by supplying high‑capacity wireless infrastructure to telecom carriers, utilities, and private network operators. Its business revolves around two complementary streams. The larger share comes from Products and Solutions, comprising about 67% of annual sales – microwave and millimeter‑wave radios, multi‑band systems, and routers that form the backbone of wireless backhaul and private LTE/5G networks. These systems are engineered for mission‑critical reliability, low‑latency performance, and simplified deployment, giving Aviat an edge over larger but less focused rivals.
The rest of the business comes from Professional Services and Software (~33% of revenue) – installation, commissioning, maintenance, and network management tools such as ProVision Plus and Health Assurance Software. These offerings create recurring revenue, especially as AviatCloud and other software solutions take on a SaaS‑like model that improves stickiness and margins. The company’s recurring services provide continuity in revenue and deeper customer engagement – a competitive advantage in long‑term contracts involving critical infrastructure.
The company serves more than 300 carriers worldwide, including Tier‑1 operators such as AT&T, Verizon, and T‑Mobile, as well as Tier‑2 carriers that operate large regional or national networks. Aviat holds roughly 43% market share in the total wireless backhaul segment and supplies about 45% of Tier‑1 carriers’ wireless transport demand – meaning their purchases of microwave backhaul equipment and solutions – in North America. This entrenched position reflects not just Aviat’s installed base but also its ability to win on total cost of ownership through modular multi‑band hardware and integrated routing that reduce deployment complexity and long‑term costs.
The opportunity in front of Aviat remains significant. Microwave backhaul continues to underpin global connectivity – more than half of base stations globally, outside North‑East Asia, still rely on it – and demand is expected to rise as 5G networks expand. Industry analysts project a 41% CAGR in global 5G wireless transport through 2027. In the U.S., rural broadband funding programs have created a market opportunity worth more than $400 million annually and growing rapidly.
The broader wireless transport market remains fragmented and highly competitive – with giants like Nokia, Ericsson, and Huawei present. Aviat occupies a strong niche by offering a low‑TCO solution ideal for private networks, utilities, and rural ISPs, supported by its focus on edge‑capable, modular multi‑band hardware and embedded routing. Its acquisitions of NEC’s Pasolink business, Redline Communications, and 4RF have expanded Aviat’s product range and customer reach, enabling cross‑selling into utilities, mining, oil and gas, and public safety systems.
Given its solid position and the growing demand for high‑bandwidth, reliable links in 5G and private networks, Aviat has substantial room for further market‑share gains. Its differentiated value proposition, strong product ecosystem, and global reach position the company to capture outsized growth as demand for high‑capacity, low‑latency connectivity continues to expand worldwide.
Source: Aviat Networks, Inc. Fiscal Q3 2025 Investor Presentation
1
Bandwidth Breakout
Aviat Networks delivered a strong third quarter of fiscal 2025, posting its second straight double beat on revenue and non‑GAAP EPS while setting a new record for adjusted EBITDA. Revenue came in at $112.6 million, up 1.6% from a year ago, and adjusted EBITDA reached $14.9 million, a 17% increase. Non‑GAAP EPS rose to $0.88 from $0.78, comfortably ahead of analyst expectations.
This marked Aviat’s 19th consecutive quarter of trailing twelve‑month revenue growth. While the company’s headline growth rates may seem modest compared to the IT sector, achieving steady revenue increases over such a long period is unusual for smaller Telecom hardware and services providers, whose results are often tied to volatile carrier spending cycles, government contracts, and capital‑intensive projects. Among small‑ and mid‑cap wireless backhaul and telecom equipment companies, Aviat’s growth performance is actually near the top of the pack.
Profitability continued to improve in FQ3, with GAAP operating income rising 64% year‑over‑year to $9.3 million, while non‑GAAP operating income climbed to $13.0 million, up from $11.4 million a year earlier. GAAP net income was $3.5 million, or $0.27 per share, compared with $3.9 million, or $0.30 per share, in the prior‑year quarter.
Margins expanded meaningfully. GAAP gross margin improved to 34.9% from 32.5%, while non‑GAAP gross margin rose to 35.8% from 35.1%. The increase was driven by a favorable regional and product mix, supported by disciplined cost control – non‑GAAP operating expenses were held essentially flat at $27.2 million.
Regional trends remained mixed. North America revenue grew 11.3% to $49.4 million, fueled by private‑network projects, while international revenue fell 4.8% to $63.2 million, primarily due to timing of capex plans of mobile network operators.
Beyond the headline numbers, Aviat reported the first customer orders for its ProVision Plus network management software from Pasolink users – an early step toward capturing a $50 million opportunity over the next five years. The company’s balance sheet remained solid, with $49.4 million in cash and net debt of $24.5 million at quarter‑end.
Management reaffirmed full‑year guidance of $430-470 million in revenue and $30-40 million in adjusted EBITDA, broadly in line with analyst forecasts clustered near the top end of the range.
While Aviat has not yet achieved consistent GAAP profitability, the record EBITDA, expanding margins, and stable cost base point to a clear path toward sustained earnings growth. With private‑network demand holding firm and early traction for ProVision Plus adding incremental margin potential, Aviat closes fiscal 2025 positioned for a stronger finish and a more profitable year ahead.
Source: Aviat Networks, Inc. Fiscal Q3 2025 Investor Presentation
1
Valuation Signal
Despite its core focus on telecom infrastructure, Aviat Networks is categorized under the Communications Equipment sub‑industry within the Information Technology sector – making comparisons to broad sector averages largely meaningless. However, benchmarking Aviat against true peers in its sub‑industry, particularly smaller firms with overlapping business models, provides a far more meaningful picture of its investment appeal.
Aviat’s stock, AVNW – along with most of its peers in the industry – struggled last year as telecom customers faced pressure from high interest rates and macro uncertainty, with smaller, riskier stocks hit hardest. Sentiment has improved in 2025, and AVNW has rebounded strongly, climbing more than 28% year‑to‑date.
Despite the strong rebound, Wall Street believes the stock’s potential isn’t yet fully realized. Analyst consensus views AVNW as a “Strong Buy,” with an average price target implying almost 30% upside from current levels. Confidence is reinforced by the company’s high institutional ownership – roughly 75% of the float – which lends credibility to its long‑term story.
Additionally, beyond the promising fundamentals, high potential upside rests on the stock’s apparent undervaluation. Multiple DCF analyses suggest that AVNW trades about 40-60% below intrinsic value. The stock is cheaper than most comparable peers on forward non‑GAAP P/E and trailing twelve‑month Price/Sales, and also trades below peer averages on forward and TTM EV/Sales and EV/EBITDA. This discount persists despite Aviat achieving the fastest revenue growth in its peer group over the past year and maintaining expectations for continued expansion.
With a mix of undervaluation, growing earnings power, and clear market‑share opportunities, AVNW stands out as a rare small‑cap telecom equipment play that combines strong fundamentals with meaningful upside potential.
1
To Sum It All Up
Aviat Networks provides wireless transport and access solutions that power mission‑critical communications for carriers, utilities, and private network operators worldwide. Its portfolio spans microwave radios, multi‑band systems, routers, and software that simplify network deployment while lowering total cost of ownership. Positioned as a focused alternative to larger, less agile rivals, Aviat combines decades of expertise with a disciplined operating model and a track record of steady growth. Recent acquisitions have broadened its product set and customer reach, while early traction for its new software offerings points to expanding high‑margin opportunities. For growth‑oriented investors seeking exposure to private networks, 5G build‑outs, and rural broadband expansion, Aviat offers a differentiated way to participate in long‑term connectivity trends with a clear path to scale, margin expansion, and rising market share.
1
1
Smart Growth Portfolio
|
1
1
Disclaimer
The information contained in this article represents the views and opinions of the writer only, and not the views or opinions of TipRanks or its affiliates and should be considered for informational purposes only. TipRanks makes no warranties about the completeness, accuracy, or reliability of such information. Nothing in this article should be taken as a recommendation or solicitation to purchase or sell securities. Nothing in the article constitutes legal, professional, investment and/or financial advice and/or takes into account the specific needs and/or requirements of an individual, nor does any information in the article constitute a comprehensive or complete statement of the matters or subject discussed therein. TipRanks and its affiliates disclaim all liability or responsibility with respect to the content of the article, and any action taken upon the information in the article is at your own and sole risk. The link to this article does not constitute an endorsement or recommendation by TipRanks or its affiliates. Past performance is not indicative of future results, prices, or performance.
