Dycom’s third quarter was marked by strong execution in core fiber-to-the-home programs and significant momentum in data center-related projects, leading to results above Wall Street’s expectations and a positive market reaction. Management pointed to robust activity from both traditional carriers and hyperscale technology providers, with CEO Dan Peyovich highlighting, “Our strong market position is validated by deepening engagement across our customer base.” Growth was also supported by recurring service and maintenance contracts, which have become a durable revenue stream.
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Dycom (DY) Q3 CY2025 Highlights:
- Revenue: $1.45 billion vs analyst estimates of $1.41 billion (14.1% year-on-year growth, 3% beat)
- Adjusted EPS: $3.63 vs analyst estimates of $3.21 (13.1% beat)
- Adjusted EBITDA: $219.4 million vs analyst estimates of $205.6 million (15.1% margin, 6.7% beat)
- Revenue Guidance for Q4 CY2025 is $1.3 billion at the midpoint, roughly in line with what analysts were expecting
- Adjusted EPS guidance for Q4 CY2025 is $1.80 at the midpoint, above analyst estimates of $1.60
- EBITDA guidance for Q4 CY2025 is $147.5 million at the midpoint, above analyst estimates of $145.7 million
- Operating Margin: 10.4%, up from 8% in the same quarter last year
- Backlog: $8.2 billion at quarter end
- Market Capitalization: $10.09 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Dycom’s Q3 Earnings Call
- Frank Louthan (Raymond James): Asked if improved DSOs represent a new normal. CEO Dan Peyovich said cash improvement was a priority, and while not always perfect, Dycom expects to maintain current levels going forward.
- Sangita Jain (KeyBanc): Sought details on Power Solutions’ customer overlap and BEAD funding timing. Peyovich explained most Power Solutions contracts are with general contractors serving hyperscalers, and BEAD revenue is expected to ramp in Q2 as awards convert to backlog.
- Alex Waters (Bank of America): Queried how additive Power Solutions is to Dycom’s $20 billion data center market opportunity and labor force integration. Peyovich emphasized the acquisition expands addressable markets and strengthens Dycom’s position with a larger skilled workforce.
- Richard Cho (JP Morgan): Questioned the wider Q4 revenue range and Power Solutions’ contract structure. Peyovich cited seasonality and fiber program ramp as drivers for the guidance range, and noted Power Solutions’ contracts are shorter-term, project-based, and less seasonal.
- Brent Thielman (D.A. Davidson): Asked about Power Solutions’ margin sustainability and potential revenue synergies from combined customer relationships. Peyovich said mid to high teens EBITDA margins are sustainable, and cross-selling should drive additional growth.
Catalysts in Upcoming Quarters
Looking ahead, the StockStory team will be monitoring (1) the successful integration and geographic expansion of Power Solutions, (2) the conversion of verbal BEAD awards into backlog as federal broadband funding is released, and (3) sustained growth in service and maintenance agreements, which underpin Dycom’s recurring revenue base. We will also keep a close eye on margin trends as the company scales its data center and fiber operations.
Dycom currently trades at $352.05, up from $296.20 just before the earnings. Is the company at an inflection point that warrants a buy or sell? The answer lies in our full research report (it’s free for active Edge members).
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