Dycom’s second quarter results were met with a significant negative market reaction, as revenue growth failed to meet Wall Street’s expectations despite rising 14.5% year over year. Management attributed the outcome to ongoing variability in the timing of large fiber-to-the-home deployments, with CEO Dan Peyovich noting that “the programs are ramping” and that short-term fluctuations reflect the modulation of customer rollouts. Strong margin expansion and improved operational efficiency, particularly in service and maintenance work, were key positives in the quarter.
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Dycom (DY) Q2 CY2025 Highlights:
- Revenue: $1.38 billion vs analyst estimates of $1.41 billion (14.5% year-on-year growth, 2.5% miss)
- EPS (GAAP): $3.33 vs analyst estimates of $2.92 (14.2% beat)
- Adjusted EBITDA: $205.5 million vs analyst estimates of $191.9 million (14.9% margin, 7.1% beat)
- Revenue Guidance for Q3 CY2025 is $1.41 billion at the midpoint, below analyst estimates of $1.46 billion
- EPS (GAAP) guidance for Q3 CY2025 is $3.20 at the midpoint, roughly in line with what analysts were expecting
- EBITDA guidance for Q3 CY2025 is $205.5 million at the midpoint, above analyst estimates of $201.5 million
- Operating Margin: 10.1%, up from 8.6% in the same quarter last year
- Backlog: $8 billion at quarter end
- Market Capitalization: $7.44 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 Q2 Earnings Call
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Richard Choe (JP Morgan) asked about the lower-than-expected revenue and seasonality impacts. CEO Dan Peyovich explained that short-term fluctuations reflected the non-linear ramping of customer programs rather than a slowdown in demand.
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Alex Waters (BofA) inquired if smaller private customers contributed to the revenue shortfall and about wireless business momentum. Peyovich said some programs were lighter in Q2 but maintained that overall backlog and momentum remain strong, especially with new wireless contracts.
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Frank Louthan (Raymond James) asked about recurring revenue growth and the scale of data center opportunities. Peyovich confirmed service and maintenance work is expanding, and described the $20 billion data center network market as a conservative estimate.
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Sangita Jain (KeyBanc) sought clarity on new data center contracts and their inclusion in backlog. Peyovich explained that the latest awards cover new geographies and represent early-stage, recurring revenue streams with hyperscalers.
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Steven Fisher (UBS) questioned visibility into Q4 revenue and margin sustainability. Peyovich expressed confidence based on current awards and operational gains, while noting that weather and project timing could affect quarterly results.
Catalysts in Upcoming Quarters
In the coming quarters, the StockStory team will watch (1) the pace of ramp-up in new fiber-to-the-home and data center contracts, (2) evidence of sustained margin improvement from operational efficiencies, and (3) the extent to which customer reinvestment from tax reform translates into incremental project awards. Updates on the BEAD broadband program and continued progress in securing hyperscaler service contracts will also be key milestones.
Dycom currently trades at $256.84, down from $269.45 just before the earnings. Is there an opportunity in the stock?The answer lies in our full research report (it’s free).
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