Core Viewpoint - Ciena Corporation (CIEN) has entered a growth cycle, supported by solid 3Q24 performance and positive demand trends across major customer segments [2][3][7] Financial Performance - CIEN reported 3Q24 revenue of $942 million, exceeding consensus estimates of $928 million and within the management-guided range of $880 to $960 million [3] - Gross margin improved to 43.7%, stable compared to 2Q24 and up 100 basis points from 3Q23 [3] - Operating expenses as a percentage of revenue decreased by 100 basis points to 35.7%, contributing to strong growth in adjusted net income and adjusted EPS of $0.35, surpassing the consensus estimate of $0.26 [3] Growth Drivers - Revenue growth in 3Q24 was driven by all major customer segments, with direct cloud providers growing 9% sequentially [4] - CIEN is experiencing robust demand trends in AI and cloud network infrastructure, with an increase in the customer base to 122 from 104 in 2Q24 and 86 in 1Q24 [4] - The company has received 23 orders for WaveLogic 6, indicating strong traction for its superior product [4] Supply Chain Improvements - CIEN has made significant progress in supply chain optimization, establishing direct sourcing relationships with major component suppliers and diversifying its supply chain geographically [4] - This transformation is expected to yield better cost control and improved revenue quality over time [4] Valuation Outlook - The growth forecast for CIEN is expected to accelerate back to 10% by FY26, with net margins anticipated to improve [5] - The forward PE multiple has been upgraded to 20x from 18x, reflecting market willingness to attach a premium as CIEN's growth accelerates [5]

Core Viewpoint - Ciena Corporation reported a significant decline in earnings and revenues for the third quarter of fiscal 2024, driven by a slower recovery in order volumes from international service providers, particularly in Europe due to macroeconomic challenges, although there was growth in certain regions like India and North America [1][2]. Financial Performance - Adjusted earnings per share (EPS) for Q3 fiscal 2024 were 35 cents, exceeding the Zacks Consensus Estimate of 26 cents, but down 40.7% year over year [1]. - Total revenues decreased by 11.8% year over year to $942.3 million, slightly surpassing the Zacks Consensus Estimate by 1.4% [1]. - Non-GAAP adjusted gross margin improved to 43.7% from 42.7% a year ago, while adjusted operating margin fell to 8% from 12% [8]. Segment Results - Networking Platforms, which accounted for 74.2% of total revenues, saw a 17.4% year-over-year decline to $699.5 million [4]. - Platform Software and Services revenues increased by 5.5% year over year to $83.2 million [4]. - Global Services revenues rose by 3.5% year over year to $133.8 million [5]. Regional Performance - Revenues in the Americas were $718.6 million, down 4.1% year over year [5]. - Europe, the Middle East, and Africa generated $135 million, down 11.6% from the prior year [5]. - Asia Pacific revenues totaled $88.7 million, reflecting a significant decline of 46.4% [5]. Customer and Product Developments - Non-telco customer revenues represented 46% of total revenues, with two customers contributing 26.6% of the top line [6]. - Ciena added 12 new customers for WaveLogic 5 Extreme, bringing the total to over 300 [6]. - Management expects growth in the fourth quarter due to increased adoption of WaveLogic 6 Extreme, with orders secured from 23 customers [7]. Cash Flow and Share Repurchase - Net cash used in operating activities was $159.4 million, a significant decrease from $9 million net cash generated in the prior year [9]. - Ciena repurchased approximately 600,000 shares worth $29 million and plans to buy back a total of $250 million in shares by the end of fiscal 2024 [10]. Guidance - For Q4 fiscal 2024, management anticipates revenues between $1,060 million and $1,140 million, with adjusted gross margin expected in the low to mid 40% range [11].

Revenue Performance - Revenue declined by 11.8% in Q3 fiscal 2024 compared to Q3 fiscal 2023, and 11.2% in the first nine months of fiscal 2024 compared to the same period in fiscal 2023[95]. - Total revenue for the quarter ended July 27, 2024, was $942.3 million, a decrease of 11.8% compared to $1,067.9 million for the same quarter in 2023[107]. - Total revenue for the nine months ended July 27, 2024, was $2.89 billion, down 11.2% from $3.26 billion in the prior year[107]. - Product revenue for the quarter ended July 27, 2024, was $729.5 million, a decrease of 15.7% compared to $865.2 million for the same quarter in 2023[108]. - Services revenue for the quarter ended July 27, 2024, was $212.8 million, an increase of 5.0% compared to $202.7 million for the same quarter in 2023[109]. Segment Performance - Networking Platforms segment revenue decreased by $147.0 million in Q3 fiscal 2024, with Optical Networking products down $112.1 million and Routing and Switching products down $34.9 million[97]. - Platform Software and Services revenue increased by 5.5% in Q3 fiscal 2024 compared to Q3 fiscal 2023, while Blue Planet Automation Software and Services revenue surged by 95.9%[97]. - Global Services revenue grew by 3.5% in Q3 fiscal 2024 compared to Q3 fiscal 2023, driven by maintenance support and training services[97]. - Networking Platforms segment revenue decreased by $433.5 million over nine months, with Optical Networking products down $376.2 million and Routing and Switching products down $57.3 million[100]. - Networking Platforms segment profit decreased by $201.1 million for the nine months ended July 27, 2024, primarily due to lower product sales volume and increased research and development costs[119]. - Platform Software and Services segment profit increased by $29.1 million for the nine months ended July 27, 2024, primarily due to higher sales volume[119]. Backlog and Orders - Backlog decreased to $2.1 billion as of the end of Q3 fiscal 2024, down from $4.2 billion at the end of fiscal 2022[90]. - Order levels relative to revenue increased in Q3 fiscal 2024, attributed to rising bandwidth demand related to generative AI[89]. - The timing and pace of backlog fulfillment will significantly impact revenue, with potential volatility in results due to customer readiness and capital expenditure constraints[91]. - The company expects gradual improvements in order volumes and dynamics, influenced by macroeconomic factors and customer inventory levels[89]. Geographic Revenue Performance - Americas revenue decreased by $30.9 million for the quarter, driven by a $41.8 million decline in Networking Platforms segment sales[103]. - EMEA revenue decreased by $17.8 million for the quarter, primarily due to a $27.0 million decrease in Networking Platforms segment sales[103]. - APAC revenue decreased by $76.9 million for the quarter, mainly reflecting a $78.3 million decline in Networking Platforms segment sales[103]. Cost and Profitability - Total cost of goods sold for the quarter was $538.4 million, down 13.0% from $618.9 million in the prior year[107]. - Gross profit for the quarter was $403.9 million, a decrease of 10.0% compared to $448.9 million in the same quarter last year, with a gross margin of 42.9%[107]. - Gross profit for products decreased by $52.3 million, while gross margin slightly increased by 30 basis points due to product cost reductions[109]. - Gross profit for services increased by $7.3 million, with gross margin rising by 100 basis points, primarily due to improved margins on Blue Planet software services[109]. - Total operating expenses for the quarter ended July 27, 2024, were $377.2 million, an increase of 1.7% compared to $370.7 million for the same quarter in 2023[112]. Expenses and Income - Research and development expenses for the quarter decreased by $0.5 million, reflecting decreases in professional services[112]. - General and administrative expenses increased by $8.9 million, primarily due to an increase in legal fees[113]. - Interest and other income, net increased by $3.8 million, primarily from higher interest income on investments[116]. - Provision for income taxes decreased by 93.9% to $2.1 million for the quarter ended July 27, 2024, compared to $34.6 million for the same quarter in 2023[116]. - Significant asset impairments and restructuring costs decreased by 67.4% to $1.4 million for the quarter ended July 27, 2024, compared to $4.2 million for the same quarter in 2023[112]. Cash Flow and Investments - Cash from operations generated $165.2 million for the nine months ended July 27, 2024, exceeding working capital requirements of approximately $139.0 million[121]. - Cash, cash equivalents, and investments decreased by $36.6 million during the first nine months of fiscal 2024, with cash used for stock repurchases totaling $125.8 million[122]. - Total cash, cash equivalents, and investments in marketable debt securities amounted to $1.2 billion as of July 27, 2024[123]. - The company repurchased an additional $118.0 million of common stock under its stock repurchase program during the first nine months of fiscal 2024[124]. - Days sales outstanding (DSOs) increased from 94 to 97 for the first nine months of fiscal 2024[128]. Tax and Accounting - Provision for income taxes decreased by $64.6 million for the first nine months of fiscal 2024, primarily due to a decrease in pre-tax book income[118]. - The effective tax rate for the first nine months of fiscal 2024 was lower than the effective tax rate for the first nine months of fiscal 2023 due to a reduction in capitalized research and development expenses[118]. - There have been no material changes to the company's critical accounting policies and estimates since October 28, 2023[131]. - The company is exposed to market risks related to changes in interest rates and foreign currency exchange rates[133]. - For detailed information on recent accounting pronouncements, refer to Note 2 in the Condensed Consolidated Financial Statements[132].

Ciena Corporation (NYSE:CIEN) Q3 2024 Earnings Conference Call September 4, 2024 8:30 AM ET Company Participants Gregg Lampf - Vice President of Investor Relations Gary Smith - President and Chief Executive Officer Jim Moylan - Chief Financial Officer Scott McFeely - Executive Advisor Conference Call Participants Meta Marshall - Morgan Stanley Simon Leopold - Raymond James Samik Chatterjee - JPMorgan Amit Daryanani - Evercore Tim Long - Barclays George Notter - Jefferies Tal Liani - Bank of America David Vo ...

Ciena (CIEN) reported $942.31 million in revenue for the quarter ended July 2024, representing a year-overyear decline of 11.8%. EPS of $0.35 for the same period compares to $0.59 a year ago. The reported revenue represents a surprise of +1.44% over the Zacks Consensus Estimate of $928.91 million. With the consensus EPS estimate being $0.26, the EPS surprise was +34.62%. While investors scrutinize revenue and earnings changes year-over-year and how they compare with Wall Street expectations to determine the ...

Ciena (CIEN) came out with quarterly earnings of $0.35 per share, beating the Zacks Consensus Estimate of $0.26 per share. This compares to earnings of $0.59 per share a year ago. These figures are adjusted for nonrecurring items. This quarterly report represents an earnings surprise of 34.62%. A quarter ago, it was expected that this developer of high-speed networking technology would post earnings of $0.15 per share when it actually produced earnings of $0.27, delivering a surprise of 80%. Over the last f ...

Financial Performance - Ciena's Q3 FY24 revenue was $942.3 million, compared to $1,067.9 million in Q3 FY23[17] - The adjusted gross margin was 43.7% in Q3 FY24, up from 42.7% in Q3 FY23[17] - Adjusted operating expenses were $336.0 million in Q3 FY24, compared to $327.9 million in Q3 FY23[17] - Adjusted EBITDA was $98.5 million in Q3 FY24, down from $151.3 million in Q3 FY23[17] - Adjusted EPS was $0.35 in Q3 FY24, compared to $0.59 in Q3 FY23[17] Revenue Segmentation - Networking Platforms revenue was $699.5 million in Q3 FY24, representing 74.2% of total revenue, compared to $846.6 million (79.2%) in Q3 FY23[19] - Optical Networking contributed $606.8 million, or 64.4% of total revenue in Q3 FY24, versus $719.0 million (67.3%) in Q3 FY23[19] - Routing and Switching revenue was $92.7 million (9.8%) in Q3 FY24, compared to $127.6 million (11.9%) in Q3 FY23[19] - Global Services revenue totaled $133.8 million, accounting for 14.2% of total revenue in Q3 FY24, compared to $129.3 million (12.1%) in Q3 FY23[19] Market and Strategy - Non-telco customers accounted for approximately 46% of Ciena's total revenue in Q3 FY24[14, 20] - Ciena is targeting $250 million for FY2024 to complete the stock repurchase plan[14] - Ciena's addressable market expansion strategy targets a $15 billion expansion by 2027, with a CAGR of 36%[11]

[Financial Highlights](index=1&type=section&id=Financial%20Highlights) Ciena reported a decline in Q3 2024 revenue and net income, with management emphasizing growing momentum with cloud providers and confidence in market share gains through innovation Q3 2024 Key Financial Metrics | Metric | Value ($) | | :--- | :--- | | Revenue | $942.3 million | | GAAP Net Income per Share | $0.10 | | Adjusted (non-GAAP) Net Income per Share | $0.35 | | Share Repurchases | $29.0 million (0.6 million shares) | - The CEO stated that **strong Q3 results** reflect **growing momentum** with cloud providers and a continued gradual recovery with service providers[1](index=1&type=chunk) - The company believes it is **well-positioned** to **gain market share** and deliver **profitable growth** due to its innovation in cloud and AI-capable infrastructures[1](index=1&type=chunk) Q3 Net Income Comparison (YoY) | Metric | Q3 FY2024 (million $) | Q3 FY2023 (million $) | | :--- | :--- | :--- | | GAAP Net Income | $14.2 | $29.7 | | Adjusted (non-GAAP) Net Income | $50.8 | $89.1 | [Performance Summary](index=1&type=section&id=Performance%20Summary) Ciena's Q3 2024 revenue declined 11.8% year-over-year, with improved gross margins but contracted operating margins, while Networking Platforms remained the largest segment despite a share decrease [Key Financial Metrics (GAAP vs. Non-GAAP)](index=1&type=section&id=Key%20Financial%20Metrics%20(GAAP%20vs.%20Non-GAAP)) Q3 2024 total revenue decreased by 11.8% to **$942.3 million**, with GAAP gross margin improving to **42.9%** but GAAP operating margin declining to **2.9%** year-over-year Q3 Performance Comparison (YoY) | Metric | Q3 FY2024 (GAAP) | Q3 FY2023 (GAAP) | Change (%) | | :--- | :--- | :--- | :--- | | Revenue | $942.3 million | $1,067.9 million | (11.8)% | | Gross Margin | 42.9% | 42.0% | +0.9% | | Operating Expense | $377.2 million | $370.7 million | +1.7% | | Operating Margin | 2.9% | 7.3% | (4.4)% | | **Metric** | **Q3 FY2024 (Non-GAAP)** | **Q3 FY2023 (Non-GAAP)** | **Change (%)** | | Adj. Gross Margin | 43.7% | 42.7% | +1.0% | | Adj. Operating Expense | $336.0 million | $327.9 million | +2.5% | | Adj. Operating Margin | 8.0% | 12.0% | (4.0)% | | Adj. EBITDA | $98.5 million | $151.3 million | (34.9)% | [Revenue by Segment](index=2&type=section&id=Revenue%20by%20Segment) Total Networking Platforms revenue declined to **$699.5 million**, representing **74.2%** of total revenue, while Blue Planet Automation Software and Services nearly doubled its revenue to **$25.8 million** Q3 Revenue by Segment (in millions $) | Segment | Q3 FY2024 Revenue | % of Total | Q3 FY2023 Revenue | % of Total | | :--- | :--- | :--- | :--- | :--- | | **Networking Platforms** | | | | | | Optical Networking | $606.8 | 64.4% | $719.0 | 67.3% | | Routing and Switching | $92.7 | 9.8% | $127.6 | 11.9% | | *Total Networking Platforms* | *$699.5* | *74.2%* | *$846.6* | *79.2%* | | **Platform Software and Services** | $83.2 | 8.9% | $78.9 | 7.4% | | **Blue Planet Automation** | $25.8 | 2.7% | $13.1 | 1.3% | | **Global Services** | $133.8 | 14.2% | $129.3 | 12.1% | | **Total** | **$942.3** | **100.0%** | **$1,067.9** | **100.0%** | [Revenue by Geographic Region](index=2&type=section&id=Revenue%20by%20Geographic%20Region) Americas revenue decreased slightly to **$718.6 million** but increased its share to **76.3%**, while Asia Pacific revenue significantly declined to **$88.7 million** Q3 Revenue by Geographic Region (in millions $) | Region | Q3 FY2024 Revenue | % of Total | Q3 FY2023 Revenue | % of Total | | :--- | :--- | :--- | :--- | :--- | | Americas | $718.6 | 76.3% | $749.5 | 70.2% | | Europe, Middle East and Africa | $135.0 | 14.3% | $152.8 | 14.3% | | Asia Pacific | $88.7 | 9.4% | $165.6 | 15.5% | | **Total** | **$942.3** | **100.0%** | **$1,067.9** | **100.0%** | [Additional Performance Metrics & Company Information](index=2&type=section&id=Additional%20Performance%20Metrics%20%26%20Company%20Information) Ciena's Q3 performance metrics include **26.6%** revenue from two major customers, **$1.2 billion** in cash and investments, negative **$159.4 million** cash flow from operations, and **$937.4 million** in inventories - Two 10%-plus customers represented a total of **26.6% of revenue**[7](index=7&type=chunk) - Cash and investments totaled **$1.2 billion**, while cash flow used in operations was **$159.4 million**[7](index=7&type=chunk) - Inventories totaled **$937.4 million** with product inventory turns at **1.8**, and headcount was **8,781**[9](index=9&type=chunk) - The company warns that forward-looking statements are subject to risks and uncertainties, including broader economic conditions, supply chain constraints, and competitive pressures, as detailed in its SEC filings[11](index=11&type=chunk)[12](index=12&type=chunk) [Condensed Consolidated Financial Statements (GAAP)](index=5&type=section&id=Condensed%20Consolidated%20Financial%20Statements%20(GAAP)) The GAAP financial statements show a year-over-year decline in Q3 revenue and net income, stable total assets, decreased liabilities, and a significant shift to positive cash from operations for the nine-month period [Statements of Operations](index=5&type=section&id=Statements%20of%20Operations) Q3 2024 total revenue was **$942.3 million** with net income of **$14.2 million**, a decline from **$1.07 billion** revenue and **$29.7 million** net income in the prior year Q3 Statement of Operations Highlights (in thousands $) | Line Item | Q3 FY2024 | Q3 FY2023 | | :--- | :--- | :--- | | Total Revenue | $942,308 | $1,067,886 | | Gross Profit | $403,945 | $448,941 | | Income from Operations | $26,743 | $78,214 | | Net Income | $14,230 | $29,733 | | Diluted EPS | $0.10 | $0.20 | [Balance Sheets](index=6&type=section&id=Balance%20Sheets) As of July 27, 2024, total assets were **$5.58 billion**, with **$883.4 million** in cash and **$937.4 million** in inventories, while total liabilities decreased to **$2.68 billion** Condensed Balance Sheet Highlights (in thousands $) | Line Item | July 27, 2024 | October 28, 2023 | | :--- | :--- | :--- | | Cash and cash equivalents | $883,365 | $1,010,618 | | Inventories, net | $937,399 | $1,050,838 | | Total Assets | $5,575,130 | $5,601,495 | | Total Liabilities | $2,684,258 | $2,753,134 | | Total Stockholders' Equity | $2,890,872 | $2,848,361 | [Statements of Cash Flows](index=7&type=section&id=Statements%20of%20Cash%20Flows) Net cash provided by operating activities for the nine months ended July 27, 2024, was **$165.2 million**, a significant improvement from the prior year, driven by working capital changes Nine-Month Cash Flow Summary (in thousands $) | Cash Flow Activity | Nine Months Ended July 27, 2024 | Nine Months Ended July 29, 2023 | | :--- | :--- | :--- | | Net cash from Operating Activities | $165,172 | $(27,140) | | Net cash used in Investing Activities | $(157,546) | $(285,336) | | Net cash from (used in) Financing Activities | $(136,382) | $426,546 | [Reconciliation of GAAP to Non-GAAP Measures](index=9&type=section&id=Reconciliation%20of%20GAAP%20to%20Non-GAAP%20Measures) Ciena provides detailed reconciliations for non-GAAP metrics, with Q3 2024 adjusted gross profit at **$411.5 million** and adjusted net income at **$50.8 million**, after accounting for items like share-based compensation and amortization - The company **excludes certain items** to arrive at non-GAAP measures, such as share-based compensation, amortization of intangible assets, acquisition costs, and restructuring costs, believing this provides a **more meaningful insight** into operating performance[13](index=13&type=chunk)[24](index=24&type=chunk) [Net Income and EPS Reconciliation](index=9&type=section&id=Net%20Income%20and%20EPS%20Reconciliation) GAAP net income of **$14.2 million** was adjusted by **$48.8 million** in operational adjustments and a **$14.3 million** non-GAAP tax provision, yielding an adjusted net income of **$50.8 million** and adjusted diluted EPS of **$0.35** Q3 Net Income Reconciliation (in thousands $) | Line Item | Q3 FY2024 | Q3 FY2023 | | :--- | :--- | :--- | | GAAP net income | $14,230 | $29,733 | | Total adjustments to income from operations | $48,782 | $49,813 | | Non-GAAP tax provision | $(14,330) | $(25,133) | | **Adjusted (non-GAAP) net income** | **$50,807** | **$89,108** | Q3 Diluted EPS Reconciliation | Metric | Q3 FY2024 | Q3 FY2023 | | :--- | :--- | :--- | | GAAP diluted EPS | $0.10 | $0.20 | | Adjusted (non-GAAP) diluted EPS | $0.35 | $0.59 | [EBITDA and Adjusted EBITDA Calculation](index=11&type=section&id=EBITDA%20and%20Adjusted%20EBITDA%20Calculation) Starting from GAAP net income of **$14.2 million**, Q3 2024 EBITDA was **$59.7 million**, and after adding back non-cash expenses, Adjusted EBITDA reached **$98.5 million**, a decrease from the prior year Q3 EBITDA and Adjusted EBITDA Reconciliation (in thousands $) | Line Item | Q3 FY2024 | Q3 FY2023 | | :--- | :--- | :--- | | Net income (GAAP) | $14,230 | $29,733 | | Adjustments (Interest, Taxes, D&A) | $45,443 | $84,465 | | **EBITDA** | **$59,673** | **$114,198** | | Add: Share-based compensation | $37,472 | $32,906 | | Add: Restructuring & other costs | $1,361 | $4,233 | | **Adjusted EBITDA** | **$98,506** | **$151,337** |

Ciena Corporation (CIEN) is scheduled to report third-quarter fiscal 2024 results on Sept. 4. The Zacks Consensus Estimate for earnings is pegged at 26 cents per share, implying a 55.9% decrease from the year-ago level. For the fiscal third quarter, management expects revenues in the range of $880-$960 million. The consensus estimate for revenues is pegged at $927.5 million, indicating a decline of 13.2% from the prior-year level. CIEN has a trailing four-quarter earnings surprise of 35.5%, on average. Shar ...

Ciena Corporation (CIEN) and Arelion have achieved a milestone with the world's first 1.6 terabits-persecond (Tb/s) wavelength data transmission in a live network field trial. Utilizing Ciena's advanced WaveLogic 6 Extreme (WL6e), this achievement took place over Arelion's 470km route connecting its Ashburn, Virginia (Equinix) and Telxius' Virginia Beach cable landing station. This success has significantly boosted capacity between these key Points-of-Presence (PoPs) in Arelion's North American network. Are ...