Ciena(CIEN) - 2024 Q3 - Quarterly Results

Financial Highlights 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] - 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] 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 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) 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 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 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 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] - Cash and investments totaled $1.2 billion, while cash flow used in operations was $159.4 million[7] - Inventories totaled $937.4 million with product inventory turns at 1.8, and headcount was 8,781[9] - 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][12] Condensed Consolidated Financial Statements (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 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 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 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 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][24] Net Income and EPS Reconciliation 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 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 |