Ciena(CIEN) - 2025 Q3 - Quarterly Results

Fiscal Third Quarter 2025 Highlights Ciena reported strong Q3 FY2025 financial results with significant revenue and net income growth, alongside share repurchases Key Financial Performance Ciena reported strong Q3 FY2025 financial results with significant year-over-year growth in revenue and net income, both GAAP and non-GAAP, and repurchased 1.0 million shares Q3 FY2025 Key Financials vs. Q3 FY2024 | Metric | Q3 FY2025 | Q3 FY2024 | Change | | :--- | :--- | :--- | :--- | | Revenue | $1.22 billion | $942.3 million | +29.5% | | GAAP Net Income per Share | $0.35 | $0.10 | +250% | | Adjusted (non-GAAP) Net Income per Share | $0.67 | $0.35 | +91.4% | - Repurchased approximately 1.0 million shares of common stock for an aggregate price of $81.8 million during the quarter[4] CEO Statement CEO Gary Smith attributed strong quarterly performance to high-speed connectivity leadership and AI-driven demand, expressing confidence in continued momentum and operating leverage expansion into FY2026 - CEO Gary Smith noted strong quarterly performance reflecting leadership in high-speed connectivity and accelerated customer demand, driven by AI's foundational role in network growth and monetization[2] - Confidence in continued business momentum and focus on expanding operating leverage, with visibility well into fiscal year 2026[2] Fiscal Third Quarter 2025 Performance Summary This section details Ciena's Q3 FY2025 GAAP and non-GAAP financial results, revenue breakdown by segment and region, and other key operational metrics GAAP Financial Results Ciena's Q3 FY2025 GAAP results showed significant revenue growth of 29.4% to $1.219 billion, with a slight gross margin decrease but substantial operating margin increase Q3 FY2025 GAAP Financial Results (unaudited) | Metric | Q3 FY2025 (in millions) | Q3 FY2024 (in millions) | Period Change Y-T-Y (%) | | :--- | :--- | :--- | :--- | | Revenue | $1,219.4 | $942.3 | 29.4 | | Gross margin | 41.3 % | 42.9 % | (1.6) | | Operating expense | $429.5 | $377.2 | 13.9 | | Operating margin | 6.1 % | 2.9 % | 3.2 | Non-GAAP Financial Results Ciena's Q3 FY2025 non-GAAP results showed robust performance with revenue matching GAAP, a slight adjusted gross margin decline, but strong growth in adjusted operating margin and Adjusted EBITDA Q3 FY2025 Non-GAAP Financial Results (unaudited) | Metric | Q3 FY2025 (in millions) | Q3 FY2024 (in millions) | Period Change Y-T-Y (%) | | :--- | :--- | :--- | :--- | | Revenue | $1,219.4 | $942.3 | 29.4 | | Adj. gross margin | 41.9 % | 43.7 % | (1.8) | | Adj. operating expense | $380.2 | $336.0 | 13.2 | | Adj. operating margin | 10.7 % | 8.0 % | 2.7 | | Adj. EBITDA | $158.0 | $98.5 | 60.4 | Revenue by Segment Networking Platforms remained the largest revenue contributor in Q3 FY2025, growing to 77.2% of total revenue, driven by strong Optical Networking and Routing and Switching performance Q3 FY2025 Revenue by Segment (unaudited) | Segment | Q3 FY2025 Revenue (in millions) | % of Total | Q3 FY2024 Revenue (in millions) | % of Total | | :--- | :--- | :--- | :--- | :--- | | Optical Networking | $815.5 | 66.9 % | $606.8 | 64.4 % | | Routing and Switching | $125.9 | 10.3 % | $92.7 | 9.8 % | | Total Networking Platforms | $941.4 | 77.2 % | $699.5 | 74.2 % | | Platform Software and Services | $90.0 | 7.4 % | $83.2 | 8.9 % | | Blue Planet Automation Software and Services | $27.8 | 2.3 % | $25.8 | 2.7 % | | Total Global Services | $160.2 | 13.1 % | $133.8 | 14.2 % | | Total | $1,219.4 | 100.0 % | $942.3 | 100.0 % | Revenue by Geographic Region The Americas remained Ciena's largest market in Q3 FY2025, contributing 75.7% of total revenue, with EMEA and Asia Pacific also showing growth Q3 FY2025 Revenue by Geographic Region (unaudited) | Region | Q3 FY2025 Revenue (in millions) | % of Total | Q3 FY2024 Revenue (in millions) | % of Total | | :--- | :--- | :--- | :--- | :--- | | Americas | $923.6 | 75.7 % | $718.6 | 76.3 % | | Europe, Middle East and Africa | $186.0 | 15.3 % | $135.0 | 14.3 % | | Asia Pacific | $109.8 | 9.0 % | $88.7 | 9.4 % | | Total | $1,219.4 | 100.0 % | $942.3 | 100.0 % | Other Key Operational Metrics Ciena reported strong liquidity with $1.39 billion in cash and investments and positive cash flow from operations, noting 28.8% revenue concentration from two customers and a headcount of 9,213 - Two customers represented 10%-plus of revenue, combining for a total of 28.8% of revenue[11] Q3 FY2025 Key Operational Metrics | Metric | Value | | :--- | :--- | | Cash and investments | $1.39 billion | | Cash flow from operations | $174.3 million | | Average days' sales outstanding (DSOs) | 88 | | Accounts receivable, net balance | $1.03 billion | | Unbilled contract asset, net balance | $164.3 million | | Inventories | $860.4 million | | Product inventory turns | 2.7 | | Headcount | 9,213 | Business Outlook and Investor Information This section provides Ciena's financial guidance for Q4 FY2025 and details on supplemental materials and investor webcast availability Q4 FY2025 Financial Guidance Ciena provided Q4 FY2025 guidance, projecting revenue between $1.24 billion and $1.32 billion, with adjusted gross margin of 42% to 43% and adjusted operating expense of $390 million to $400 million Fiscal Fourth Quarter 2025 Financial Guidance | Metric | Guidance Range | | :--- | :--- | | Revenue | $1.24 billion to $1.32 billion | | Adjusted (non-GAAP) gross margin | 42% to 43% | | Adjusted (non-GAAP) operating expense | $390 million to $400 million | Supplemental Materials and Investor Webcast Ciena provided supplemental Q3 FY2025 materials on its investor relations website and hosted a live audio webcast with management to discuss results and outlook - Related supporting materials for unaudited fiscal third quarter 2025 results posted to the Quarterly Results page of the Investor Relations section of Ciena's website[9] - Management hosted a live audio web broadcast at 8:30 a.m. Eastern on September 4, 2025, accessible via www.ciena.com, with an archived replay available[10] Notes to Investors This section provides important disclosures regarding forward-looking statements and the use of non-GAAP financial measures for investors Forward-Looking Statements This section advises investors to review Ciena's website and SEC filings for material information, highlighting forward-looking statements and outlining risks like economic conditions, supply chain, competition, and geopolitical events - Forward-looking statements are based on current expectations and involve risks and uncertainties, including broader economic conditions, supply chain disruptions, new technologies, customer order timing, competitive pressure, foreign currency rates, and geopolitical tensions[13] - Investors are encouraged to review the Investors section of Ciena's website and SEC filings (e.g., Form 10-K, 10-Q) for routine disclosures and risk factors[13] Non-GAAP Financial Measures Presentation Ciena uses non-GAAP measures to provide insight into operating performance by excluding unusual, non-cash, or non-ordinary course items, noting that quantitative reconciliation for certain forward-looking guidance is not feasible - Non-GAAP measures (gross profit, operating expense, income from operations, EBITDA, net income, EPS) exclude unusual, non-cash, or non-ordinary course charges and credits to provide useful insight into operating performance[14] - A quantitative reconciliation of adjusted (non-GAAP) gross margin and operating expense guidance to GAAP measures is not provided due to the forward-looking nature, inherent variability, and uncertainty of estimates[15][16] Condensed Consolidated Financial Statements (Unaudited) This section presents Ciena's unaudited condensed consolidated statements of operations, balance sheets, and cash flows for the reported periods Condensed Consolidated Statements of Operations Ciena's Q3 FY2025 consolidated statements of operations show total revenue of $1.219 billion and net income of $50.3 million ($0.35 diluted EPS), significantly up from Q3 FY2024 Condensed Consolidated Statements of Operations (Q3 FY2025 vs. Q3 FY2024) | Metric | Q3 FY2025 (in thousands) | Q3 FY2024 (in thousands) | | :--- | :--- | :--- | | Total revenue | $1,219,385 | $942,308 | | Gross profit | $503,079 | $403,945 | | Total operating expenses | $429,544 | $377,202 | | Income from operations | $73,535 | $26,743 | | Net income | $50,308 | $14,230 | | Diluted net income per potential common share | $0.35 | $0.10 | Condensed Consolidated Balance Sheets As of August 2, 2025, Ciena's total assets increased to $5.749 billion, driven by higher cash and accounts receivable, with total liabilities also increasing to $2.961 billion Condensed Consolidated Balance Sheets (August 2, 2025 vs. November 2, 2024) | Metric | August 2, 2025 (in thousands) | November 2, 2024 (in thousands) | | :--- | :--- | :--- | | Total assets | $5,748,778 | $5,641,337 | | Cash and cash equivalents | $1,055,976 | $934,863 | | Accounts receivable, net | $1,025,563 | $908,597 | | Inventories, net | $860,403 | $820,430 | | Total current assets | $3,686,223 | $3,544,416 | | Total liabilities | $2,961,477 | $2,825,199 | | Total stockholders' equity | $2,787,301 | $2,816,138 | Condensed Consolidated Statements of Cash Flows For the nine months ended August 2, 2025, Ciena generated $435.0 million in net cash from operating activities, with $27.7 million used in investing and $286.1 million in financing, primarily for stock repurchases Condensed Consolidated Statements of Cash Flows (Nine Months Ended August 2, 2025 vs. July 27, 2024) | Metric | Nine Months Ended August 2, 2025 (in thousands) | Nine Months Ended July 27, 2024 (in thousands) | | :--- | :--- | :--- | | Net cash provided by operating activities | $435,016 | $165,172 | | Net cash used in investing activities | $(27,732) | $(157,546) | | Net cash used in financing activities | $(286,145) | $(136,382) | | Net increase (decrease) in cash, cash equivalents and restricted cash | $121,199 | $(127,257) | | Cash, cash equivalents and restricted cash at end of period | $1,056,225 | $883,529 | Appendices - GAAP to Non-GAAP Reconciliations This appendix provides detailed reconciliations of GAAP to non-GAAP financial measures, including gross profit, operating expense, income from operations, net income, and EBITDA Gross Profit Reconciliation Adjusted (non-GAAP) gross profit for Q3 FY2025 was $511.3 million, exceeding GAAP gross profit of $503.1 million, primarily due to excluding share-based compensation and intangible asset amortization Q3 FY2025 Gross Profit Reconciliation (in thousands) | Metric | Q3 FY2025 | Q3 FY2024 | | :--- | :--- | :--- | | GAAP gross profit | $503,079 | $403,945 | | Total adjustments related to gross profit | $8,201 | $7,546 | | Adjusted (non-GAAP) gross profit | $511,280 | $411,491 | | Adjusted (non-GAAP) gross profit percentage | 41.9 % | 43.7 % | Operating Expense Reconciliation Adjusted (non-GAAP) operating expense for Q3 FY2025 was $380.2 million, lower than GAAP's $429.5 million, after excluding share-based compensation, impairments, restructuring, and intangible amortization Q3 FY2025 Operating Expense Reconciliation (in thousands) | Metric | Q3 FY2025 | Q3 FY2024 | | :--- | :--- | :--- | | GAAP operating expense | $429,544 | $377,202 | | Total adjustments related to operating expense | $49,360 | $41,236 | | Adjusted (non-GAAP) operating expense | $380,184 | $335,966 | Income from Operations Reconciliation Adjusted (non-GAAP) income from operations for Q3 FY2025 significantly increased to $131.1 million from GAAP's $73.5 million, resulting in an adjusted operating margin of 10.7% Q3 FY2025 Income from Operations Reconciliation (in thousands) | Metric | Q3 FY2025 | Q3 FY2024 | | :--- | :--- | :--- | | GAAP income from operations | $73,535 | $26,743 | | Total adjustments related to income from operations | $57,561 | $48,782 | | Adjusted (non-GAAP) income from operations | $131,096 | $75,525 | | Adjusted (non-GAAP) operating margin percentage | 10.7 % | 8.0 % | Net Income Reconciliation Adjusted (non-GAAP) net income for Q3 FY2025 was $96.2 million ($0.67 diluted EPS), substantially higher than GAAP's $50.3 million ($0.35 diluted EPS), after adjustments Q3 FY2025 Net Income Reconciliation (in thousands, except per share data) | Metric | Q3 FY2025 | Q3 FY2024 | | :--- | :--- | :--- | | GAAP net income | $50,308 | $14,230 | | Adjusted (non-GAAP) net income | $96,236 | $50,807 | | GAAP diluted net income per potential common share | $0.35 | $0.10 | | Adjusted (non-GAAP) diluted net income per potential common share | $0.67 | $0.35 | EBITDA and Adjusted EBITDA Calculation Ciena's Q3 FY2025 EBITDA was $109.2 million, and Adjusted EBITDA reached $158.0 million, reflecting adjustments for share-based compensation and restructuring costs Q3 FY2025 EBITDA and Adjusted EBITDA (in thousands) | Metric | Q3 FY2025 | Q3 FY2024 | | :--- | :--- | :--- | | Net income (GAAP) | $50,308 | $14,230 | | EBITDA | $109,189 | $59,673 | | Adjusted EBITDA | $157,962 | $98,506 | Explanation of Non-GAAP Adjustments This section details non-GAAP adjustments, including share-based compensation, asset impairments, restructuring costs, intangible asset amortization, and a 22.0% blended non-GAAP tax provision - Share-based compensation is a non-cash expense incurred per accounting guidance[29] - Significant asset impairments and restructuring costs are incurred to align resources with market opportunities, redesign business processes, and restructure real estate facilities[29] - Amortization of intangible assets is a non-cash expense from acquired intangible assets (developed technologies, customer-related intangibles) amortized over their useful life[29] - Non-GAAP tax provision uses a current, blended U.S. and foreign statutory annual tax rate of 22.0% for both fiscal 2025 and 2024 Q3[29] About Ciena This section provides an overview of Ciena Corporation, highlighting its role as a global leader in networking systems, services, and software Company Overview Ciena Corporation is a global leader in networking systems, services, and software, focused on building adaptive, flexible, open, and sustainable networks to meet increasing digital demands - Ciena (NYSE: CIEN) is a global leader in networking systems, services, and software, building adaptive networks to anticipate and meet digital demands[17] - The company prioritizes collaborative relationships with customers, partners, and communities to create flexible, open, and sustainable networks[17]