Infinera(US:INFN)2023-02-27 21:05Revenue Performance - Total revenue for 2022 was $1,573.2 million, a 10% increase from $1,425.2 million in 2021, driven by new product ramp-up and growth in the ICP vertical in the U.S. and APAC [282]. - Total revenue for 2022 was $1,573,242, an increase of $148,037 or 10% compared to 2021 [288]. - Product revenue increased by $169.2 million, or 15%, in 2022, driven by the ramp of new products, particularly ICE6 [289]. - Services revenue decreased by $21.2 million, or 7%, in 2022, primarily due to network installation delays [290]. - Domestic revenue increased by $206.5 million, or 31%, while international revenue decreased by $58.4 million, or 8% [291][292]. Gross Margin and Expenses - Gross margin decreased to 34% in 2022 from 35% in 2021, primarily due to higher component costs and logistics expenses, partially offset by improved product mix [283]. - Operating expenses rose to $595.9 million in 2022, a 2% increase from $585.5 million in 2021, mainly due to higher employee-related costs and technology investments [284]. - Gross profit increased by $37.8 million, but gross margin decreased to 34% in 2022 from 35% in 2021 [295]. - Research and development expenses increased by $6.3 million, or 2%, in 2022, reflecting higher employee-related and material costs [301]. - Sales and marketing expenses rose by $7.6 million, or 5%, due to increased employee-related expenses and marketing costs [303]. - General and administrative expenses increased by $3.2 million, or 3%, attributed to higher employee-related expenses and professional fees [304]. Customer Base and Market Position - One customer accounted for approximately 11% of revenue in 2022, while no customer exceeded 10% in 2021, indicating a more diversified customer base [285]. - The company expects to benefit from a diversified customer base and sees opportunities for revenue growth through the adoption of new and existing solutions in 2023 [282]. - The company has grown its solutions portfolio through internal development and acquisitions, positioning itself as a leading provider of vertically integrated optical networking solutions [276]. Cash Flow and Financial Position - Net cash used by operating activities was $37.6 million for 2022, compared to net cash provided of $28.1 million in 2021 [317]. - Net loss for 2022 was $76.0 million, which included non-cash charges of $152.1 million [318]. - Net cash used in investing activities was $46.1 million for 2022, primarily for the purchase of property and equipment [320]. - Net cash provided by financing activities was $82.3 million for 2022, including net proceeds of $92.9 million from the issuance of 2028 Notes [321]. - As of December 31, 2022, the company had $189.2 million of cash, cash equivalents, and restricted cash, including $65.9 million held by foreign subsidiaries [331]. Obligations and Commitments - Total contractual obligations increased by $263,529, reaching $1,612,344, a 20% rise compared to the previous year [334]. - Purchase obligations rose by $153,237, totaling $744,777, reflecting a 26% increase due to higher lead-time commitments and investments for new products [334]. - The company has a commitment of $457,572 related to 2028 Notes, marking a 100% increase as it was not present in the previous year [334]. Foreign Currency and Risk Management - The company operates in international markets, exposing it to foreign currency risks, particularly with the euro, Indian rupee, and British pound [362]. - The company may enter into foreign currency exchange forward contracts to mitigate currency exchange rate fluctuations, but these do not cover all transactions [363]. Revenue Recognition and Inventory - The company recognizes revenue when control of goods or services is transferred to customers, following a five-step approach to revenue recognition [337]. - Inventory is valued at standard cost, with adjustments made to reflect the lower of actual cost or net realizable value, impacting financial statements [357]. Debt and Interest Rates - The company issued 2024 Notes, 2027 Notes, and 2028 Notes with fixed annual interest rates of 2.125%, 2.50%, and 3.75%, respectively [365]. - The fair value of the 2024, 2027, and 2028 Notes as of December 31, 2022, was $101.0 million, $221.4 million, and $462.9 million, respectively [365]. - Interest expense decreased by $23.1 million in 2022 compared to 2021, primarily due to the adoption of ASU 2020-06, which eliminated debt discounts for convertible senior notes [309]. - Gain on extinguishment of debt was $15.5 million in 2022 due to the partial repurchase of 2024 Notes at a price below par value [311].