Ciena's Q3 Earnings & Revenues Surpass Estimates, Stock Falls

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].