Infinera(US:INFN)2022-05-04 03:38Financial Data and Key Metrics Changes - Q1 revenue was $339 million, growing 2% year-over-year, with product revenue up over 5% and services revenue down 8% [36][38] - Q1 gross margin was 36.2%, below the midpoint of the outlook range, primarily due to supply chain impacts [38] - Operating loss for the quarter was $3.5 million, equating to an operating margin of negative 1% [39] - Q1 EPS was a loss of $0.07 per share [40] - Cash and restricted cash at the end of the quarter was $204 million, with $16 million generated from operations [41] Business Line Data and Key Metrics Changes - ICE6 revenue grew to the high teens as a percentage of product revenue in Q1, up from the low-teens in the previous quarter [16] - GX metro product bookings were up almost 200% year-over-year, driven by new wins and growth in existing accounts [17] - Services revenue decline was primarily due to project shifts caused by customer site readiness and resource constraints [37] Market Data and Key Metrics Changes - 50% of revenue came from domestic customers, up from 48% in the previous year [38] - No single customer contributed more than 10% of total revenue in the quarter [38] Company Strategy and Development Direction - The company is focused on ramping ICE6 to 20% to 25% of product revenue in 2022 and integrating pluggables into their platforms [16][20] - The strategy includes qualifying additional sources of supply and increasing production capacity of ICE6 [28][29] - Membership in the Open XR forum is growing, with new service providers joining, indicating a healthy pipeline for future growth [22] Management's Comments on Operating Environment and Future Outlook - Management expects continued healthy demand in Q2 despite supply chain challenges, projecting Q2 revenue in the range of $350 million, plus or minus $20 million [42] - The outlook for 2022 is now expected to be at the low end of the 8% to 12% growth range, with gross margin expanding by 100 to 150 basis points [49] - The second half of 2022 is anticipated to show significant improvement in financial performance, driven by product growth and backlog conversion [50] Other Important Information - The company faced a $5 million impact from suspending operations in Russia and a $20 million impact from supply chain-related developments [12][43] - The company is experiencing a shift in project timelines, with some revenue recognition expected to occur in the second half of the year [68] Q&A Session Summary Question: Clarification on Q2 guidance and supply chain issues - Management indicated that the majority of the $25 million impact in Q2 is due to customer project acceptance issues rather than their own supply chain problems [53][56] Question: Impact of ICE6 products and supply chain control - Management stated that they have more control over ICE6 production, but some components are still dependent on external suppliers [59] Question: Confidence in the third quarter's performance - Confidence in the back half of the year is based on the visibility of revenue conversion from existing contracts and increased production capacity [61] Question: Details on the largest GX Metro deal - The deal is characterized as a nationwide metro footprint with significant integration plans, contributing to future growth [95] Question: Vertical integration and gross margin expectations - Vertical integration efforts are ongoing, with a focus on increasing the percentage of sales from integrated products [109]