Infinera(US:INFN)2020-08-06 04:17Financial Data and Key Metrics Changes - In Q2 2020, non-GAAP revenue was $332.6 million, an 8% increase year-over-year, exceeding the top end of the guidance range of $310 million to $330 million [41] - Non-GAAP gross margin was 33.8%, above the midpoint of the 31% to 35% outlook range, driven by improved sales of vertically-integrated products [42] - Non-GAAP operating expenses were $118.3 million, better than the $120 million to $124 million outlook range, reflecting cost-saving efforts [43] - The company reported a non-GAAP operating loss of $6 million, or negative 1.8%, within guidance range, with a non-GAAP EPS loss of $0.09 [44] Business Line Data and Key Metrics Changes - The ICP business saw flat orders compared to Q1, but bookings growth is anticipated in the second half of the year [18] - Cable bookings showed growth quarter-over-quarter and year-over-year, aligning with expectations [18] - The subsea segment continued to perform well, with new expansion opportunities in APAC and a new deployment with Orange in West Africa [19] Market Data and Key Metrics Changes - North America accounted for 50% of revenue, driven by strength from Tier 1 customers and solid growth from cable and other service providers [41] - Record bookings from a major APAC customer contributed to improvements in that region, recovering from earlier COVID-19 impacts [17] - The company noted strong demand for bandwidth from customers for 600-gig and interest in 800-gig solutions [47] Company Strategy and Development Direction - The company is focusing on leveraging the opportunity created by the displacement of Huawei and the migration to open platforms [12][28] - The launch of the ICE6 solution is expected to drive a new technology cycle, enhancing network capacity and operational efficiency [13][31] - The company aims to enter 2021 with a lower cost structure and improved operational efficiencies [35][50] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the company's growth potential despite ongoing challenges from COVID-19, highlighting customer interest in differentiated optical capabilities [36] - The company anticipates Q3 non-GAAP revenue in the range of $325 million to $345 million, with gross margins expected to improve [46] - Management acknowledged that while supply chain constraints are expected to persist, they are working to mitigate impacts on customer satisfaction and costs [32][33] Other Important Information - A leadership succession plan was announced, with David Heard set to assume the role of CEO by the end of the year [60][64] - The company is continuing to invest in XR optics technology, which is expected to redefine network architectures [29] Q&A Session Summary Question: Can existing chassis accommodate 800-gig blades? - The company will have a portfolio approach for 800-gig products, focusing on compact modular formats for ICPs and CSPs [73] Question: Update on 600-gig product qualification with a Tier 1 player? - One Tier 1 ICP has begun deployment for long-haul applications, while the second is in the qualification process, expected to be delayed by one quarter [75][76] Question: Thoughts on Huawei's geopolitical pressures? - Management sees significant medium-term opportunities for replacing Huawei networks, with initial revenue already noted [92][94] Question: Feedback on 800-gig trials with Verizon? - The trial results were overwhelmingly positive, leading to increased requests for trials from other customers [98][100] Question: Supply chain overhang and balancing OpEx cuts? - The company is cautious about supply chain impacts and is focusing R&D investments on high-growth markets while managing operational costs [111][112]