Ciena(US:CIEN)2025-12-11 14:32Financial Data and Key Metrics Changes - The company reported record fiscal fourth quarter revenue of $1.35 billion, up 20% year-over-year, and full year revenue of $4.77 billion, up 19% from the previous year [9][35] - Earnings per share (EPS) for Q4 was $0.91, a 69% increase year-over-year, while full year EPS was $2.64, up 45% from fiscal 2024 [10][41] - Record orders for the year reached $7.8 billion, resulting in a backlog of approximately $5 billion [10][37] Business Line Data and Key Metrics Changes - The optical business grew 19% year-over-year, driven by a 72% increase in RLS [35] - Routing and switching business saw a 49% year-over-year growth, with significant contributions from the 3000 and 5000 series products [35] - Global services revenue increased by 25% year-over-year, with advisory and enablement services growing 53% and installation implementation services growing 45% [36] Market Data and Key Metrics Changes - Demand from cloud customers, including hyperscalers, is accelerating, with service provider orders up nearly 70% for the year [15][16] - The company’s optical market share has increased by two points year-to-date, with expectations for further gains in 2026 [16] - The in and around data center opportunities grew threefold from 2024 to 2025, contributing significantly to expected growth in 2026 [22] Company Strategy and Development Direction - The company is focused on high-speed connectivity technologies, particularly in the AI ecosystem, serving both cloud and service provider customers [10][11] - Investments are being made to expand capacity and meet increasing demand, with a commitment to flat operating expenses in 2026 while investing in new opportunities [34][44] - The company anticipates a significant increase in capital expenditures for fiscal 2026 to support robust demand [44] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the durability of demand and the financial trajectory, citing strong market dynamics and technology leadership [29][47] - The company expects revenue for fiscal 2026 to be approximately $5.7-$6.1 billion, representing nearly 24% annual growth at the midpoint [42] - Management noted that the demand for network expansion driven by AI is unprecedented and is expected to continue [18][19] Other Important Information - The company has improved its cash conversion cycle by 34 days, resulting in $1.4 billion in cash at year-end [32] - Adjusted gross margin for Q4 was 43.4%, with expectations for year-over-year improvements [38] - The company completed a cash purchase of Nubis Communications to enhance its interconnects portfolio [34] Q&A Session Questions and Answers Question: How much of the new opportunities are included in the guidance? - All new opportunities discussed are included in the guidance, with a significant increase in revenue from in and around data center projects [50] Question: Can you provide a timeline for when additional hyperscalers will contribute to revenue? - Revenue from all three hyperscalers is expected to begin in 2026, with significant scaling anticipated in 2027 and 2028 [61] Question: What are the supply constraints currently faced by the company? - The main constraints are on photonics and optical parts, with efforts being made to secure supply through investments and strong relationships with suppliers [76][78] Question: What is the outlook for margins given the current product mix? - Margins are expected to improve as new products ramp up and pricing discussions yield benefits, with a target of reaching mid-40s gross margins in the future [96] Question: How does the company view the sustainability of its telco business? - The telco business is expected to remain sustainable, with ongoing investments in 5G and MOFEN projects [114]