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Ciena Reports Fiscal Third Quarter 2024 Financial Results

HANOVER, Md., Sep. 04 /BusinessWire/ -- Ciena® Corporation (NYSE:CIEN), a networking systems, services and software company, today announced unaudited financial results for its fiscal third quarter ended July 27, 2024.

  • Q3 Revenue: $942.3 million
  • Q3 Net Income per Share: $0.10 GAAP; $0.35 adjusted (non-GAAP)
  • Share Repurchases: Repurchased approximately 0.6 million shares of common stock for an aggregate price of $29.0 million during the quarter

"We delivered strong results for the fiscal third quarter that reflect growing momentum with cloud providers and continued gradual recovery with service providers," said Gary Smith, president and CEO, Ciena. "With leading innovation that is well-aligned with our customers' focus on building cloud and AI-capable infrastructures, we are well-positioned to continue to gain share and deliver profitable growth."

For the fiscal third quarter 2024, Ciena reported revenue of $942.3 million as compared to $1.07 billion for the fiscal third quarter 2023.

Ciena's GAAP net income for the fiscal third quarter 2024 was $14.2 million, or $0.10 per diluted common share, which compares to a GAAP net income of $29.7 million, or $0.20 per diluted common share, for the fiscal third quarter 2023.

Ciena's adjusted (non-GAAP) net income for the fiscal third quarter 2024 was $50.8 million, or $0.35 per diluted common share, which compares to an adjusted (non-GAAP) net income of $89.1 million, or $0.59 per diluted common share, for the fiscal third quarter 2023.

Fiscal Third Quarter 2024 Performance Summary

The tables below (in millions, except percentage data) provide comparisons of certain quarterly results to the prior year. Appendices A and B set forth reconciliations between the GAAP and adjusted (non-GAAP) measures contained in this release.

GAAP Results (unaudited)

Q3

Q3

Period Change

FY 2024

FY 2023

Y-T-Y*

Revenue

$

942.3

$

1,067.9

(11.8

)%

Gross margin

42.9

%

42.0

%

0.9

%

Operating expense

$

377.2

$

370.7

1.7

%

Operating margin

2.9

%

7.3

%

(4.4

)%

Non-GAAP Results (unaudited)

Q3

Q3

Period Change

FY 2024

FY 2023

Y-T-Y*

Revenue

$

942.3

$

1,067.9

(11.8

)%

Adj. gross margin

43.7

%

42.7

%

1.0

%

Adj. operating expense

$

336.0

$

327.9

2.5

%

Adj. operating margin

8.0

%

12.0

%

(4.0

)%

Adj. EBITDA

$

98.5

$

151.3

(34.9

)%

* Denotes % change, or in the case of margin, absolute change

Revenue by Segment (unaudited)

Q3 FY 2024

Q3 FY 2023

Revenue

%**

Revenue

%**

Networking Platforms

Optical Networking

$

606.8

64.4

$

719.0

67.3

Routing and Switching

92.7

9.8

127.6

11.9

Total Networking Platforms

699.5

74.2

846.6

79.2

Platform Software and Services

83.2

8.9

78.9

7.4

Blue Planet Automation Software and Services

25.8

2.7

13.1

1.3

Global Services

Maintenance Support and Training

74.4

7.9

72.9

6.8

Installation and Deployment

46.5

4.9

46.8

4.4

Consulting and Network Design

12.9

1.4

9.6

0.9

Total Global Services

133.8

14.2

129.3

12.1

Total

$

942.3

100.0

$

1,067.9

100.0

** Denotes % of total revenue

Additional Performance Metrics for Fiscal Third Quarter 2024

Revenue by Geographic Region (unaudited)

Q3 FY 2024

Q3 FY 2023

Revenue

% **

Revenue

% **

Americas

$

718.6

76.3

$

749.5

70.2

Europe, Middle East and Africa

135.0

14.3

152.8

14.3

Asia Pacific

88.7

9.4

165.6

15.5

Total

$

942.3

100.0

$

1,067.9

100.0

** Denotes % of total revenue

  • Two 10%-plus customers represented a total 26.6% of revenue
  • Cash and investments totaled $1.2 billion
  • Cash flow used in operations totaled $159.4 million
  • Average days' sales outstanding (DSOs) were 100
  • Accounts receivable, net balance was $899.9 million
  • Unbilled contract asset, net balance was $142.8 million
  • Inventories totaled $937.4 million, including:
    • Raw materials: $612.7 million
    • Work in process: $44.4 million
    • Finished goods: $314.0 million
    • Deferred cost of sales: $36.0 million
    • Reserve for excess and obsolescence: $(69.7) million
  • Product inventory turns were 1.8
  • Headcount totaled 8,781

Supplemental Materials and Live Web Broadcast of Unaudited Fiscal Third Quarter 2024 Results

Today, Wednesday, September 4, 2024, in conjunction with this announcement, Ciena has posted to the Quarterly Results page of the Investor Relations section of its website certain related supporting materials for its unaudited fiscal third quarter 2024 results.

Ciena's management will also host a discussion today with investors and financial analysts that will include the Company's outlook. The live audio web broadcast beginning at 8:30 a.m. Eastern will be accessible via www.ciena.com. An archived replay of the live broadcast will be available shortly following its conclusion on the Investor Relations page of Ciena's website.

Notes to Investors

Forward-Looking Statements. You are encouraged to review the Investors section of our website, where we routinely post press releases, Securities and Exchange Commission ("SEC") filings, recent news, financial results, supplemental financial information, and other announcements. From time to time we exclusively post material information to this website along with other disclosure channels that we use. This press release contains certain forward-looking statements that involve risks and uncertainties. These statements are based on current expectations, forecasts, assumptions and other information available to the Company as of the date hereof. Forward-looking statements include statements regarding Ciena's expectations, beliefs, intentions or strategies regarding the future and can be identified by forward-looking words such as "anticipate," "believe," "could," "estimate," "expect," "intend," "may," "should," "will," and "would" or similar words. Forward-looking statements in this release include: "We delivered strong results for the fiscal third quarter that reflect growing momentum with cloud providers and continued gradual recovery with service providers. With leading innovation that is well-aligned with our customers' focus on building cloud and AI-capable infrastructures, we are well-positioned to continue to gain share and deliver profitable growth."

Ciena's actual results, performance or events may differ materially from these forward-looking statements made or implied due to a number of risks and uncertainties relating to Ciena's business, including: the effect of broader economic and market conditions on our customers, their spending and their businesses and markets; our ability to execute our business and growth strategies; the impact of macroeconomic conditions and global supply chain constraints or disruptions including increased supply costs and lead times; the impact of the introduction of new technologies by us or our competitors; seasonality and the timing and size of customer orders, their delivery dates and our ability to recognize revenue relating to such sales; the level of competitive pressure we encounter; the product, customer and geographic mix of sales within the period; changes in foreign currency exchange rates; factors beyond our control such as natural disasters, climate change, acts of war or terrorism, geopolitical tensions or events, including but not limited to the ongoing conflicts between Ukraine and Russia, and Israel and Hamas, and public health emergencies or epidemics, including the COVID-19 pandemic; changes in tax or trade regulations, including the imposition of tariffs, duties or efforts to withdraw from or materially modify international trade agreements; cyberattacks, data breaches or other security incidents involving our enterprise network environment or our products; regulatory changes, litigation involving our intellectual property or government investigations; and the other risk factors disclosed in Ciena's periodic reports filed with the Securities and Exchange Commission (SEC) including its Annual Report on Form 10-K filed with the SEC on December 15, 2023 and included in its Quarterly Report on Form 10-Q for the third quarter of fiscal 2024 to be filed with the SEC. Ciena assumes no obligation to update any forward-looking information included in this press release.

Non-GAAP Presentation of Quarterly and Annual Results. This release includes non-GAAP measures of Ciena's gross profit, operating expense, income from operations, earnings before interest, tax, depreciation and amortization (EBITDA), Adjusted EBITDA, and measures of net income and net income per share. In evaluating the operating performance of Ciena's business, management excludes certain charges and credits that are required by GAAP. These items share one or more of the following characteristics: they are unusual and Ciena does not expect them to recur in the ordinary course of its business; they do not involve the expenditure of cash; they are unrelated to the ongoing operation of the business in the ordinary course; or their magnitude and timing is largely outside of Ciena's control. Management believes that the non-GAAP measures below provide management and investors useful information and meaningful insight to the operating performance of the business. The presentation of these non-GAAP financial measures should be considered in addition to Ciena's GAAP results and these measures are not intended to be a substitute for the financial information prepared and presented in accordance with GAAP. Ciena's non-GAAP measures and the related adjustments may differ from non-GAAP measures used by other companies and should only be used to evaluate Ciena's results of operations in conjunction with our corresponding GAAP results. To the extent not previously disclosed in a prior Ciena financial results press release, Appendices A and B to this press release set forth a complete GAAP to non-GAAP reconciliation of the non-GAAP measures contained in this release.

About Ciena. Ciena (NYSE: CIEN) is a global leader in networking systems, services, and software. We build the most adaptive networks in the industry, enabling customers to anticipate and meet ever-increasing digital demands. For three-plus decades, Ciena has brought our humanity to our relentless pursuit of innovation. Prioritizing collaborative relationships with our customers, partners, and communities, we create flexible, open, and sustainable networks that better serve all users-today and into the future. For updates on Ciena, follow us on LinkedIn, X, the Ciena Insights blog, or visit www.ciena.com.

CIENA CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

(unaudited)

Quarter Ended

Nine Months Ended

July 27,

July 29,

July 27,

July 29,

2024

2023

2024

2023

Revenue:

Products

$

729,503

$

865,197

$

2,266,596

$

2,678,242

Services

212,805

202,689

624,247

578,820

Total revenue

942,308

1,067,886

2,890,843

3,257,062

Cost of goods sold:

Products

433,533

516,900

1,315,737

1,559,120

Services

104,830

102,045

315,538

305,372

Total cost of goods sold

538,363

618,945

1,631,275

1,864,492

Gross profit

403,945

448,941

1,259,568

1,392,570

Operating expenses:

Research and development

188,888

189,392

571,537

561,115

Selling and marketing

121,520

118,266

373,749

367,156

General and administrative

58,248

49,349

162,504

151,184

Significant asset impairments and restructuring costs

1,361

4,174

21,987

16,625

Amortization of intangible assets

7,185

9,487

22,384

26,773

Acquisition and integration costs

-

59

-

3,474

Total operating expenses

377,202

370,727

1,152,161

1,126,327

Income from operations

26,743

78,214

107,407

266,243

Interest and other income, net

14,013

10,187

36,460

50,711

Interest expense

(24,401

)

(24,060

)

(72,038

)

(63,819

)

Income before income taxes

16,355

64,341

71,829

253,135

Provision for income taxes

2,125

34,608

24,901

89,507

Net income

$

14,230

$

29,733

$

46,928

$

163,628

Net Income per Common Share

Basic net income per common share

$

0.10

$

0.20

$

0.32

$

1.09

Diluted net income per potential common share

$

0.10

$

0.20

$

0.32

$

1.09

Weighted average basic common shares outstanding

144,394

149,690

144,876

149,472

Weighted average dilutive potential common shares outstanding 1

145,361

149,977

145,795

149,867

1 Weighted average dilutive potential common shares outstanding used in calculating GAAP diluted net income per potential common share includes the following number of shares underlying certain stock option and stock unit awards: (i) 1.0 million and 0.9 million for the third quarter and first nine months of fiscal 2024, respectively, and (ii) 0.3 million and 0.4 million for the third quarter and first nine months of fiscal 2023, respectively.

CIENA CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)

(unaudited)

July 27,
2024

October 28,
2023

ASSETS

Current assets:

Cash and cash equivalents

$

883,365

$

1,010,618

Short-term investments

217,810

104,753

Accounts receivable, net

899,877

1,003,876

Inventories, net

937,399

1,050,838

Prepaid expenses and other

600,008

405,694

Total current assets

3,538,459

3,575,779

Long-term investments

111,833

134,278

Equipment, building, furniture and fixtures, net

299,161

280,147

Operating lease right-of-use assets

28,717

35,140

Goodwill

444,791

444,765

Other intangible assets, net

174,974

205,627

Deferred tax asset, net

831,682

809,306

Other long-term assets

145,513

116,453

Total assets

$

5,575,130

$

5,601,495

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Accounts payable

$

316,599

$

317,828

Accrued liabilities and other short-term obligations

347,238

431,419

Deferred revenue

179,457

154,419

Operating lease liabilities

15,565

16,655

Current portion of long-term debt

11,700

11,700

Total current liabilities

870,559

932,021

Long-term deferred revenue

77,628

74,041

Other long-term obligations

171,014

170,407

Long-term operating lease liabilities

26,742

33,259

Long-term debt, net

1,538,315

1,543,406

Total liabilities

2,684,258

2,753,134

Stockholders' equity:

Preferred stock - par value $0.01; 20,000,000 shares authorized; zero shares issued and outstanding

-

-

Common stock - par value $0.01; 290,000,000 shares authorized; 144,426,873 and 144,829,938 shares issued and outstanding

1,444

1,448

Additional paid-in capital

6,260,095

6,262,083

Accumulated other comprehensive loss

(40,192

)

(37,767

)

Accumulated deficit

(3,330,475

)

(3,377,403

)

Total stockholders' equity

2,890,872

2,848,361

Total liabilities and stockholders' equity

$

5,575,130

$

5,601,495

CIENA CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands) (unaudited)

Nine Months Ended

July 27,

July 29,

2024

2023

Cash flows provided by (used in) operating activities:

Net income

$

46,928

$

163,628

Adjustments to reconcile net income to net cash provided by (used in) operating activities:

Depreciation of equipment, building, furniture and fixtures, and amortization of leasehold improvements

68,997

69,213

Share-based compensation expense

115,433

95,405

Amortization of intangible assets

30,675

36,274

Deferred taxes

(19,909

)

(64,005

)

Provision for inventory excess and obsolescence

35,400

18,767

Provision for warranty

14,708

18,860

Gain on equity investments, net

-

(26,368

)

Other

11,968

13,694

Changes in assets and liabilities:

Accounts receivable

92,421

(80,399

)

Inventories

78,220

(262,345

)

Prepaid expenses and other

(221,823

)

72,062

Operating lease right-of-use assets

8,963

11,003

Accounts payable, accruals and other obligations

(112,352

)

(133,880

)

Deferred revenue

28,833

57,547

Short and long-term operating lease liabilities

(13,290

)

(16,596

)

Net cash provided by (used in) operating activities

165,172

(27,140

)

Cash flows used in investing activities:

Payments for equipment, furniture, fixtures and intellectual property

(53,098

)

(83,422

)

Purchases of investments

(197,303

)

(119,240

)

Proceeds from sales and maturities of investments

114,899

150,646

Settlement of foreign currency forward contracts, net

(362

)

(3,272

)

Purchase of equity investments

(21,682

)

-

Acquisition of business, net of cash acquired

-

(230,048

)

Net cash used in investing activities

(157,546

)

(285,336

)

Cash flows provided by (used in) financing activities:

Proceeds from issuance of term loan, net

-

497,500

Payment of long term debt

(5,850

)

(6,448

)

Payment of debt issuance costs

(2,554

)

(5,422

)

Payment of finance lease obligations

(3,004

)

(2,830

)

Shares repurchased for tax withholdings on vesting of stock unit awards

(33,450

)

(29,794

)

Repurchases of common stock - repurchase program, net

(125,816

)

(57,736

)

Proceeds from issuance of common stock

34,292

31,276

Net cash provided by (used in) financing activities

(136,382

)

426,546

Effect of exchange rate changes on cash, cash equivalents and restricted cash

1,499

9,501

Net increase (decrease) in cash, cash equivalents and restricted cash

(127,257

)

123,571

Cash, cash equivalents and restricted cash at beginning of period

1,010,786

994,378

Cash, cash equivalents and restricted cash at end of period

$

883,529

$

1,117,949

Supplemental disclosure of cash flow information

Cash paid during the period for interest, net

$

64,999

$

56,709

Cash paid during the period for income taxes, net

$

41,736

$

68,058

Operating lease payments

$

14,672

$

18,038

Non-cash investing and financing activities

Purchase of equipment in accounts payable

$

35,316

$

4,579

Repurchase of common stock in accrued liabilities from repurchase program, net

$

1,762

$

3,500

Operating right-of-use assets subject to lease liability

$

5,326

$

9,771

Gain on equity investments, net

$

-

$

26,368

APPENDIX A - Reconciliation of Adjusted (Non- GAAP) Measurements

(in thousands, except per share data) (unaudited)

Quarter Ended

July 27,

July 29,

2024

2023

Gross Profit Reconciliation (GAAP/non-GAAP)

GAAP gross profit

$

403,945

$

448,941

Share-based compensation-products

1,660

1,118

Share-based compensation-services

3,122

2,687

Amortization of intangible assets

2,764

3,187

Total adjustments related to gross profit

7,546

6,992

Adjusted (non-GAAP) gross profit

$

411,491

$

455,933

Adjusted (non-GAAP) gross profit percentage

43.7

%

42.7

%

Operating Expense Reconciliation (GAAP/non-GAAP)

GAAP operating expense

$

377,202

$

370,727

Share-based compensation-research and development

13,118

10,954

Share-based compensation-sales and marketing

10,315

8,770

Share-based compensation-general and administrative

9,257

9,377

Significant asset impairments and restructuring costs

1,361

4,174

Amortization of intangible assets

7,185

9,487

Acquisition and integration costs

-

59

Total adjustments related to operating expense

41,236

42,821

Adjusted (non-GAAP) operating expense

$

335,966

$

327,906

Income from Operations Reconciliation (GAAP/non-GAAP)

GAAP income from operations

$

26,743

$

78,214

Total adjustments related to gross profit

7,546

6,992

Total adjustments related to operating expense

41,236

42,821

Total adjustments related to income from operations

48,782

49,813

Adjusted (non-GAAP) income from operations

$

75,525

$

128,027

Adjusted (non-GAAP) operating margin percentage

8.0

%

12.0

%

Net Income Reconciliation (GAAP/non-GAAP)

GAAP net income

$

14,230

$

29,733

Exclude GAAP provision for income taxes

2,125

34,608

Income before income taxes

16,355

64,341

Total adjustments related to income from operations

48,782

49,813

Loss on equity investment

-

87

Adjusted income before income taxes

65,137

114,241

Non-GAAP tax provision on adjusted income before income taxes

14,330

25,133

Adjusted (non-GAAP) net income

$

50,807

$

89,108

Weighted average basic common shares outstanding

144,394

149,690

Weighted average dilutive potential common shares outstanding 1

145,361

149,977

Net Income per Common Share

GAAP diluted net income per potential common share

$

0.10

$

0.20

Adjusted (non-GAAP) diluted net income per potential common share

$

0.35

$

0.59

1 Weighted average dilutive potential common shares outstanding used in calculating Adjusted (non-GAAP) diluted net income per potential common share includes the following number of shares underlying certain stock option and stock unit awards: (i) 1.0 million for the third quarter of fiscal 2024; and (ii) 0.3 million for the third quarter of fiscal 2023.

APPENDIX B - Calculation of EBITDA and Adjusted EBITDA

(in thousands) (unaudited)

Quarter Ended

July 27,

July 29,

2024

2023

Earnings Before Interest, Tax, Depreciation and Amortization (EBITDA)

Net income (GAAP)

$

14,230

$

29,733

Add: Interest expense

24,401

24,060

Less: Interest and other income, net

14,013

10,187

Add: Provision for income taxes

2,125

34,608

Add: Depreciation of equipment, building, furniture and fixtures, and amortization of leasehold improvements

22,981

23,310

Add: Amortization of intangible assets

9,949

12,674

EBITDA

$

59,673

$

114,198

Add: Share-based compensation expense

37,472

32,906

Add: Significant asset impairments and restructuring costs

1,361

4,174

Add: Acquisition and integration costs

-

59

Adjusted EBITDA

$

98,506

$

151,337

* * *

The adjusted (non-GAAP) measures above and their reconciliation to Ciena's GAAP results for the periods presented reflect adjustments relating to the following items:

  • Share-based compensation - a non-cash expense incurred in accordance with share-based compensation accounting guidance.
  • Significant asset impairments and restructuring costs - costs incurred as a result of restructuring activities taken to align resources with perceived market opportunities, the redesign of business processes and restructuring certain real estate facilities.
  • Amortization of intangible assets - a non-cash expense arising from the acquisition of intangible assets, principally developed technologies and customer-related intangibles, that Ciena is required to amortize over an expected useful life.
  • Acquisition and integration costs - primarily consist of financial, legal and accounting advisors' costs and employment-related costs related to Ciena's acquisitions in fiscal 2023.
  • Loss on equity investment - reflects changes in the carrying value of a certain equity investment due to triggering events.
  • Non-GAAP tax provision - consists of current and deferred income tax expense commensurate with the level of adjusted income before income taxes and utilizes a current, blended U.S. and foreign statutory annual tax rate of 22.0% for both the fiscal third quarter 2024 and the fiscal third quarter 2023. This rate may be subject to change in the future, including as a result of changes in tax policy or tax strategy.

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