Revenue

6 Months Ended

Apr. 30, 2019

Revenue from Contract with Customer [Abstract]

Revenue

REVENUE

Disaggregation of Revenue

Ciena’s disaggregated revenue represents similar groups that depict the nature, amount, and timing of revenue and cash flows for Ciena’s various offerings. The sales cycle, contractual obligations, customer requirements, and go-to-market strategies may differ for each of its product categories, resulting in different economic risk profiles for each category.

The tables below (in thousands) set forth Ciena’s disaggregated revenue for the respective period:

	Quarter Ended April 30, 2019
	Networking Platforms		Software and Software-Related Services		Global Services		Total
Product lines:
Converged Packet Optical	$	623,838	$	—	$	—	$	623,838
Packet Networking	73,138		—		—		73,138
Platform Software and Services	—		35,229		—		35,229
Blue Planet Automation Software and Services	—		12,473		—		12,473
Maintenance Support and Training	—		—		68,788		68,788
Installation and Deployment	—		—		41,322		41,322
Consulting and Network Design	—		—		10,223		10,223
Total revenue by product line	$	696,976	$	47,702	$	120,333	$	865,011
Timing of revenue recognition:
Products and services at a point in time	$	696,976	$	14,148	$	5,575	$	716,699
Services transferred over time	—		33,554		114,758		148,312
Total revenue by timing of revenue recognition	$	696,976	$	47,702	$	120,333	$	865,011

	Six Months Ended April 30, 2019
	Networking Platforms		Software and Software-Related Services		Global Services		Total
Product lines:
Converged Packet Optical	$	1,172,835	$	—	$	—	$	1,172,835
Packet Networking	144,707		—		—		144,707
Platform Software and Services	—		76,827		—		76,827
Blue Planet Automation Software and Services	—		27,447		—		27,447
Maintenance Support and Training	—		—		130,065		130,065
Installation and Deployment	—		—		71,944		71,944
Consulting and Network Design	—		—		19,713		19,713
Total revenue by product line	$	1,317,542	$	104,274	$	221,722	$	1,643,538
Timing of revenue recognition:
Products and services at a point in time	$	1,317,542	$	36,420	$	9,141	$	1,363,103
Services transferred over time	—		67,854		212,581		280,435
Total revenue by timing of revenue recognition	$	1,317,542	$	104,274	$	221,722	$	1,643,538

	Quarter Ended April 30, 2019		Six Months Ended April 30, 2019
Geographic distribution:
North America	$	576,093	$	1,061,599
EMEA	114,993		244,183
CALA	39,399		70,374
APAC	134,526		267,382
Total revenue by geographic distribution	$	865,011	$	1,643,538

• Networking Platforms reflects sales of Ciena’s Converged Packet Optical and Packet Networking product lines.

• Converged Packet Optical - includes the 6500 Packet-Optical Platform, the 5430 Reconfigurable Switching System, Waveserver® stackable interconnect system, the family of CoreDirector® Multiservice Optical Switches and the OTN configuration for the 5410 Reconfigurable Switching System. This product line also includes sales of the Z-Series Packet-Optical Platform.

• Packet Networking - includes the 3000 family of service delivery switches and service aggregation switches and the 5000 family of service aggregation switches. This product line also includes the 8700 Packetwave Platform, the Ethernet packet configuration for the 5410 Service Aggregation Switch, and the 6500 Packet Transport System (PTS), which combines packet switching, control plane operation, and integrated optics.

The Networking Platforms segment also includes sales of operating system software and enhanced software features embedded in each of the product lines above. Revenue from this segment is included in product revenue on the Condensed Consolidated Statements of Operations. Ciena’s hardware with the embedded operating system software and enhanced software features are considered distinct performance obligations for which the revenue is generally recognized upfront at a point in time upon transfer of control.

•Software and Software-Related Services reflects sales of the following:

• Ciena’s Blue Planet Automation Software and Services, which is a comprehensive, open software suite that allows customers to use enhanced knowledge about their network to drive adaptive optimization of their services and operations. Ciena’s Blue Planet Automation Platform includes multi-domain service orchestration (MDSO), network function virtualization (NFV), management and orchestration (NFV MANO), analytics, network health predictor (NHP), route optimization and assurance (ROA), inventory management and Ciena’s SDN Multilayer Controller and virtual wide area network (V-WAN) application. Ciena acquired the NHP and ROA software solutions as a part of its acquisition of Packet Design, LLC (“Packet Design”). Ciena acquired the inventory management software solution as a part of its acquisition of DonRiver Holdings, LLC (“DonRiver”). Services revenue includes sales of subscription, installation, support, consulting and design services related to Ciena’s Blue Planet Automation Platform.

• Ciena’s Platform Software and Services, which provides analytics, data, and planning tools to assist customers in managing Ciena’s Networking Platforms products in their networks. Ciena’s platform software includes its Manage, Control and Plan (MCP) domain controller solution, OneControl Unified Management System, ON-Center® Network and Service Management Suite, Ethernet Services Manager, Optical Suite Release and Planet Operate. As Ciena seeks further adoption of its MCP software platform and transitions features, functionality and customers to this platform, Ciena expects revenue declines for its other platform software solutions. Software-related services revenue includes sales of subscription, installation, support, and consulting services related to Ciena’s software platforms and operating system software and enhanced software features embedded in each of the Networking Platforms product lines above.

Revenue from the software portions of this segment is included in product revenue on the Condensed Consolidated Statements of Operations. Revenue from services portions of this segment is included in services revenue on the Condensed Consolidated Statements of Operations.

Ciena’s software platform revenue typically reflects either perpetual or term-based software licenses, and these sales are considered a distinct performance obligation where revenue is generally recognized upfront at a point in time upon transfer of control. Revenue from software subscription and support are recognized ratably over the period during which the services are performed. Revenue from professional services for solution customization, software and solution support services, consulting and design, and build-operate-transfer services relating to Ciena’s software offerings are recognized over time with Ciena applying the input method to determine the amount of revenue to be recognized in a given period.

• Global Services reflects sales of a broad range of Ciena’s services for maintenance support and training, installation and deployment, and consulting and network design activities. Revenue from this segment is included in services revenue on the Condensed Consolidated Statements of Operations.

Ciena’s Global Services are considered a distinct performance obligation where revenue is generally recognized over time. Revenue from maintenance support is recognized ratably over the period during which the services are performed. Revenue from installation and deployment services and consulting and network design services are recognized over time with Ciena applying the input method to determine the amount of revenue to be recognized in a given period. Revenue from training services are generally recognized at a point in time upon completion of the service.

Contract Balances

The following table provides information about receivables, contract assets and contract liabilities (deferred revenue) from contracts with customers (in thousands):

	Balance at April 30, 2019		Adjusted Balance at November 1, 2018
Accounts receivable, net	$	756,607	$	799,011
Contract assets	$	74,439	$	31,380
Deferred revenue	$	145,022	$	140,704

Our contract assets represent unbilled accounts receivable where transfer of a product or service has occurred but invoicing is conditional upon completion of future performance obligations. These amounts are primarily related to installation and deployment services arrangements where transfer of control has occurred but Ciena has not yet invoiced the customer.

Contract liabilities consist of deferred revenue and represent advanced payments against non-cancelable customer orders received prior to revenue recognition. Ciena recognized approximately $73.0 million of revenue during the first six months of fiscal 2019 that was included in the deferred revenue balance at November 1, 2018. Revenue recognized due to changes in transaction price from performance obligations satisfied or partially satisfied in previous periods were immaterial during the six months ended April 30, 2019.

Capitalized Contract Acquisition Costs

Capitalized contract acquisition costs consist of deferred sales commissions and were $12.2 million and $13.6 million as of April 30, 2019 and November 1, 2018, respectively, and were included in other current assets and other assets. The amortization expense associated with these costs was $8.4 million during the first six months of fiscal 2019 and was included in sales and marketing expense.

Remaining Performance Obligations

Remaining Performance Obligations (RPO) are comprised of non-cancelable customer purchase orders for products and services that are awaiting transfer of control for revenue recognition under the applicable contract terms. As of April 30, 2019, the aggregate amount of RPO was $1.28 billion. As of April 30, 2019, Ciena expects approximately 83% of the RPO to be recognized as revenue within the next twelve months.