Revenue

3 Months Ended

Jan. 31, 2020

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 January 31, 2020
	Networking Platforms		Platform Software and Services		Blue Planet Automation Software and Services		Global Services		Total
Product lines:
Converged Packet Optical	$	591,549	$	—	$	—	$	—	$	591,549
Packet Networking	67,508		—		—		—		67,508
Platform Software and Services	—		51,888		—		—		51,888
Blue Planet Automation Software and Services	—		—		15,466		—		15,466
Maintenance Support and Training	—		—		—		61,793		61,793
Installation and Deployment	—		—		—		34,954		34,954
Consulting and Network Design	—		—		—		9,754		9,754
Total revenue by product line	$	659,057	$	51,888	$	15,466	$	106,501	$	832,912
Timing of revenue recognition:
Products and services at a point in time	$	659,057	$	13,114	$	3,736	$	4,197	$	680,104
Services transferred over time	—		38,774		11,730		102,304		152,808
Total revenue by timing of revenue recognition	$	659,057	$	51,888	$	15,466	$	106,501	$	832,912

	Quarter Ended January 31, 2019
	Networking Platforms		Platform Software and Services		Blue Planet Automation Software and Services		Global Services		Total
Product lines:
Converged Packet Optical	$	548,997	$	—	$	—	$	—	$	548,997
Packet Networking	71,569		—		—		—		71,569
Platform Software and Services	—		41,598		—		—		41,598
Blue Planet Automation Software and Services	—		—		14,974		—		14,974
Maintenance Support and Training	—		—		—		61,277		61,277
Installation and Deployment	—		—		—		30,622		30,622
Consulting and Network Design	—		—		—		9,490		9,490
Total revenue by product line	$	620,566	$	41,598	$	14,974	$	101,389	$	778,527
Timing of revenue recognition:
Products and services at a point in time	$	620,566	$	16,044	$	6,228	$	3,566	$	646,404
Services transferred over time	—		25,554		8,746		97,823		132,123
Total revenue by timing of revenue recognition	$	620,566	$	41,598	$	14,974	$	101,389	$	778,527

Effective the beginning of fiscal 2020, Ciena’s Global Sales and Marketing organization combined its previous North America and Caribbean and Latin America (“CALA”) regions into a new “Americas” sales region. Accordingly, Ciena reflects its sales geographically around the following markets: (i) Americas; (ii) Europe, Middle East and Africa (“EMEA”); and (iii) Asia Pacific, Japan and India (“APAC”). Within each geographic area, we maintain specific teams or personnel that focus on a particular region, country, customer or market vertical. These teams include sales management, account salespersons and sales engineers, as well as services professionals and commercial management personnel, who ensure that we maintain a high-touch, consultative relationship with our customers.

For the periods below, Ciena’s geographic distribution of revenue was as follows (in thousands):

	Quarter Ended January 31,
	2020		2019
Geographic distribution:
Americas	$	574,004	$	516,481
EMEA	129,965		129,190
APAC	128,943		132,856
Total revenue by geographic distribution	$	832,912	$	778,527

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

• Converged Packet Optical - includes the 6500 Packet-Optical Platform, 5430 Reconfigurable Switching System, Waveserver® stackable interconnect system (“Waveserver”), 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. Operating system software and enhanced software features embedded in Ciena hardware are each considered distinct performance obligations for which the revenue is generally recognized upfront at a point in time upon transfer of control.

• Platform Software and Services 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. Platform software-related services revenue includes sales of subscription, installation, support, and consulting services related to Ciena’s software platforms, operating system software and enhanced software features embedded in each of the Networking Platforms product lines above. Revenue from the software portion 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.

• Blue Planet® Automation Software and Services is a comprehensive, open software suite, together with related services, that allows customers to use enhanced knowledge about their networks 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, unified assurance and analytics (UAA) and Ciena’s SDN Multilayer Controller and virtual wide area network (V-WAN) application. Services revenue includes sales of subscription, installation, support, consulting and design services related to Ciena’s Blue Planet Automation Platform. Revenue from the software portion 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 sales of 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 is 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 January 31, 2020		Balance at October 31, 2019
Accounts receivable, net	$	655,105	$	724,854
Contract assets	$	83,717	$	84,046
Deferred revenue	$	166,835	$	156,873

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 and professional services arrangements where transfer of control has occurred, but Ciena has not yet invoiced the customer. Contract assets are included in prepaid expenses and other current assets in the Condensed Consolidated Balance Sheets. See Note 11 for further discussion.

Contract liabilities consist of deferred revenue and represent advanced payments against non-cancelable customer orders received prior to revenue recognition. Ciena recognized approximately $49.0 million and $39.4 million of revenue during the first three months of fiscal 2020 and 2019 that was included in the deferred revenue balance at October 31, 2019 and November 1, 2018, respectively. Revenue recognized due to changes in transaction price from performance obligations satisfied or partially satisfied in previous periods was immaterial during the three months ended January 31, 2020 and 2019.

Capitalized Contract Acquisition Costs

Capitalized contract acquisition costs consist of deferred sales commissions, and were $13.1 million and $15.7 million as of January 31, 2020 and October 31, 2019, respectively, and were included in other current assets and other assets. The amortization expense associated with these costs was $5.6 million and $4.1 million during the first three months of fiscal 2020 and 2019, respectively, 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 January 31, 2020, the aggregate amount of RPO was $905 million. As of January 31, 2020, Ciena expects approximately 82% of the RPO to be recognized as revenue within the next twelve months.