EX-99.1 2 ex9912024q1earningspressre.htm EX-99.1 Document

FOR IMMEDIATE RELEASE

Ciena Reports Fiscal First Quarter 2024 Financial Results


HANOVER, Md. - March 7, 2024 - Ciena® Corporation (NYSE: CIEN), a networking systems, services and software company, today announced unaudited financial results for its fiscal first quarter ended January 27, 2024.

•Q1 Revenue: $1.04 billion

•Q1 Net Income per Share: $0.34 GAAP; $0.66 adjusted (non-GAAP)

•Share Repurchases: Repurchased approximately 691 thousand shares of common stock for an aggregate price of $32.0 million during the quarter


"We delivered solid fiscal first quarter results, including strong profitability, as we continue to expand our relationships and gain share with cloud providers," said Gary Smith, president and CEO of Ciena. "While we remain very confident in the strength and durability of bandwidth demand as a long-term driver of our business, it is taking longer than expected for service providers to work through high levels of inventory."

For fiscal first quarter 2024, Ciena reported revenue of $1.04 billion as compared to $1.06 billion for the fiscal first quarter 2023.

Ciena's GAAP net income for the fiscal first quarter 2024 was $49.5 million, or $0.34 per diluted common share, which compares to a GAAP net income of $76.2 million, or $0.51 per diluted common share, for the fiscal first quarter 2023.

Ciena's adjusted (non-GAAP) net income for the fiscal first quarter 2024 was $96.8 million, or $0.66 per diluted common share, which compares to an adjusted (non-GAAP) net income of $95.6 million, or $0.64 per diluted common share, for the fiscal first quarter 2023.

Fiscal First 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)
Q1Q1Period Change
FY 2024FY 2023Y-T-Y*
Revenue$1,037.7 $1,056.5 (1.8)%
Gross margin45.0 %43.2 %1.8 %
Operating expense$382.3 $370.7 3.1 %
Operating margin8.2 %8.1 %0.1 %
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Non-GAAP Results (unaudited)
Q1Q1Period Change
FY 2024FY 2023Y-T-Y*
Revenue$1,037.7 $1,056.5 (1.8)%
Adj. gross margin45.7 %43.7 %2.0 %
Adj. operating expense$336.8 $329.3 2.3 %
Adj. operating margin13.2 %12.6 %0.6 %
Adj. EBITDA$160.0 $155.1 3.2 %
* Denotes % change, or in the case of margin, absolute change
Revenue by Segment (unaudited)
Q1 FY 2024Q1 FY 2023
Revenue%**Revenue%**
Networking Platforms
Optical Networking$695.8 67.1 $735.6 69.6 
Routing and Switching111.4 10.7 119.5 11.3 
Total Networking Platforms807.2 77.8 855.1 80.9 
Platform Software and Services89.7 8.6 73.4 6.9 
Blue Planet Automation Software and Services14.0 1.4 15.4 1.5 
Global Services
Maintenance Support and Training74.1 7.1 67.9 6.4 
Installation and Deployment42.7 4.1 34.6 3.3 
Consulting and Network Design10.0 1.0 10.1 1.0 
Total Global Services126.8 12.2 112.6 10.7 
Total$1,037.7 100.0 $1,056.5 100.0 
** Denotes % of total revenue

Additional Performance Metrics for Fiscal First Quarter 2024
Revenue by Geographic Region (unaudited)
Q1 FY 2024Q1 FY 2023
Revenue% **Revenue% **
Americas$718.2 69.2 $765.1 72.4 
Europe, Middle East and Africa207.4 20.0 152.8 14.5 
Asia Pacific112.1 10.8 138.6 13.1 
Total$1,037.7 100.0 $1,056.5 100.0 

** Denotes % of total revenue
•Two customers represented 10%-plus of revenue combining for a total of 26.5% of revenue
•Cash and investments totaled $1.48 billion
•Cash flow from operations totaled $266.1 million
•Average days' sales outstanding (DSOs) were 88
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•Accounts receivable, net balance was $865.2 million
•Unbilled contract asset, net balance was $151.6 million
•Inventories totaled $984.9 million, including:
◦Raw materials: $571.7 million
◦Work in process: $60.6 million
◦Finished goods: $369.8 million
◦Deferred cost of sales: $36.8 million
◦Reserve for excess and obsolescence: $(54.0) million
•Product inventory turns were 1.9
•Headcount totaled 8,647

Supplemental Materials and Live Web Broadcast of Unaudited Fiscal First Quarter 2024 Results
Today, Thursday, March 7, 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 first 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 solid fiscal first quarter results, including strong profitability, as we continue to expand our relationships and gain share with cloud providers. While we remain very confident in the strength and durability of bandwidth demand as a long-term driver of our business, it is taking longer than expected for service providers to work through high levels of inventory."

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
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Report on Form 10-Q for the first 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.
 

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CIENA CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
Quarter Ended
 January 27,January 28,
 20242023
Revenue: 
Products$835,777 $877,715 
Services201,932 178,806 
Total revenue1,037,709 1,056,521 
Cost of goods sold: 
Products466,472 500,337 
Services104,275 100,238 
Total cost of goods sold570,747 600,575 
Gross profit466,962 455,946 
Operating expenses: 
Research and development187,269 181,730 
Selling and marketing128,158 123,807 
General and administrative54,683 50,896 
Significant asset impairments and restructuring costs4,971 4,298 
Amortization of intangible assets7,252 7,441 
Acquisition and integration costs — 2,558 
Total operating expenses382,333 370,730 
Income from operations84,629 85,216 
Interest and other income, net10,650 31,973 
Interest expense(23,776)(15,870)
Income before income taxes71,503 101,319 
Provision for income taxes21,956 25,078 
Net income$49,547 $76,241 
Net Income per Common Share
Basic net income per common share$0.34 $0.51 
Diluted net income per potential common share $0.34 $0.51 
Weighted average basic common shares outstanding145,291 149,081 
Weighted average dilutive potential common shares outstanding 1
145,848 149,551 

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) 0.6 million for the first quarter of fiscal 2024, and (ii) 0.5 million for the first quarter of fiscal 2023.

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CIENA CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
(unaudited)
January 27,
2024		October 28,
2023
ASSETS 
Current assets: 
Cash and cash equivalents$1,264,751 $1,010,618 
Short-term investments106,678 104,753 
Accounts receivable, net865,239 1,003,876 
Inventories, net984,886 1,050,838 
Prepaid expenses and other387,193 405,694 
Total current assets3,608,747 3,575,779 
Long-term investments103,862 134,278 
Equipment, building, furniture and fixtures, net280,357 280,147 
Operating lease right-of-use assets35,679 35,140 
Goodwill445,084 444,765 
Other intangible assets, net195,682 205,627 
Deferred tax asset, net814,098 809,306 
Other long-term assets109,701 116,453 
Total assets$5,593,210 $5,601,495 
LIABILITIES AND STOCKHOLDERS’ EQUITY 
Current liabilities: 
Accounts payable$316,094 $317,828 
Accrued liabilities and other short-term obligations329,910 431,419 
Deferred revenue166,714 154,419 
Operating lease liabilities16,888 16,655 
Current portion of long-term debt11,700 11,700 
Total current liabilities841,306 932,021 
Long-term deferred revenue76,556 74,041 
Other long-term obligations176,313 170,407 
Long-term operating lease liabilities32,418 33,259 
Long-term debt, net1,543,118 1,543,406 
Total liabilities2,669,711 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; 144,946,510 and 144,829,938 shares issued and outstanding
1,449 1,448 
Additional paid-in capital6,274,773 6,262,083 
Accumulated other comprehensive loss(24,867)(37,767)
Accumulated deficit(3,327,856)(3,377,403)
Total stockholders’ equity2,923,499 2,848,361 
Total liabilities and stockholders’ equity$5,593,210 $5,601,495 
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CIENA CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands) (unaudited)
Quarter Ended
 January 27,January 28,
 20242023
Cash flows provided by (used in) operating activities: 
Net income$49,547 $76,241 
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 improvements22,808 22,208 
Share-based compensation expense37,827 30,512 
Amortization of intangible assets10,016 10,325 
Deferred taxes(4,368)(7,247)
Provision for inventory excess and obsolescence10,350 5,503 
Provision for warranty4,841 8,230 
Gain on cost method equity investments, net— (26,455)
Other5,051 7,325 
Changes in assets and liabilities: 
Accounts receivable135,160 (133,067)
Inventories56,157 (235,059)
Prepaid expenses and other17,116 4,667 
Operating lease right-of-use assets3,084 3,891 
Accounts payable, accruals and other obligations(90,915)(56,979)
Deferred revenue14,022 29,459 
Short and long-term operating lease liabilities(4,620)(5,193)
Net cash provided by (used in) operating activities266,076 (265,639)
Cash flows provided by (used in) investing activities: 
Payments for equipment, furniture, fixtures and intellectual property(16,599)(30,030)
Purchases of investments(21,213)(35,411)
Proceeds from sales and maturities of investments53,674 123,249 
Settlement of foreign currency forward contracts, net2,271 (4,001)
Acquisition of business, net of cash acquired— (230,048)
Net cash provided by (used in) investing activities18,133 (176,241)
Cash flows provided by (used in) financing activities: 
Proceeds from issuance of term loan, net— 497,500 
Payment of long term debt— (1,732)
Payment of debt issuance costs(2,402)(3,996)
Payment of finance lease obligations(981)(913)
Shares repurchased for tax withholdings on vesting of stock unit awards(10,076)(12,980)
Repurchases of common stock - repurchase program(38,195)— 
Proceeds from issuance of common stock16,934 14,315 
Net cash provided by (used in) financing activities(34,720)492,194 
Effect of exchange rate changes on cash, cash equivalents and restricted cash4,646 9,884 
Net increase in cash, cash equivalents and restricted cash254,135 60,198 
Cash, cash equivalents and restricted cash at beginning of period1,010,786 994,378 
Cash, cash equivalents and restricted cash at end of period$1,264,921 $1,054,576 
Supplemental disclosure of cash flow information 
Cash paid during the period for interest, net$18,582 $10,536 
Cash paid during the period for income taxes, net$8,260 $8,383 
Operating lease payments$5,080 $5,638 
Non-cash investing and financing activities
Purchase of equipment in accounts payable$4,225 $7,354 
Repurchase of common stock in accrued liabilities from repurchase program$3,110 $— 
Operating right-of-use assets subject to lease liability $3,498 $6,244 
Gain on cost method equity investments, net$— $26,455 
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APPENDIX A - Reconciliation of Adjusted (Non- GAAP) Measurements
(in thousands, except per share data) (unaudited)
Quarter Ended
January 27,January 28,
20242023
Gross Profit Reconciliation (GAAP/non-GAAP)
GAAP gross profit$466,962 $455,946 
Share-based compensation-products1,318 1,051 
Share-based compensation-services3,020 2,297 
Amortization of intangible assets2,764 2,883 
Total adjustments related to gross profit7,102 6,231 
Adjusted (non-GAAP) gross profit$474,064 $462,177 
Adjusted (non-GAAP) gross profit percentage45.7 %43.7 %
Operating Expense Reconciliation (GAAP/non-GAAP)
GAAP operating expense$382,333 $370,730 
Share-based compensation-research and development12,880 9,234 
Share-based compensation-sales and marketing10,305 8,424 
Share-based compensation-general and administrative10,079 9,468 
Significant asset impairments and restructuring costs4,971 4,298 
Amortization of intangible assets7,252 7,441 
Acquisition and integration costs— 2,558 
Total adjustments related to operating expense45,487 41,423 
Adjusted (non-GAAP) operating expense$336,846 $329,307 
Income from Operations Reconciliation (GAAP/non-GAAP)
GAAP income from operations$84,629 $85,216 
Total adjustments related to gross profit7,102 6,231 
Total adjustments related to operating expense45,487 41,423 
Total adjustments related to income from operations52,589 47,654 
Adjusted (non-GAAP) income from operations$137,218 $132,870 
Adjusted (non-GAAP) operating margin percentage13.2 %12.6 %
Net Income Reconciliation (GAAP/non-GAAP)
GAAP net income$49,547 $76,241 
Exclude GAAP provision for income taxes21,956 25,078 
Income before income taxes71,503 101,319 
Total adjustments related to income from operations52,589 47,654 
Gain on cost method equity investments, net— (26,455)
Adjusted income before income taxes124,092 122,518 
Non-GAAP tax provision on adjusted income before income taxes27,300 26,954 
Adjusted (non-GAAP) net income$96,792 $95,564 
Weighted average basic common shares outstanding145,291149,081
Weighted average dilutive potential common shares outstanding 1
145,848149,551
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APPENDIX A - Reconciliation of Adjusted (Non- GAAP) Measurements
(in thousands, except per share data) (unaudited)
Quarter Ended
January 27,January 28,
20242023
Net Income per Common Share
GAAP diluted net income per potential common share$0.34 $0.51 
Adjusted (non-GAAP) diluted net income per potential common share$0.66 $0.64 

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) 0.6 million for the first quarter of fiscal 2024; and (ii) 0.5 million for the first quarter of fiscal 2023.
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APPENDIX B - Calculation of EBITDA and Adjusted EBITDA (unaudited)
(in thousands) (unaudited)
Quarter Ended
January 27,January 28,
20242023
Earnings Before Interest, Tax, Depreciation and Amortization (EBITDA)
Net income (GAAP)$49,547 $76,241 
Add: Interest expense23,776 15,870 
Less: Interest and other income, net10,650 31,973 
Add: Provision for income taxes21,956 25,078 
Add: Depreciation of equipment, building, furniture and fixtures, and amortization of leasehold improvements22,808 22,208 
Add: Amortization of intangible assets10,016 10,325 
EBITDA$117,453 $117,749 
Add: Share-based compensation cost 37,602 30,474 
Add: Significant asset impairments and restructuring costs4,971 4,298 
Add: Acquisition and integration costs— 2,558 
Adjusted EBITDA$160,026 $155,079 
* * *
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.
•Gain on cost method equity investments, net - reflects changes in the carrying value of certain cost method equity investments 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 first quarter 2024 and the fiscal first 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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