EX-99.1 2 ex9912024q2earningspressre.htm EX-99.1 Document

FOR IMMEDIATE RELEASE

Ciena Reports Fiscal Second Quarter 2024 Financial Results


HANOVER, Md. - June 6, 2024 - Ciena® Corporation (NYSE: CIEN), a networking systems, services and software company, today announced unaudited financial results for its fiscal second quarter ended April 27, 2024.

•Q2 Revenue: $910.8 million

•Q2 Net Income (Loss) per Share: $(0.12) GAAP; $0.27 adjusted (non-GAAP)

•Share Repurchases: Repurchased approximately 1.1 million shares of common stock for an aggregate price of $57.0 million during the quarter


"Our fiscal second quarter performance underscores the strength in our business amid a challenging near-term environment as service providers continue to work through existing inventory," said Gary Smith, president and CEO, Ciena. “With continued robust growth in bandwidth demand, we remain focused on extending our leadership in optical as a foundation for expanding our addressable market.”

For the fiscal second quarter 2024, Ciena reported revenue of $910.8 million as compared to $1.13 billion for the fiscal second quarter 2023.

Ciena's GAAP net loss for the fiscal second quarter 2024 was $(16.8) million, or $(0.12) per diluted common share, which compares to a GAAP net income of $57.7 million, or $0.38 per diluted common share, for the fiscal second quarter 2023.

Ciena's adjusted (non-GAAP) net income for the fiscal second quarter 2024 was $39.4 million, or $0.27 per diluted common share, which compares to an adjusted (non-GAAP) net income of $110.4 million, or $0.74 per diluted common share, for the fiscal second quarter 2023.

Fiscal Second 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)
Q2Q2Period Change
FY 2024FY 2023Y-T-Y*
Revenue$910.8 $1,132.7 (19.6)%
Gross margin42.7 %43.1 %(0.4)%
Operating expense$392.6 $384.9 2.0 %
Operating margin(0.4)%9.1 %(9.5)%
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Non-GAAP Results (unaudited)
Q2Q2Period Change
FY 2024FY 2023Y-T-Y*
Revenue$910.8 $1,132.7 (19.6)%
Adj. gross margin43.5 %43.7 %(0.2)%
Adj. operating expense$333.9 $338.1 (1.2)%
Adj. operating margin6.8 %13.8 %(7.0)%
Adj. EBITDA$85.8 $180.6 (52.5)%
* Denotes % change, or in the case of margin, absolute change
Revenue by Segment (unaudited)
Q2 FY 2024Q2 FY 2023
Revenue%**Revenue%**
Networking Platforms
Optical Networking$560.2 61.5 $784.5 69.3 
Routing and Switching116.1 12.7 130.4 11.5 
Total Networking Platforms676.3 74.2 914.9 80.8 
Platform Software and Services85.4 9.4 69.4 6.1 
Blue Planet Automation Software and Services14.4 1.6 20.6 1.8 
Global Services
Maintenance Support and Training77.4 8.5 73.2 6.5 
Installation and Deployment43.8 4.8 39.5 3.5 
Consulting and Network Design13.5 1.5 15.1 1.3 
Total Global Services134.7 14.8 127.8 11.3 
Total$910.8 100.0 $1,132.7 100.0 
** Denotes % of total revenue

Additional Performance Metrics for Fiscal Second Quarter 2024
Revenue by Geographic Region (unaudited)
Q2 FY 2024Q2 FY 2023
Revenue% **Revenue% **
Americas$662.9 72.8 $794.4 70.1 
Europe, Middle East and Africa155.8 17.1 173.4 15.3 
Asia Pacific92.1 10.1 164.9 14.6 
Total$910.8 100.0 $1,132.7 100.0 

** Denotes % of total revenue
•One 10%-plus customer represented a total 13.8% of revenue
•Cash and investments totaled $1.42 billion
•Cash flow from operations totaled $58.5 million
•Average days' sales outstanding (DSOs) were 98
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•Accounts receivable, net balance was $840.1 million
•Unbilled contract asset, net balance was $151.9 million
•Inventories totaled $1.02 billion, including:
◦Raw materials: $638.9 million
◦Work in process: $68.2 million
◦Finished goods: $331.3 million
◦Deferred cost of sales: $43.7 million
◦Reserve for excess and obsolescence: $(59.5) million
•Product inventory turns were 1.6
•Headcount totaled 8,627

Supplemental Materials and Live Web Broadcast of Unaudited Fiscal Second Quarter 2024 Results
Today, Thursday, June 6, 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 second 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: "Our fiscal second quarter performance underscores the strength in our business amid a challenging near-term environment as service providers continue to work through existing inventory. With continued robust growth in bandwidth demand, we remain focused on extending our leadership in optical as a foundation for expanding our addressable market.”

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
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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 second 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 EndedYear Ended
 April 27,April 29,April 27,April 29,
 2024202320242023
Revenue:  
Products$701,316 $935,330 $1,537,093 $1,813,045 
Services209,510 197,325 411,442 376,131 
Total revenue910,826 1,132,655 1,948,535 2,189,176 
Cost of goods sold:  
Products415,732 541,883 882,204 1,042,220 
Services106,433 103,089 210,708 203,327 
Total cost of goods sold522,165 644,972 1,092,912 1,245,547 
Gross profit388,661 487,683 855,623 943,629 
Operating expenses:  
Research and development195,380 189,993 382,649 371,723 
Selling and marketing124,071 125,083 252,229 248,890 
General and administrative49,573 50,939 104,256 101,835 
Significant asset impairments and restructuring costs15,655 8,153 20,626 12,451 
Amortization of intangible assets7,947 9,845 15,199 17,286 
Acquisition and integration costs — 857 — 3,415 
Total operating expenses392,626 384,870 774,959 755,600 
Income (loss) from operations(3,965)102,813 80,664 188,029 
Interest and other income, net11,797 8,551 22,447 40,524 
Interest expense(23,861)(23,889)(47,637)(39,759)
Income (loss) before income taxes(16,029)87,475 55,474 188,794 
Provision for income taxes820 29,821 22,776 54,899 
Net income (loss)$(16,849)$57,654 $32,698 $133,895 
Net Income (Loss) per Common Share
Basic net income (loss) per common share$(0.12)$0.39 $0.23 $0.90 
Diluted net income (loss) per potential common share $(0.12)$0.38 $0.22 $0.89 
Weighted average basic common shares outstanding144,914 149,616 145,104 149,351 
Weighted average dilutive potential common shares outstanding 1
144,914 150,147 146,059 149,852 

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 for the first six months of fiscal 2024, and (ii) 0.5 million for both the second quarter and first six months of fiscal 2023.

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CIENA CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
(unaudited)
April 27,
2024		October 28,
2023
ASSETS 
Current assets: 
Cash and cash equivalents$1,091,289 $1,010,618 
Short-term investments165,620 104,753 
Accounts receivable, net840,131 1,003,876 
Inventories, net1,022,615 1,050,838 
Prepaid expenses and other421,692 405,694 
Total current assets3,541,347 3,575,779 
Long-term investments165,960 134,278 
Equipment, building, furniture and fixtures, net274,353 280,147 
Operating lease right-of-use assets30,210 35,140 
Goodwill444,917 444,765 
Other intangible assets, net184,941 205,627 
Deferred tax asset, net821,879 809,306 
Other long-term assets151,196 116,453 
Total assets$5,614,803 $5,601,495 
LIABILITIES AND STOCKHOLDERS’ EQUITY 
Current liabilities: 
Accounts payable$332,106 $317,828 
Accrued liabilities and other short-term obligations355,258 431,419 
Deferred revenue196,989 154,419 
Operating lease liabilities16,138 16,655 
Current portion of long-term debt11,700 11,700 
Total current liabilities912,191 932,021 
Long-term deferred revenue80,365 74,041 
Other long-term obligations172,839 170,407 
Long-term operating lease liabilities28,513 33,259 
Long-term debt, net1,540,639 1,543,406 
Total liabilities2,734,547 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; 144,199,201 and 144,829,938 shares issued and outstanding
1,442 1,448 
Additional paid-in capital6,245,248 6,262,083 
Accumulated other comprehensive loss(21,729)(37,767)
Accumulated deficit(3,344,705)(3,377,403)
Total stockholders’ equity2,880,256 2,848,361 
Total liabilities and stockholders’ equity$5,614,803 $5,601,495 
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CIENA CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands) (unaudited)
Six Months Ended
 April 27,April 29,
 20242023
Cash flows provided by (used in) operating activities: 
Net income$32,698 $133,895 
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 improvements46,016 45,903 
Share-based compensation expense78,075 62,372 
Amortization of intangible assets20,726 23,600 
Deferred taxes(8,946)(2,134)
Provision for inventory excess and obsolescence23,152 12,691 
Provision for warranty8,629 13,577 
Gain on equity investments, net— (26,455)
Other11,509 11,331 
Changes in assets and liabilities: 
Accounts receivable155,107 (116,914)
Inventories5,346 (162,143)
Prepaid expenses and other(37,441)(41,511)
Operating lease right-of-use assets6,111 7,644 
Accounts payable, accruals and other obligations(56,064)(55,754)
Deferred revenue48,641 68,818 
Short and long-term operating lease liabilities(9,010)(10,748)
Net cash provided by (used in) operating activities324,549 (35,828)
Cash flows used in investing activities: 
Payments for equipment, furniture, fixtures and intellectual property(33,500)(58,034)
Purchases of investments(171,131)(106,245)
Proceeds from sales and maturities of investments83,013 123,251 
Settlement of foreign currency forward contracts, net(828)(6,194)
Purchase of equity investments(16,256)— 
Acquisition of business, net of cash acquired— (230,048)
Net cash used in investing activities(138,702)(277,270)
Cash flows provided by (used in) financing activities: 
Proceeds from issuance of term loan, net— 497,500 
Payment of long term debt(2,925)(3,465)
Payment of debt issuance costs(2,554)(5,230)
Payment of finance lease obligations(1,989)(1,864)
Shares repurchased for tax withholdings on vesting of stock unit awards(22,428)(22,022)
Repurchases of common stock - repurchase program, net(94,817)— 
Proceeds from issuance of common stock16,876 14,656 
Net cash provided by (used in) financing activities(107,837)479,575 
Effect of exchange rate changes on cash, cash equivalents and restricted cash2,659 6,867 
Net increase in cash, cash equivalents and restricted cash80,669 173,344 
Cash, cash equivalents and restricted cash at beginning of period1,010,786 994,378 
Cash, cash equivalents and restricted cash at end of period$1,091,455 $1,167,722 
Supplemental disclosure of cash flow information 
Cash paid during the period for interest, net$45,782 $37,514 
Cash paid during the period for income taxes, net$29,193 $24,218 
Operating lease payments$9,964 $11,689 
Non-cash investing and financing activities
Purchase of equipment in accounts payable$6,365 $4,618 
Repurchase of common stock in accrued liabilities from repurchase program$3,859 $— 
Operating right-of-use assets subject to lease liability $3,639 $6,177 
Gain on equity investments, net$— $26,455 
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APPENDIX A - Reconciliation of Adjusted (Non- GAAP) Measurements
(in thousands, except per share data) (unaudited)
Quarter Ended
April 27,April 29,
20242023
Gross Profit Reconciliation (GAAP/non-GAAP)
GAAP gross profit$388,661 $487,683 
Share-based compensation-products1,760 1,155 
Share-based compensation-services3,344 2,659 
Amortization of intangible assets2,763 3,431 
Total adjustments related to gross profit7,867 7,245 
Adjusted (non-GAAP) gross profit$396,528 $494,928 
Adjusted (non-GAAP) gross profit percentage43.5 %43.7 %
Operating Expense Reconciliation (GAAP/non-GAAP)
GAAP operating expense$392,626 $384,870 
Share-based compensation-research and development14,066 10,731 
Share-based compensation-sales and marketing11,166 8,755 
Share-based compensation-general and administrative9,875 8,468 
Significant asset impairments and restructuring costs15,655 8,153 
Amortization of intangible assets7,947 9,845 
Acquisition and integration costs— 857 
Total adjustments related to operating expense58,709 46,809 
Adjusted (non-GAAP) operating expense$333,917 $338,061 
Income (Loss) from Operations Reconciliation (GAAP/non-GAAP)
GAAP income (loss) from operations$(3,965)$102,813 
Total adjustments related to gross profit7,867 7,245 
Total adjustments related to operating expense58,709 46,809 
Total adjustments related to income (loss) from operations66,576 54,054 
Adjusted (non-GAAP) income from operations$62,611 $156,867 
Adjusted (non-GAAP) operating margin percentage6.8 %13.8 %
Net Income (Loss) Reconciliation (GAAP/non-GAAP)
GAAP net income (loss)$(16,849)$57,654 
Exclude GAAP provision for income taxes820 29,821 
Income (loss) before income taxes(16,029)87,475 
Total adjustments related to income from operations66,576 54,054 
Adjusted income before income taxes50,547 141,529 
Non-GAAP tax provision on adjusted income before income taxes11,120 31,136 
Adjusted (non-GAAP) net income$39,427 $110,393 
Weighted average basic common shares outstanding144,914149,616
Weighted average dilutive potential common shares outstanding 1
146,268150,147
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APPENDIX A - Reconciliation of Adjusted (Non- GAAP) Measurements
(in thousands, except per share data) (unaudited)
Quarter Ended
April 27,April 29,
20242023
Net Income (Loss) per Common Share
GAAP diluted net income (loss) per potential common share$(0.12)$0.38 
Adjusted (non-GAAP) diluted net income per potential common share$0.27 $0.74 

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) 1.4 million and 1.0 million for the second quarter and first six months of fiscal 2024, respectively; and (ii) 0.5 million for both the second quarter and first six months of fiscal 2023.
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APPENDIX B - Calculation of EBITDA and Adjusted EBITDA
(in thousands) (unaudited)
Quarter Ended
April 27,April 29,
20242023
Earnings Before Interest, Tax, Depreciation and Amortization (EBITDA)
Net income (loss) (GAAP)$(16,849)$57,654 
Add: Interest expense23,861 23,889 
Less: Interest and other income, net11,797 8,551 
Add: Provision for income taxes820 29,821 
Add: Depreciation of equipment, building, furniture and fixtures, and amortization of leasehold improvements23,208 23,695 
Add: Amortization of intangible assets10,710 13,275 
EBITDA$29,953 $139,783 
Add: Share-based compensation expense40,211 31,768 
Add: Significant asset impairments and restructuring costs15,655 8,153 
Add: Acquisition and integration costs— 857 
Adjusted EBITDA$85,819 $180,561 
* * *
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.
•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 second quarter 2024 and the fiscal second 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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