Ciena Reports Fiscal First Quarter 2024 Financial Results

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)

Period Change

FY 2024

FY 2023

Y-T-Y*

Revenue

1,037.7

1,056.5

(1.8

Gross margin

45.0

43.2

1.8

Operating expense

382.3

370.7

3.1

Operating margin

8.2

8.1

0.1

Non-GAAP Results (unaudited)

Period Change

FY 2024

FY 2023

Y-T-Y*

Revenue

1,037.7

1,056.5

(1.8

Adj. gross margin

45.7

43.7

2.0

Adj. operating expense

336.8

329.3

2.3

Adj. operating margin

13.2

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 2024

Q1 FY 2023

Revenue

%**

Revenue

%**

Networking Platforms

Optical Networking

695.8

67.1

735.6

69.6

Routing and Switching

111.4

10.7

119.5

11.3

Total Networking Platforms

807.2

77.8

855.1

80.9

Platform Software and Services

89.7

8.6

73.4

6.9

Blue Planet Automation Software and Services

14.0

1.4

15.4

1.5

Global Services

Maintenance Support and Training

74.1

7.1

67.9

6.4

Installation and Deployment

42.7

4.1

34.6

3.3

Consulting and Network Design

10.0

1.0

10.1

1.0

Total Global Services

126.8

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 2024

Q1 FY 2023

Revenue

% **

Revenue

% **

Americas

718.2

69.2

765.1

72.4

Europe, Middle East and Africa

207.4

20.0

152.8

14.5

Asia Pacific

112.1

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
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 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.

CIENA CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

(unaudited)

Quarter Ended

January 27,

January 28,

2024

2023

Revenue:

Products

835,777

877,715

Services

201,932

178,806

Total revenue

1,037,709

1,056,521

Cost of goods sold:

Products

466,472

500,337

Services

104,275

100,238

Total cost of goods sold

570,747

600,575

Gross profit

466,962

455,946

Operating expenses:

Research and development

187,269

181,730

Selling and marketing

128,158

123,807

General and administrative

54,683

50,896

Significant asset impairments and restructuring costs

4,971

4,298

Amortization of intangible assets

7,252

7,441

Acquisition and integration costs

—

2,558

Total operating expenses

382,333

370,730

Income from operations

84,629

85,216

Interest and other income, net

10,650

31,973

Interest expense

(23,776

)

(15,870

)

Income before income taxes

71,503

101,319

Provision for income taxes

21,956

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 outstanding

145,291

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.

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 investments

106,678

104,753

Accounts receivable, net

865,239

1,003,876

Inventories, net

984,886

1,050,838

Prepaid expenses and other

387,193

405,694

Total current assets

3,608,747

3,575,779

Long-term investments

103,862

134,278

Equipment, building, furniture and fixtures, net

280,357

280,147

Operating lease right-of-use assets

35,679

35,140

Goodwill

445,084

444,765

Other intangible assets, net

195,682

205,627

Deferred tax asset, net

814,098

809,306

Other long-term assets

109,701

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 obligations

329,910

431,419

Deferred revenue

166,714

154,419

Operating lease liabilities

16,888

16,655

Current portion of long-term debt

11,700

Total current liabilities

841,306

932,021

Long-term deferred revenue

76,556

74,041

Other long-term obligations

176,313

170,407

Long-term operating lease liabilities

32,418

33,259

Long-term debt, net

1,543,118

1,543,406

Total liabilities

2,669,711

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 capital

6,274,773

6,262,083

Accumulated other comprehensive loss

(24,867

)

(37,767

)

Accumulated deficit

(3,327,856

)

(3,377,403

)

Total stockholders’ equity

2,923,499

2,848,361

Total liabilities and stockholders’ equity

5,593,210

5,601,495

CIENA CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands) (unaudited)

Quarter Ended

January 27,

January 28,

2024

2023

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 improvements

22,808

22,208

Share-based compensation expense

37,827

30,512

Amortization of intangible assets

10,016

10,325

Deferred taxes

(4,368

)

(7,247

)

Provision for inventory excess and obsolescence

10,350

5,503

Provision for warranty

4,841

8,230

Gain on cost method equity investments, net

—

(26,455

)

Other

5,051

7,325

Changes in assets and liabilities:

Accounts receivable

135,160

(133,067

)

Inventories

56,157

(235,059

)

Prepaid expenses and other

17,116

4,667

Operating lease right-of-use assets

3,084

3,891

Accounts payable, accruals and other obligations

(90,915

)

(56,979

)

Deferred revenue

14,022

29,459

Short and long-term operating lease liabilities

(4,620

)

(5,193

)

Net cash provided by (used in) operating activities

266,076

(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 investments

53,674

123,249

Settlement of foreign currency forward contracts, net

2,271

(4,001

)

Acquisition of business, net of cash acquired

—

(230,048

)

Net cash provided by (used in) investing activities

18,133

(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 stock

16,934

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 cash

4,646

9,884

Net increase in cash, cash equivalents and restricted cash

254,135

60,198

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

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

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

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

Quarter Ended

January 27,

January 28,

2024

2023

Gross Profit Reconciliation (GAAP/non-GAAP)

GAAP gross profit

466,962

455,946

Share-based compensation-products

1,318

1,051

Share-based compensation-services

3,020

2,297

Amortization of intangible assets

2,764

2,883

Total adjustments related to gross profit

7,102

6,231

Adjusted (non-GAAP) gross profit

474,064

462,177

Adjusted (non-GAAP) gross profit percentage

45.7

43.7

Operating Expense Reconciliation (GAAP/non-GAAP)

GAAP operating expense

382,333

370,730

Share-based compensation-research and development

12,880

9,234

Share-based compensation-sales and marketing

10,305

8,424

Share-based compensation-general and administrative

10,079

9,468

Significant asset impairments and restructuring costs

4,971

4,298

Amortization of intangible assets

7,252

7,441

Acquisition and integration costs

—

2,558

Total adjustments related to operating expense

45,487

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 profit

7,102

6,231

Total adjustments related to operating expense

45,487

41,423

Total adjustments related to income from operations

52,589

47,654

Adjusted (non-GAAP) income from operations

137,218

132,870

Adjusted (non-GAAP) operating margin percentage

13.2

12.6

Net Income Reconciliation (GAAP/non-GAAP)

GAAP net income

49,547

76,241

Exclude GAAP provision for income taxes

21,956

25,078

Income before income taxes

71,503

101,319

Total adjustments related to income from operations

52,589

47,654

Gain on cost method equity investments, net

—

(26,455

)

Adjusted income before income taxes

124,092

122,518

Non-GAAP tax provision on adjusted income before income taxes

27,300

26,954

Adjusted (non-GAAP) net income

96,792

95,564

Weighted average basic common shares outstanding

145,291

149,081

Weighted average dilutive potential common shares outstanding 1

145,848

149,551

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.

APPENDIX B - Calculation of EBITDA and Adjusted EBITDA (unaudited)

(in thousands) (unaudited)

Quarter Ended

January 27,

January 28,

2024

2023

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

Net income (GAAP)

49,547

76,241

Add: Interest expense

23,776

15,870

Less: Interest and other income, net

10,650

31,973

Add: Provision for income taxes

21,956

25,078

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

22,808

22,208

Add: Amortization of intangible assets

10,016

10,325

EBITDA

117,453

117,749

Add: Share-based compensation cost

37,602

30,474

Add: Significant asset impairments and restructuring costs

4,971

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.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240306451513/en/

Press Contact: Jamie Moody Ciena Corporation +1 (410) 694-5761 pr@ciena.com

Investor Contact: Gregg Lampf Ciena Corporation +1 (410) 694-5700 ir@ciena.com

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