Recent Quotes View Full List My Watchlist Create Watchlist Indicators DJI Nasdaq Composite SPX Gold Crude Oil EL&P Market Index Markets Stocks ETFs Tools Overview News Currencies International Treasuries Ciena Reports Fiscal Third Quarter 2021 Financial Results By: Ciena Corporation via Business Wire September 02, 2021 at 07:00 AM EDT Ciena® Corporation (NYSE: CIEN), a networking systems, services and software company, today announced unaudited financial results for its fiscal third quarter ended July 31, 2021. Q3 Revenue: $988.1 million Q3 Net Income per Share: $1.52 GAAP; $0.92 adjusted (non-GAAP) Share Repurchases: Repurchased approximately 0.5 million shares of common stock for an aggregate price of $26.0 million during the quarter “We delivered outstanding fiscal third quarter results that reflect continued momentum in our business as well as our differentiated position in the market,” said Gary Smith, president and CEO of Ciena. “These results combined with a robust demand environment give us confidence that we will deliver our expected strong second half performance.” For the fiscal third quarter 2021, Ciena reported revenue of $988.1 million as compared to $976.7 million for the fiscal third quarter 2020. Ciena's GAAP net income for the fiscal third quarter 2021 was $238.2 million, or $1.52 per diluted common share, which compares to a GAAP net income of $142.3 million, or $0.91 per diluted common share, for the fiscal third quarter 2020. Ciena's GAAP net income for the third quarter of 2021 benefited from the recording of a $124.2 million tax benefit related to an internal transfer of non-U.S. intangible assets. See APPENDIX A - Reconciliation of Adjusted (Non- GAAP) Quarterly Measures for more information and a reconciliation of our adjusted (non-GAAP) net income which excludes the effect of these amounts. Ciena's adjusted (non-GAAP) net income for the fiscal third quarter 2021 was $144.9 million, or $0.92 per diluted common share, which compares to an adjusted (non-GAAP) net income of $166.4 million, or $1.06 per diluted common share, for the fiscal third quarter 2020. Fiscal Third Quarter 2021 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 Q3 Q3 FY 2021 FY 2020 Y-T-Y* Revenue $ 988.1 $ 976.7 1.2 % Gross margin 48.0 % 47.6 % 0.4 % Operating expense $ 326.0 $ 276.6 17.9 % Operating margin 15.0 % 19.3 % (4.3) % Non-GAAP Results Q3 Q3 FY 2021 FY 2020 Y-T-Y* Revenue $ 988.1 $ 976.7 1.2 % Adj. gross margin 48.5 % 48.2 % 0.3 % Adj. operating expense $ 290.4 $ 251.2 15.6 % Adj. operating margin 19.1 % 22.4 % (3.3) % Adj. EBITDA $ 213.7 $ 241.1 (11.4) % * Denotes % change, or in the case of margin, absolute change Revenue by Segment Q3 FY 2021 Q3 FY 2020 Revenue %** Revenue %** Networking Platforms Converged Packet Optical $ 712.9 72.1 $ 722.5 74.0 Routing and Switching (1) 69.7 7.1 79.8 8.1 Total Networking Platforms 782.6 79.2 802.3 82.1 Platform Software and Services 56.9 5.8 46.4 4.8 Blue Planet Automation Software and Services 16.6 1.7 11.3 1.1 Global Services Maintenance Support and Training 74.0 7.5 69.1 7.1 Installation and Deployment 46.7 4.7 39.8 4.1 Consulting and Network Design 11.3 1.1 7.8 0.8 Total Global Services 132.0 13.3 116.7 12.0 Total $ 988.1 100.0 $ 976.7 100.0 ** Denotes % of total revenue (1) Ciena renamed its former “Packet Networking” product line “Routing and Switching” effective as of the beginning of fiscal 2021. This change, affecting only the presentation of such information, was made on a prospective basis and does not impact comparability of previous financial results or the composition of this product category. Additional Performance Metrics for Fiscal Third Quarter 2021 Revenue by Geographic Region Q3 FY 2021 Q3 FY 2020 Revenue % ** Revenue % ** Americas $ 692.8 70.1 $ 713.3 73.0 Europe, Middle East and Africa 189.2 19.2 162.5 16.6 Asia Pacific 106.1 10.7 100.9 10.4 Total $ 988.1 100.0 $ 976.7 100.0 ** Denotes % of total revenue Three 10%-plus customers represented a total of 37.5% of revenue Cash and investments totaled $1.5 billion Cash flow from operations totaled $69.1 million Average days' sales outstanding (DSOs) were 89 Accounts receivable, net balance was $878.2 million Unbilled contract asset, net balance was $98.8 million Inventories totaled $370.2 million, including: Raw materials: $139.3 million Work in process: $10.6 million Finished goods: $204.6 million Deferred cost of sales: $53.8 million Reserve for excess and obsolescence: $(38.1) million Product inventory turns were 4.5 Headcount totaled 7,251 Supplemental Materials and Live Web Broadcast of Unaudited Fiscal Third Quarter 2021 Results Today, Thursday, September 2, 2021, in conjunction with this announcement, Ciena has posted to the Quarterly Results page of the Investor Relations section of its website an accompanying investor presentation for its unaudited fiscal third quarter 2021 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 outstanding fiscal third quarter results that reflect continued momentum in our business as well as our differentiated position in the market” and "These results combined with a robust demand environment give us confidence that we will deliver our expected strong second half performance.” 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 and their business; our ability to execute successfully our business and growth strategies; the duration and severity of the COVID-19 pandemic and its impact on macroeconomic conditions, economic activity, demand for our technology solutions, short- and long-term changes in customer or end user needs, continuity of supply chain, our business operations, liquidity, and financial results; changes in network spending or network strategy by customers; seasonality and the timing and size of customer orders, including 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; supply chain disruptions; changes in foreign currency exchange rates affecting revenue and operating expense; factors beyond our control such as natural disasters, acts of war or terrorism, and public health emergencies; the impact of the Tax Cuts and Jobs Act; changes in tax or trade regulations, including the imposition of tariffs, duties or efforts to withdraw from or materially modify international trade agreements; changes in estimates of prospective income tax rates and any adjustments to Ciena's provisional estimates whether related to further guidance, analysis or otherwise; and the other risk factors disclosed in its Annual Report on Form 10-K filed with the SEC on December 18, 2020 and included in its Quarterly Report on Form 10-Q for the third quarter of fiscal 2021 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 networking systems, services and software company. We provide solutions that help our customers create the Adaptive Network™ in response to the constantly changing demands of their users. By delivering best-in-class networking technology through high-touch consultative relationships, we build the world’s most agile networks with automation, openness and scale. For updates on Ciena, follow us on Twitter @Ciena, LinkedIn, 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 Nine Months Ended July 31, August 1, July 31, August 1, 2021 2020 2021 2020 Revenue: Products $ 804,414 $ 819,022 $ 2,071,677 $ 2,246,129 Services 183,727 157,690 507,521 457,548 Total revenue 988,141 976,712 2,579,198 2,703,677 Cost of goods sold: Products 420,236 436,227 1,074,935 1,230,378 Services 93,355 75,804 259,403 224,757 Total cost of goods sold 513,591 512,031 1,334,338 1,455,135 Gross profit 474,550 464,681 1,244,860 1,248,542 Operating expenses: Research and development 146,225 130,221 389,212 392,651 Selling and marketing 114,924 94,763 322,589 303,043 General and administrative 48,863 41,635 132,491 126,133 Significant asset impairments and restructuring costs 9,789 6,515 23,865 14,798 Amortization of intangible assets 5,967 5,840 17,896 17,532 Acquisition and integration costs (recoveries) 259 (2,329) 860 904 Total operating expenses 326,027 276,645 886,913 855,061 Income from operations 148,523 188,036 357,947 393,481 Interest and other income (loss), net 795 232 (1,600) 1,213 Interest expense (7,776) (7,251) (22,921) (23,926) Loss on extinguishment and modification of debt — — — (646) Income before income taxes 141,542 181,017 333,426 370,122 Provision (benefit) for income taxes (96,690) 38,750 (63,271) 73,872 Net income $ 238,232 $ 142,267 $ 396,697 $ 296,250 Net Income per Common Share Basic net income per common share $ 1.53 $ 0.92 $ 2.55 $ 1.92 Diluted net income per potential common share $ 1.52 $ 0.91 $ 2.53 $ 1.90 Weighted average basic common shares outstanding 155,271 154,184 155,277 154,136 Weighted average dilutive potential common shares outstanding 1 156,744 156,318 156,742 155,741 1 Weighted average dilutive potential common shares outstanding used in calculating GAAP diluted net income per potential common share for the third quarter of fiscal 2021 includes 1.5 million shares underlying certain stock option and stock unit awards. Weighted average dilutive potential common shares outstanding used in calculating GAAP diluted net income per potential common share for the first nine months of fiscal 2021 includes 1.5 million shares underlying certain stock option and stock unit awards. Weighted average dilutive potential common shares outstanding used in calculating GAAP diluted net income per potential common share for the third quarter of fiscal 2020 includes 2.1 million shares underlying certain stock option and stock unit awards. Weighted average dilutive potential common shares outstanding used in calculating GAAP diluted net income per potential common share for the first nine months of fiscal 2020 includes 1.6 million shares underlying certain stock option and stock unit awards. CIENA CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except share data) (unaudited) July 31, 2021 October 31, 2020 ASSETS Current assets: Cash and cash equivalents $ 1,230,441 $ 1,088,624 Short-term investments 182,010 150,667 Accounts receivable, net 878,229 719,405 Inventories 370,170 344,379 Prepaid expenses and other 323,283 308,084 Total current assets 2,984,133 2,611,159 Long-term investments 60,888 82,226 Equipment, building, furniture and fixtures, net 288,937 272,377 Operating lease right-of-use assets 48,937 57,026 Goodwill 311,569 310,847 Other intangible assets, net 73,974 96,647 Deferred tax asset, net 784,702 647,805 Other long-term assets 102,728 102,830 Total assets $ 4,655,868 $ 4,180,917 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $ 301,606 $ 291,904 Accrued liabilities and other short-term obligations 373,291 334,132 Deferred revenue 126,179 108,700 Operating lease liabilities 19,085 19,035 Current portion of long-term debt 6,930 6,930 Total current liabilities 827,091 760,701 Long-term deferred revenue 57,720 49,663 Other long-term obligations 123,731 123,185 Long-term operating lease liabilities 51,235 61,415 Long-term debt, net 671,855 676,356 Total liabilities $ 1,731,632 $ 1,671,320 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; 155,103,315 and 154,563,005 shares issued and outstanding 1,551 1,546 Additional paid-in capital 6,815,946 6,826,531 Accumulated other comprehensive loss (4,630) (35,358) Accumulated deficit (3,888,631) (4,283,122) Total stockholders’ equity 2,924,236 2,509,597 Total liabilities and stockholders’ equity $ 4,655,868 $ 4,180,917 CIENA CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (unaudited) Nine Months Ended July 31, August 1, 2021 2020 Cash flows provided by operating activities: Net income $ 396,697 $ 296,250 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation of equipment, building, furniture and fixtures, and amortization of leasehold improvements 71,918 70,370 Share-based compensation costs 62,970 50,838 Amortization of intangible assets 27,341 29,035 Deferred taxes (139,543) 57,636 Provision for inventory excess and obsolescence 13,460 20,176 Provision for warranty 12,726 19,172 Other 6,350 15,085 Changes in assets and liabilities: Accounts receivable (163,149) (6,688) Inventories (38,821) (39,568) Prepaid expenses and other (17,272) (52,945) Operating lease right-of-use assets 12,340 12,816 Accounts payable, accruals and other obligations 31,388 (131,647) Deferred revenue 24,969 (19,039) Short and long-term operating lease liabilities (14,618) (15,132) Net cash provided by operating activities 286,756 306,359 Cash flows used in investing activities: Payments for equipment, furniture, fixtures and intellectual property (67,290) (61,333) Purchase of available for sale securities (132,895) (39,859) Proceeds from maturities of available for sale securities 122,063 90,000 Settlement of foreign currency forward contracts, net 7,326 3,067 Acquisition of business, net of cash acquired — (28,300) Proceeds from sale of equity investment 4,678 — Net cash used in investing activities (66,118) (36,425) Cash flows used in financing activities: Payment of long term debt (5,197) (3,465) Payment of debt issuance costs — (382) Payment of finance lease obligations (2,243) (2,030) Shares repurchased for tax withholdings on vesting of restricted stock units (36,484) (26,328) Repurchases of common stock - repurchase program (64,555) (74,535) Proceeds from issuance of common stock 28,289 27,986 Net cash used in financing activities (80,190) (78,754) Effect of exchange rate changes on cash, cash equivalents and restricted cash 1,344 (1,526) Net increase in cash, cash equivalents and restricted cash 141,792 189,654 Cash, cash equivalents and restricted cash at beginning of period 1,088,708 904,161 Cash, cash equivalents and restricted cash at end of period $ 1,230,500 $ 1,093,815 Supplemental disclosure of cash flow information Cash paid during the period for interest $ 22,392 $ 25,278 Cash paid during the period for income taxes, net $ 46,165 $ 41,316 Operating lease payments $ 16,162 $ 16,762 Non-cash investing and financing activities Purchase of equipment in accounts payable $ 5,517 $ 4,200 Repurchase of common stock in accrued liabilities from repurchase program $ 800 $ — Operating lease right-of-use assets subject to lease liability $ 4,182 $ 11,404 APPENDIX A - Reconciliation of Adjusted (Non- GAAP) Quarterly Measures (in thousands, except per share data) (unaudited) Quarter Ended July 31, August 1, 2021 2020 Gross Profit Reconciliation (GAAP/non-GAAP) GAAP gross profit $ 474,550 $ 464,681 Share-based compensation-products 1,037 960 Share-based compensation-services 1,315 1,007 Canadian Emergency Wage Subsidy-products (94) — Canadian Emergency Wage Subsidy-services (47) — Amortization of intangible assets 2,857 3,834 Total adjustments related to gross profit 5,068 5,801 Adjusted (non-GAAP) gross profit $ 479,618 $ 470,482 Adjusted (non-GAAP) gross profit percentage 48.5 % 48.2 % Operating Expense Reconciliation (GAAP/non-GAAP) GAAP operating expense $ 326,027 $ 276,645 Share-based compensation-research and development 5,541 4,286 Share-based compensation-sales and marketing 6,534 5,180 Share-based compensation-general and administrative 8,237 5,940 Canadian Emergency Wage Subsidy-research and development (596) — Canadian Emergency Wage Subsidy-sales and marketing (53) — Canadian Emergency Wage Subsidy-general and administrative (46) — Significant asset impairments and restructuring costs 9,789 6,515 Amortization of intangible assets 5,967 5,840 Acquisition and integration costs (recoveries) 259 (2,329) Total adjustments related to operating expense 35,632 25,432 Adjusted (non-GAAP) operating expense $ 290,395 $ 251,213 Income from Operations Reconciliation (GAAP/non-GAAP) GAAP income from operations $ 148,523 $ 188,036 Total adjustments related to gross profit 5,068 5,801 Total adjustments related to operating expense 35,632 25,432 Total adjustments related to income from operations 40,700 31,233 Adjusted (non-GAAP) income from operations $ 189,223 $ 219,269 Adjusted (non-GAAP) operating margin percentage 19.1 % 22.4 % Net Income Reconciliation (GAAP/non-GAAP) GAAP net income $ 238,232 $ 142,267 Exclude GAAP provision (benefit) for income taxes (96,690) 38,750 Income before income taxes 141,542 181,017 Total adjustments related to income from operations 40,700 31,233 Adjusted income before income taxes 182,242 212,250 Non-GAAP tax provision on adjusted income before income taxes 37,360 45,846 Adjusted (non-GAAP) net income $ 144,882 $ 166,404 Weighted average basic common shares outstanding 155,271 154,184 Weighted average dilutive potential common shares outstanding 1 156,744 156,318 Net Income per Common Share GAAP diluted net income per common share $ 1.52 $ 0.91 Adjusted (non-GAAP) diluted net income per potential common share $ 0.92 $ 1.06 1 Weighted average dilutive potential common shares outstanding used in calculating Adjusted (non-GAAP) diluted net income per potential common share for the third quarter of fiscal 2021 includes 1.5 million shares underlying certain stock option and stock unit awards. Weighted average dilutive potential common shares outstanding used in calculating Adjusted (non-GAAP) diluted net income per potential common share for the third quarter of fiscal 2020 includes 2.1 million shares underlying certain stock option and stock unit awards. APPENDIX B - Calculation of EBITDA and Adjusted EBITDA (unaudited) (in thousands) (unaudited) Quarter Ended July 31, August 1, 2021 2020 Earnings Before Interest, Tax, Depreciation and Amortization (EBITDA) Net income (GAAP) $ 238,232 $ 142,267 Add: Interest expense 7,776 7,251 Less: Interest and other income, net 795 232 Add: Provision (benefit) for income taxes (96,690) 38,750 Add: Depreciation of equipment, building, furniture and fixtures, and amortization of leasehold improvements 24,623 21,989 Add: Amortization of intangible assets 8,824 9,674 EBITDA $ 181,970 $ 219,699 Less: Canadian Emergency Wage Subsidy 836 — Add: Share-based compensation cost 22,471 17,259 Add: Significant asset impairments and restructuring costs 9,789 6,515 Add: Acquisition and integration costs (recoveries) 259 (2,329) Adjusted EBITDA $ 213,653 $ 241,144 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. Canadian Emergency Wage Subsidy - a program introduced by the Government of Canada to offset a portion of employee wages for a limited period in response to COVID-19 outbreak. Significant asset impairments and restructuring costs - costs incurred as a result of restructuring activities taken to align resources with perceived market opportunities and the redesign of business processes. 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 its expected useful life. Acquisition and integration costs (recoveries) - includes costs and recoveries of acquisition consideration and compensation associated with a three-year earn-out arrangement related to the DonRiver acquisition in fiscal 2018. Ciena does not believe that these costs are reflective of its ongoing operating expense following its completion of these integration activities. 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 20.5% for the third fiscal quarter of 2021 and 21.6% for the third fiscal quarter of 2020. This rate may be subject to change in the future, including as a result of changes in tax policy or tax strategy. Ciena's GAAP tax provision for the third quarter of 2021 benefited from recording a $124.2 million tax benefit related to an internal transfer of non-U.S. intangible assets that was recognized as a result of the step-up in basis of such rights for tax purposes. The Non-GAAP tax provision for the periods presented do not include this tax benefit or the corresponding deferred tax asset. View source version on businesswire.com: https://www.businesswire.com/news/home/20210902005349/en/Contacts Press Contact: Jamie Moody Ciena Corporation +1 (214) 995-8035 pr@ciena.com Investor Contact: Gregg Lampf Ciena Corporation +1 (410) 694-5700 ir@ciena.com Data & News supplied by www.cloudquote.io Stock quotes supplied by Barchart Quotes delayed at least 20 minutes. By accessing this page, you agree to the following Privacy Policy and Terms and Conditions.
Ciena Reports Fiscal Third Quarter 2021 Financial Results By: Ciena Corporation via Business Wire September 02, 2021 at 07:00 AM EDT Ciena® Corporation (NYSE: CIEN), a networking systems, services and software company, today announced unaudited financial results for its fiscal third quarter ended July 31, 2021. Q3 Revenue: $988.1 million Q3 Net Income per Share: $1.52 GAAP; $0.92 adjusted (non-GAAP) Share Repurchases: Repurchased approximately 0.5 million shares of common stock for an aggregate price of $26.0 million during the quarter “We delivered outstanding fiscal third quarter results that reflect continued momentum in our business as well as our differentiated position in the market,” said Gary Smith, president and CEO of Ciena. “These results combined with a robust demand environment give us confidence that we will deliver our expected strong second half performance.” For the fiscal third quarter 2021, Ciena reported revenue of $988.1 million as compared to $976.7 million for the fiscal third quarter 2020. Ciena's GAAP net income for the fiscal third quarter 2021 was $238.2 million, or $1.52 per diluted common share, which compares to a GAAP net income of $142.3 million, or $0.91 per diluted common share, for the fiscal third quarter 2020. Ciena's GAAP net income for the third quarter of 2021 benefited from the recording of a $124.2 million tax benefit related to an internal transfer of non-U.S. intangible assets. See APPENDIX A - Reconciliation of Adjusted (Non- GAAP) Quarterly Measures for more information and a reconciliation of our adjusted (non-GAAP) net income which excludes the effect of these amounts. Ciena's adjusted (non-GAAP) net income for the fiscal third quarter 2021 was $144.9 million, or $0.92 per diluted common share, which compares to an adjusted (non-GAAP) net income of $166.4 million, or $1.06 per diluted common share, for the fiscal third quarter 2020. Fiscal Third Quarter 2021 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 Q3 Q3 FY 2021 FY 2020 Y-T-Y* Revenue $ 988.1 $ 976.7 1.2 % Gross margin 48.0 % 47.6 % 0.4 % Operating expense $ 326.0 $ 276.6 17.9 % Operating margin 15.0 % 19.3 % (4.3) % Non-GAAP Results Q3 Q3 FY 2021 FY 2020 Y-T-Y* Revenue $ 988.1 $ 976.7 1.2 % Adj. gross margin 48.5 % 48.2 % 0.3 % Adj. operating expense $ 290.4 $ 251.2 15.6 % Adj. operating margin 19.1 % 22.4 % (3.3) % Adj. EBITDA $ 213.7 $ 241.1 (11.4) % * Denotes % change, or in the case of margin, absolute change Revenue by Segment Q3 FY 2021 Q3 FY 2020 Revenue %** Revenue %** Networking Platforms Converged Packet Optical $ 712.9 72.1 $ 722.5 74.0 Routing and Switching (1) 69.7 7.1 79.8 8.1 Total Networking Platforms 782.6 79.2 802.3 82.1 Platform Software and Services 56.9 5.8 46.4 4.8 Blue Planet Automation Software and Services 16.6 1.7 11.3 1.1 Global Services Maintenance Support and Training 74.0 7.5 69.1 7.1 Installation and Deployment 46.7 4.7 39.8 4.1 Consulting and Network Design 11.3 1.1 7.8 0.8 Total Global Services 132.0 13.3 116.7 12.0 Total $ 988.1 100.0 $ 976.7 100.0 ** Denotes % of total revenue (1) Ciena renamed its former “Packet Networking” product line “Routing and Switching” effective as of the beginning of fiscal 2021. This change, affecting only the presentation of such information, was made on a prospective basis and does not impact comparability of previous financial results or the composition of this product category. Additional Performance Metrics for Fiscal Third Quarter 2021 Revenue by Geographic Region Q3 FY 2021 Q3 FY 2020 Revenue % ** Revenue % ** Americas $ 692.8 70.1 $ 713.3 73.0 Europe, Middle East and Africa 189.2 19.2 162.5 16.6 Asia Pacific 106.1 10.7 100.9 10.4 Total $ 988.1 100.0 $ 976.7 100.0 ** Denotes % of total revenue Three 10%-plus customers represented a total of 37.5% of revenue Cash and investments totaled $1.5 billion Cash flow from operations totaled $69.1 million Average days' sales outstanding (DSOs) were 89 Accounts receivable, net balance was $878.2 million Unbilled contract asset, net balance was $98.8 million Inventories totaled $370.2 million, including: Raw materials: $139.3 million Work in process: $10.6 million Finished goods: $204.6 million Deferred cost of sales: $53.8 million Reserve for excess and obsolescence: $(38.1) million Product inventory turns were 4.5 Headcount totaled 7,251 Supplemental Materials and Live Web Broadcast of Unaudited Fiscal Third Quarter 2021 Results Today, Thursday, September 2, 2021, in conjunction with this announcement, Ciena has posted to the Quarterly Results page of the Investor Relations section of its website an accompanying investor presentation for its unaudited fiscal third quarter 2021 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 outstanding fiscal third quarter results that reflect continued momentum in our business as well as our differentiated position in the market” and "These results combined with a robust demand environment give us confidence that we will deliver our expected strong second half performance.” 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 and their business; our ability to execute successfully our business and growth strategies; the duration and severity of the COVID-19 pandemic and its impact on macroeconomic conditions, economic activity, demand for our technology solutions, short- and long-term changes in customer or end user needs, continuity of supply chain, our business operations, liquidity, and financial results; changes in network spending or network strategy by customers; seasonality and the timing and size of customer orders, including 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; supply chain disruptions; changes in foreign currency exchange rates affecting revenue and operating expense; factors beyond our control such as natural disasters, acts of war or terrorism, and public health emergencies; the impact of the Tax Cuts and Jobs Act; changes in tax or trade regulations, including the imposition of tariffs, duties or efforts to withdraw from or materially modify international trade agreements; changes in estimates of prospective income tax rates and any adjustments to Ciena's provisional estimates whether related to further guidance, analysis or otherwise; and the other risk factors disclosed in its Annual Report on Form 10-K filed with the SEC on December 18, 2020 and included in its Quarterly Report on Form 10-Q for the third quarter of fiscal 2021 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 networking systems, services and software company. We provide solutions that help our customers create the Adaptive Network™ in response to the constantly changing demands of their users. By delivering best-in-class networking technology through high-touch consultative relationships, we build the world’s most agile networks with automation, openness and scale. For updates on Ciena, follow us on Twitter @Ciena, LinkedIn, 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 Nine Months Ended July 31, August 1, July 31, August 1, 2021 2020 2021 2020 Revenue: Products $ 804,414 $ 819,022 $ 2,071,677 $ 2,246,129 Services 183,727 157,690 507,521 457,548 Total revenue 988,141 976,712 2,579,198 2,703,677 Cost of goods sold: Products 420,236 436,227 1,074,935 1,230,378 Services 93,355 75,804 259,403 224,757 Total cost of goods sold 513,591 512,031 1,334,338 1,455,135 Gross profit 474,550 464,681 1,244,860 1,248,542 Operating expenses: Research and development 146,225 130,221 389,212 392,651 Selling and marketing 114,924 94,763 322,589 303,043 General and administrative 48,863 41,635 132,491 126,133 Significant asset impairments and restructuring costs 9,789 6,515 23,865 14,798 Amortization of intangible assets 5,967 5,840 17,896 17,532 Acquisition and integration costs (recoveries) 259 (2,329) 860 904 Total operating expenses 326,027 276,645 886,913 855,061 Income from operations 148,523 188,036 357,947 393,481 Interest and other income (loss), net 795 232 (1,600) 1,213 Interest expense (7,776) (7,251) (22,921) (23,926) Loss on extinguishment and modification of debt — — — (646) Income before income taxes 141,542 181,017 333,426 370,122 Provision (benefit) for income taxes (96,690) 38,750 (63,271) 73,872 Net income $ 238,232 $ 142,267 $ 396,697 $ 296,250 Net Income per Common Share Basic net income per common share $ 1.53 $ 0.92 $ 2.55 $ 1.92 Diluted net income per potential common share $ 1.52 $ 0.91 $ 2.53 $ 1.90 Weighted average basic common shares outstanding 155,271 154,184 155,277 154,136 Weighted average dilutive potential common shares outstanding 1 156,744 156,318 156,742 155,741 1 Weighted average dilutive potential common shares outstanding used in calculating GAAP diluted net income per potential common share for the third quarter of fiscal 2021 includes 1.5 million shares underlying certain stock option and stock unit awards. Weighted average dilutive potential common shares outstanding used in calculating GAAP diluted net income per potential common share for the first nine months of fiscal 2021 includes 1.5 million shares underlying certain stock option and stock unit awards. Weighted average dilutive potential common shares outstanding used in calculating GAAP diluted net income per potential common share for the third quarter of fiscal 2020 includes 2.1 million shares underlying certain stock option and stock unit awards. Weighted average dilutive potential common shares outstanding used in calculating GAAP diluted net income per potential common share for the first nine months of fiscal 2020 includes 1.6 million shares underlying certain stock option and stock unit awards. CIENA CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except share data) (unaudited) July 31, 2021 October 31, 2020 ASSETS Current assets: Cash and cash equivalents $ 1,230,441 $ 1,088,624 Short-term investments 182,010 150,667 Accounts receivable, net 878,229 719,405 Inventories 370,170 344,379 Prepaid expenses and other 323,283 308,084 Total current assets 2,984,133 2,611,159 Long-term investments 60,888 82,226 Equipment, building, furniture and fixtures, net 288,937 272,377 Operating lease right-of-use assets 48,937 57,026 Goodwill 311,569 310,847 Other intangible assets, net 73,974 96,647 Deferred tax asset, net 784,702 647,805 Other long-term assets 102,728 102,830 Total assets $ 4,655,868 $ 4,180,917 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $ 301,606 $ 291,904 Accrued liabilities and other short-term obligations 373,291 334,132 Deferred revenue 126,179 108,700 Operating lease liabilities 19,085 19,035 Current portion of long-term debt 6,930 6,930 Total current liabilities 827,091 760,701 Long-term deferred revenue 57,720 49,663 Other long-term obligations 123,731 123,185 Long-term operating lease liabilities 51,235 61,415 Long-term debt, net 671,855 676,356 Total liabilities $ 1,731,632 $ 1,671,320 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; 155,103,315 and 154,563,005 shares issued and outstanding 1,551 1,546 Additional paid-in capital 6,815,946 6,826,531 Accumulated other comprehensive loss (4,630) (35,358) Accumulated deficit (3,888,631) (4,283,122) Total stockholders’ equity 2,924,236 2,509,597 Total liabilities and stockholders’ equity $ 4,655,868 $ 4,180,917 CIENA CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (unaudited) Nine Months Ended July 31, August 1, 2021 2020 Cash flows provided by operating activities: Net income $ 396,697 $ 296,250 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation of equipment, building, furniture and fixtures, and amortization of leasehold improvements 71,918 70,370 Share-based compensation costs 62,970 50,838 Amortization of intangible assets 27,341 29,035 Deferred taxes (139,543) 57,636 Provision for inventory excess and obsolescence 13,460 20,176 Provision for warranty 12,726 19,172 Other 6,350 15,085 Changes in assets and liabilities: Accounts receivable (163,149) (6,688) Inventories (38,821) (39,568) Prepaid expenses and other (17,272) (52,945) Operating lease right-of-use assets 12,340 12,816 Accounts payable, accruals and other obligations 31,388 (131,647) Deferred revenue 24,969 (19,039) Short and long-term operating lease liabilities (14,618) (15,132) Net cash provided by operating activities 286,756 306,359 Cash flows used in investing activities: Payments for equipment, furniture, fixtures and intellectual property (67,290) (61,333) Purchase of available for sale securities (132,895) (39,859) Proceeds from maturities of available for sale securities 122,063 90,000 Settlement of foreign currency forward contracts, net 7,326 3,067 Acquisition of business, net of cash acquired — (28,300) Proceeds from sale of equity investment 4,678 — Net cash used in investing activities (66,118) (36,425) Cash flows used in financing activities: Payment of long term debt (5,197) (3,465) Payment of debt issuance costs — (382) Payment of finance lease obligations (2,243) (2,030) Shares repurchased for tax withholdings on vesting of restricted stock units (36,484) (26,328) Repurchases of common stock - repurchase program (64,555) (74,535) Proceeds from issuance of common stock 28,289 27,986 Net cash used in financing activities (80,190) (78,754) Effect of exchange rate changes on cash, cash equivalents and restricted cash 1,344 (1,526) Net increase in cash, cash equivalents and restricted cash 141,792 189,654 Cash, cash equivalents and restricted cash at beginning of period 1,088,708 904,161 Cash, cash equivalents and restricted cash at end of period $ 1,230,500 $ 1,093,815 Supplemental disclosure of cash flow information Cash paid during the period for interest $ 22,392 $ 25,278 Cash paid during the period for income taxes, net $ 46,165 $ 41,316 Operating lease payments $ 16,162 $ 16,762 Non-cash investing and financing activities Purchase of equipment in accounts payable $ 5,517 $ 4,200 Repurchase of common stock in accrued liabilities from repurchase program $ 800 $ — Operating lease right-of-use assets subject to lease liability $ 4,182 $ 11,404 APPENDIX A - Reconciliation of Adjusted (Non- GAAP) Quarterly Measures (in thousands, except per share data) (unaudited) Quarter Ended July 31, August 1, 2021 2020 Gross Profit Reconciliation (GAAP/non-GAAP) GAAP gross profit $ 474,550 $ 464,681 Share-based compensation-products 1,037 960 Share-based compensation-services 1,315 1,007 Canadian Emergency Wage Subsidy-products (94) — Canadian Emergency Wage Subsidy-services (47) — Amortization of intangible assets 2,857 3,834 Total adjustments related to gross profit 5,068 5,801 Adjusted (non-GAAP) gross profit $ 479,618 $ 470,482 Adjusted (non-GAAP) gross profit percentage 48.5 % 48.2 % Operating Expense Reconciliation (GAAP/non-GAAP) GAAP operating expense $ 326,027 $ 276,645 Share-based compensation-research and development 5,541 4,286 Share-based compensation-sales and marketing 6,534 5,180 Share-based compensation-general and administrative 8,237 5,940 Canadian Emergency Wage Subsidy-research and development (596) — Canadian Emergency Wage Subsidy-sales and marketing (53) — Canadian Emergency Wage Subsidy-general and administrative (46) — Significant asset impairments and restructuring costs 9,789 6,515 Amortization of intangible assets 5,967 5,840 Acquisition and integration costs (recoveries) 259 (2,329) Total adjustments related to operating expense 35,632 25,432 Adjusted (non-GAAP) operating expense $ 290,395 $ 251,213 Income from Operations Reconciliation (GAAP/non-GAAP) GAAP income from operations $ 148,523 $ 188,036 Total adjustments related to gross profit 5,068 5,801 Total adjustments related to operating expense 35,632 25,432 Total adjustments related to income from operations 40,700 31,233 Adjusted (non-GAAP) income from operations $ 189,223 $ 219,269 Adjusted (non-GAAP) operating margin percentage 19.1 % 22.4 % Net Income Reconciliation (GAAP/non-GAAP) GAAP net income $ 238,232 $ 142,267 Exclude GAAP provision (benefit) for income taxes (96,690) 38,750 Income before income taxes 141,542 181,017 Total adjustments related to income from operations 40,700 31,233 Adjusted income before income taxes 182,242 212,250 Non-GAAP tax provision on adjusted income before income taxes 37,360 45,846 Adjusted (non-GAAP) net income $ 144,882 $ 166,404 Weighted average basic common shares outstanding 155,271 154,184 Weighted average dilutive potential common shares outstanding 1 156,744 156,318 Net Income per Common Share GAAP diluted net income per common share $ 1.52 $ 0.91 Adjusted (non-GAAP) diluted net income per potential common share $ 0.92 $ 1.06 1 Weighted average dilutive potential common shares outstanding used in calculating Adjusted (non-GAAP) diluted net income per potential common share for the third quarter of fiscal 2021 includes 1.5 million shares underlying certain stock option and stock unit awards. Weighted average dilutive potential common shares outstanding used in calculating Adjusted (non-GAAP) diluted net income per potential common share for the third quarter of fiscal 2020 includes 2.1 million shares underlying certain stock option and stock unit awards. APPENDIX B - Calculation of EBITDA and Adjusted EBITDA (unaudited) (in thousands) (unaudited) Quarter Ended July 31, August 1, 2021 2020 Earnings Before Interest, Tax, Depreciation and Amortization (EBITDA) Net income (GAAP) $ 238,232 $ 142,267 Add: Interest expense 7,776 7,251 Less: Interest and other income, net 795 232 Add: Provision (benefit) for income taxes (96,690) 38,750 Add: Depreciation of equipment, building, furniture and fixtures, and amortization of leasehold improvements 24,623 21,989 Add: Amortization of intangible assets 8,824 9,674 EBITDA $ 181,970 $ 219,699 Less: Canadian Emergency Wage Subsidy 836 — Add: Share-based compensation cost 22,471 17,259 Add: Significant asset impairments and restructuring costs 9,789 6,515 Add: Acquisition and integration costs (recoveries) 259 (2,329) Adjusted EBITDA $ 213,653 $ 241,144 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. Canadian Emergency Wage Subsidy - a program introduced by the Government of Canada to offset a portion of employee wages for a limited period in response to COVID-19 outbreak. Significant asset impairments and restructuring costs - costs incurred as a result of restructuring activities taken to align resources with perceived market opportunities and the redesign of business processes. 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 its expected useful life. Acquisition and integration costs (recoveries) - includes costs and recoveries of acquisition consideration and compensation associated with a three-year earn-out arrangement related to the DonRiver acquisition in fiscal 2018. Ciena does not believe that these costs are reflective of its ongoing operating expense following its completion of these integration activities. 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 20.5% for the third fiscal quarter of 2021 and 21.6% for the third fiscal quarter of 2020. This rate may be subject to change in the future, including as a result of changes in tax policy or tax strategy. Ciena's GAAP tax provision for the third quarter of 2021 benefited from recording a $124.2 million tax benefit related to an internal transfer of non-U.S. intangible assets that was recognized as a result of the step-up in basis of such rights for tax purposes. The Non-GAAP tax provision for the periods presented do not include this tax benefit or the corresponding deferred tax asset. View source version on businesswire.com: https://www.businesswire.com/news/home/20210902005349/en/Contacts Press Contact: Jamie Moody Ciena Corporation +1 (214) 995-8035 pr@ciena.com Investor Contact: Gregg Lampf Ciena Corporation +1 (410) 694-5700 ir@ciena.com
Ciena® Corporation (NYSE: CIEN), a networking systems, services and software company, today announced unaudited financial results for its fiscal third quarter ended July 31, 2021. Q3 Revenue: $988.1 million Q3 Net Income per Share: $1.52 GAAP; $0.92 adjusted (non-GAAP) Share Repurchases: Repurchased approximately 0.5 million shares of common stock for an aggregate price of $26.0 million during the quarter “We delivered outstanding fiscal third quarter results that reflect continued momentum in our business as well as our differentiated position in the market,” said Gary Smith, president and CEO of Ciena. “These results combined with a robust demand environment give us confidence that we will deliver our expected strong second half performance.” For the fiscal third quarter 2021, Ciena reported revenue of $988.1 million as compared to $976.7 million for the fiscal third quarter 2020. Ciena's GAAP net income for the fiscal third quarter 2021 was $238.2 million, or $1.52 per diluted common share, which compares to a GAAP net income of $142.3 million, or $0.91 per diluted common share, for the fiscal third quarter 2020. Ciena's GAAP net income for the third quarter of 2021 benefited from the recording of a $124.2 million tax benefit related to an internal transfer of non-U.S. intangible assets. See APPENDIX A - Reconciliation of Adjusted (Non- GAAP) Quarterly Measures for more information and a reconciliation of our adjusted (non-GAAP) net income which excludes the effect of these amounts. Ciena's adjusted (non-GAAP) net income for the fiscal third quarter 2021 was $144.9 million, or $0.92 per diluted common share, which compares to an adjusted (non-GAAP) net income of $166.4 million, or $1.06 per diluted common share, for the fiscal third quarter 2020. Fiscal Third Quarter 2021 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 Q3 Q3 FY 2021 FY 2020 Y-T-Y* Revenue $ 988.1 $ 976.7 1.2 % Gross margin 48.0 % 47.6 % 0.4 % Operating expense $ 326.0 $ 276.6 17.9 % Operating margin 15.0 % 19.3 % (4.3) % Non-GAAP Results Q3 Q3 FY 2021 FY 2020 Y-T-Y* Revenue $ 988.1 $ 976.7 1.2 % Adj. gross margin 48.5 % 48.2 % 0.3 % Adj. operating expense $ 290.4 $ 251.2 15.6 % Adj. operating margin 19.1 % 22.4 % (3.3) % Adj. EBITDA $ 213.7 $ 241.1 (11.4) % * Denotes % change, or in the case of margin, absolute change Revenue by Segment Q3 FY 2021 Q3 FY 2020 Revenue %** Revenue %** Networking Platforms Converged Packet Optical $ 712.9 72.1 $ 722.5 74.0 Routing and Switching (1) 69.7 7.1 79.8 8.1 Total Networking Platforms 782.6 79.2 802.3 82.1 Platform Software and Services 56.9 5.8 46.4 4.8 Blue Planet Automation Software and Services 16.6 1.7 11.3 1.1 Global Services Maintenance Support and Training 74.0 7.5 69.1 7.1 Installation and Deployment 46.7 4.7 39.8 4.1 Consulting and Network Design 11.3 1.1 7.8 0.8 Total Global Services 132.0 13.3 116.7 12.0 Total $ 988.1 100.0 $ 976.7 100.0 ** Denotes % of total revenue (1) Ciena renamed its former “Packet Networking” product line “Routing and Switching” effective as of the beginning of fiscal 2021. This change, affecting only the presentation of such information, was made on a prospective basis and does not impact comparability of previous financial results or the composition of this product category. Additional Performance Metrics for Fiscal Third Quarter 2021 Revenue by Geographic Region Q3 FY 2021 Q3 FY 2020 Revenue % ** Revenue % ** Americas $ 692.8 70.1 $ 713.3 73.0 Europe, Middle East and Africa 189.2 19.2 162.5 16.6 Asia Pacific 106.1 10.7 100.9 10.4 Total $ 988.1 100.0 $ 976.7 100.0 ** Denotes % of total revenue Three 10%-plus customers represented a total of 37.5% of revenue Cash and investments totaled $1.5 billion Cash flow from operations totaled $69.1 million Average days' sales outstanding (DSOs) were 89 Accounts receivable, net balance was $878.2 million Unbilled contract asset, net balance was $98.8 million Inventories totaled $370.2 million, including: Raw materials: $139.3 million Work in process: $10.6 million Finished goods: $204.6 million Deferred cost of sales: $53.8 million Reserve for excess and obsolescence: $(38.1) million Product inventory turns were 4.5 Headcount totaled 7,251 Supplemental Materials and Live Web Broadcast of Unaudited Fiscal Third Quarter 2021 Results Today, Thursday, September 2, 2021, in conjunction with this announcement, Ciena has posted to the Quarterly Results page of the Investor Relations section of its website an accompanying investor presentation for its unaudited fiscal third quarter 2021 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 outstanding fiscal third quarter results that reflect continued momentum in our business as well as our differentiated position in the market” and "These results combined with a robust demand environment give us confidence that we will deliver our expected strong second half performance.” 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 and their business; our ability to execute successfully our business and growth strategies; the duration and severity of the COVID-19 pandemic and its impact on macroeconomic conditions, economic activity, demand for our technology solutions, short- and long-term changes in customer or end user needs, continuity of supply chain, our business operations, liquidity, and financial results; changes in network spending or network strategy by customers; seasonality and the timing and size of customer orders, including 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; supply chain disruptions; changes in foreign currency exchange rates affecting revenue and operating expense; factors beyond our control such as natural disasters, acts of war or terrorism, and public health emergencies; the impact of the Tax Cuts and Jobs Act; changes in tax or trade regulations, including the imposition of tariffs, duties or efforts to withdraw from or materially modify international trade agreements; changes in estimates of prospective income tax rates and any adjustments to Ciena's provisional estimates whether related to further guidance, analysis or otherwise; and the other risk factors disclosed in its Annual Report on Form 10-K filed with the SEC on December 18, 2020 and included in its Quarterly Report on Form 10-Q for the third quarter of fiscal 2021 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 networking systems, services and software company. We provide solutions that help our customers create the Adaptive Network™ in response to the constantly changing demands of their users. By delivering best-in-class networking technology through high-touch consultative relationships, we build the world’s most agile networks with automation, openness and scale. For updates on Ciena, follow us on Twitter @Ciena, LinkedIn, 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 Nine Months Ended July 31, August 1, July 31, August 1, 2021 2020 2021 2020 Revenue: Products $ 804,414 $ 819,022 $ 2,071,677 $ 2,246,129 Services 183,727 157,690 507,521 457,548 Total revenue 988,141 976,712 2,579,198 2,703,677 Cost of goods sold: Products 420,236 436,227 1,074,935 1,230,378 Services 93,355 75,804 259,403 224,757 Total cost of goods sold 513,591 512,031 1,334,338 1,455,135 Gross profit 474,550 464,681 1,244,860 1,248,542 Operating expenses: Research and development 146,225 130,221 389,212 392,651 Selling and marketing 114,924 94,763 322,589 303,043 General and administrative 48,863 41,635 132,491 126,133 Significant asset impairments and restructuring costs 9,789 6,515 23,865 14,798 Amortization of intangible assets 5,967 5,840 17,896 17,532 Acquisition and integration costs (recoveries) 259 (2,329) 860 904 Total operating expenses 326,027 276,645 886,913 855,061 Income from operations 148,523 188,036 357,947 393,481 Interest and other income (loss), net 795 232 (1,600) 1,213 Interest expense (7,776) (7,251) (22,921) (23,926) Loss on extinguishment and modification of debt — — — (646) Income before income taxes 141,542 181,017 333,426 370,122 Provision (benefit) for income taxes (96,690) 38,750 (63,271) 73,872 Net income $ 238,232 $ 142,267 $ 396,697 $ 296,250 Net Income per Common Share Basic net income per common share $ 1.53 $ 0.92 $ 2.55 $ 1.92 Diluted net income per potential common share $ 1.52 $ 0.91 $ 2.53 $ 1.90 Weighted average basic common shares outstanding 155,271 154,184 155,277 154,136 Weighted average dilutive potential common shares outstanding 1 156,744 156,318 156,742 155,741 1 Weighted average dilutive potential common shares outstanding used in calculating GAAP diluted net income per potential common share for the third quarter of fiscal 2021 includes 1.5 million shares underlying certain stock option and stock unit awards. Weighted average dilutive potential common shares outstanding used in calculating GAAP diluted net income per potential common share for the first nine months of fiscal 2021 includes 1.5 million shares underlying certain stock option and stock unit awards. Weighted average dilutive potential common shares outstanding used in calculating GAAP diluted net income per potential common share for the third quarter of fiscal 2020 includes 2.1 million shares underlying certain stock option and stock unit awards. Weighted average dilutive potential common shares outstanding used in calculating GAAP diluted net income per potential common share for the first nine months of fiscal 2020 includes 1.6 million shares underlying certain stock option and stock unit awards. CIENA CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except share data) (unaudited) July 31, 2021 October 31, 2020 ASSETS Current assets: Cash and cash equivalents $ 1,230,441 $ 1,088,624 Short-term investments 182,010 150,667 Accounts receivable, net 878,229 719,405 Inventories 370,170 344,379 Prepaid expenses and other 323,283 308,084 Total current assets 2,984,133 2,611,159 Long-term investments 60,888 82,226 Equipment, building, furniture and fixtures, net 288,937 272,377 Operating lease right-of-use assets 48,937 57,026 Goodwill 311,569 310,847 Other intangible assets, net 73,974 96,647 Deferred tax asset, net 784,702 647,805 Other long-term assets 102,728 102,830 Total assets $ 4,655,868 $ 4,180,917 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $ 301,606 $ 291,904 Accrued liabilities and other short-term obligations 373,291 334,132 Deferred revenue 126,179 108,700 Operating lease liabilities 19,085 19,035 Current portion of long-term debt 6,930 6,930 Total current liabilities 827,091 760,701 Long-term deferred revenue 57,720 49,663 Other long-term obligations 123,731 123,185 Long-term operating lease liabilities 51,235 61,415 Long-term debt, net 671,855 676,356 Total liabilities $ 1,731,632 $ 1,671,320 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; 155,103,315 and 154,563,005 shares issued and outstanding 1,551 1,546 Additional paid-in capital 6,815,946 6,826,531 Accumulated other comprehensive loss (4,630) (35,358) Accumulated deficit (3,888,631) (4,283,122) Total stockholders’ equity 2,924,236 2,509,597 Total liabilities and stockholders’ equity $ 4,655,868 $ 4,180,917 CIENA CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (unaudited) Nine Months Ended July 31, August 1, 2021 2020 Cash flows provided by operating activities: Net income $ 396,697 $ 296,250 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation of equipment, building, furniture and fixtures, and amortization of leasehold improvements 71,918 70,370 Share-based compensation costs 62,970 50,838 Amortization of intangible assets 27,341 29,035 Deferred taxes (139,543) 57,636 Provision for inventory excess and obsolescence 13,460 20,176 Provision for warranty 12,726 19,172 Other 6,350 15,085 Changes in assets and liabilities: Accounts receivable (163,149) (6,688) Inventories (38,821) (39,568) Prepaid expenses and other (17,272) (52,945) Operating lease right-of-use assets 12,340 12,816 Accounts payable, accruals and other obligations 31,388 (131,647) Deferred revenue 24,969 (19,039) Short and long-term operating lease liabilities (14,618) (15,132) Net cash provided by operating activities 286,756 306,359 Cash flows used in investing activities: Payments for equipment, furniture, fixtures and intellectual property (67,290) (61,333) Purchase of available for sale securities (132,895) (39,859) Proceeds from maturities of available for sale securities 122,063 90,000 Settlement of foreign currency forward contracts, net 7,326 3,067 Acquisition of business, net of cash acquired — (28,300) Proceeds from sale of equity investment 4,678 — Net cash used in investing activities (66,118) (36,425) Cash flows used in financing activities: Payment of long term debt (5,197) (3,465) Payment of debt issuance costs — (382) Payment of finance lease obligations (2,243) (2,030) Shares repurchased for tax withholdings on vesting of restricted stock units (36,484) (26,328) Repurchases of common stock - repurchase program (64,555) (74,535) Proceeds from issuance of common stock 28,289 27,986 Net cash used in financing activities (80,190) (78,754) Effect of exchange rate changes on cash, cash equivalents and restricted cash 1,344 (1,526) Net increase in cash, cash equivalents and restricted cash 141,792 189,654 Cash, cash equivalents and restricted cash at beginning of period 1,088,708 904,161 Cash, cash equivalents and restricted cash at end of period $ 1,230,500 $ 1,093,815 Supplemental disclosure of cash flow information Cash paid during the period for interest $ 22,392 $ 25,278 Cash paid during the period for income taxes, net $ 46,165 $ 41,316 Operating lease payments $ 16,162 $ 16,762 Non-cash investing and financing activities Purchase of equipment in accounts payable $ 5,517 $ 4,200 Repurchase of common stock in accrued liabilities from repurchase program $ 800 $ — Operating lease right-of-use assets subject to lease liability $ 4,182 $ 11,404 APPENDIX A - Reconciliation of Adjusted (Non- GAAP) Quarterly Measures (in thousands, except per share data) (unaudited) Quarter Ended July 31, August 1, 2021 2020 Gross Profit Reconciliation (GAAP/non-GAAP) GAAP gross profit $ 474,550 $ 464,681 Share-based compensation-products 1,037 960 Share-based compensation-services 1,315 1,007 Canadian Emergency Wage Subsidy-products (94) — Canadian Emergency Wage Subsidy-services (47) — Amortization of intangible assets 2,857 3,834 Total adjustments related to gross profit 5,068 5,801 Adjusted (non-GAAP) gross profit $ 479,618 $ 470,482 Adjusted (non-GAAP) gross profit percentage 48.5 % 48.2 % Operating Expense Reconciliation (GAAP/non-GAAP) GAAP operating expense $ 326,027 $ 276,645 Share-based compensation-research and development 5,541 4,286 Share-based compensation-sales and marketing 6,534 5,180 Share-based compensation-general and administrative 8,237 5,940 Canadian Emergency Wage Subsidy-research and development (596) — Canadian Emergency Wage Subsidy-sales and marketing (53) — Canadian Emergency Wage Subsidy-general and administrative (46) — Significant asset impairments and restructuring costs 9,789 6,515 Amortization of intangible assets 5,967 5,840 Acquisition and integration costs (recoveries) 259 (2,329) Total adjustments related to operating expense 35,632 25,432 Adjusted (non-GAAP) operating expense $ 290,395 $ 251,213 Income from Operations Reconciliation (GAAP/non-GAAP) GAAP income from operations $ 148,523 $ 188,036 Total adjustments related to gross profit 5,068 5,801 Total adjustments related to operating expense 35,632 25,432 Total adjustments related to income from operations 40,700 31,233 Adjusted (non-GAAP) income from operations $ 189,223 $ 219,269 Adjusted (non-GAAP) operating margin percentage 19.1 % 22.4 % Net Income Reconciliation (GAAP/non-GAAP) GAAP net income $ 238,232 $ 142,267 Exclude GAAP provision (benefit) for income taxes (96,690) 38,750 Income before income taxes 141,542 181,017 Total adjustments related to income from operations 40,700 31,233 Adjusted income before income taxes 182,242 212,250 Non-GAAP tax provision on adjusted income before income taxes 37,360 45,846 Adjusted (non-GAAP) net income $ 144,882 $ 166,404 Weighted average basic common shares outstanding 155,271 154,184 Weighted average dilutive potential common shares outstanding 1 156,744 156,318 Net Income per Common Share GAAP diluted net income per common share $ 1.52 $ 0.91 Adjusted (non-GAAP) diluted net income per potential common share $ 0.92 $ 1.06 1 Weighted average dilutive potential common shares outstanding used in calculating Adjusted (non-GAAP) diluted net income per potential common share for the third quarter of fiscal 2021 includes 1.5 million shares underlying certain stock option and stock unit awards. Weighted average dilutive potential common shares outstanding used in calculating Adjusted (non-GAAP) diluted net income per potential common share for the third quarter of fiscal 2020 includes 2.1 million shares underlying certain stock option and stock unit awards. APPENDIX B - Calculation of EBITDA and Adjusted EBITDA (unaudited) (in thousands) (unaudited) Quarter Ended July 31, August 1, 2021 2020 Earnings Before Interest, Tax, Depreciation and Amortization (EBITDA) Net income (GAAP) $ 238,232 $ 142,267 Add: Interest expense 7,776 7,251 Less: Interest and other income, net 795 232 Add: Provision (benefit) for income taxes (96,690) 38,750 Add: Depreciation of equipment, building, furniture and fixtures, and amortization of leasehold improvements 24,623 21,989 Add: Amortization of intangible assets 8,824 9,674 EBITDA $ 181,970 $ 219,699 Less: Canadian Emergency Wage Subsidy 836 — Add: Share-based compensation cost 22,471 17,259 Add: Significant asset impairments and restructuring costs 9,789 6,515 Add: Acquisition and integration costs (recoveries) 259 (2,329) Adjusted EBITDA $ 213,653 $ 241,144 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. Canadian Emergency Wage Subsidy - a program introduced by the Government of Canada to offset a portion of employee wages for a limited period in response to COVID-19 outbreak. Significant asset impairments and restructuring costs - costs incurred as a result of restructuring activities taken to align resources with perceived market opportunities and the redesign of business processes. 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 its expected useful life. Acquisition and integration costs (recoveries) - includes costs and recoveries of acquisition consideration and compensation associated with a three-year earn-out arrangement related to the DonRiver acquisition in fiscal 2018. Ciena does not believe that these costs are reflective of its ongoing operating expense following its completion of these integration activities. 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 20.5% for the third fiscal quarter of 2021 and 21.6% for the third fiscal quarter of 2020. This rate may be subject to change in the future, including as a result of changes in tax policy or tax strategy. Ciena's GAAP tax provision for the third quarter of 2021 benefited from recording a $124.2 million tax benefit related to an internal transfer of non-U.S. intangible assets that was recognized as a result of the step-up in basis of such rights for tax purposes. The Non-GAAP tax provision for the periods presented do not include this tax benefit or the corresponding deferred tax asset. 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Press Contact: Jamie Moody Ciena Corporation +1 (214) 995-8035 pr@ciena.com Investor Contact: Gregg Lampf Ciena Corporation +1 (410) 694-5700 ir@ciena.com