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 Second Quarter 2022 Financial Results By: Ciena Corporation via Business Wire June 02, 2022 at 07:00 AM EDT Ciena® Corporation (NYSE: CIEN), a networking systems, services and software company, today announced unaudited financial results for its fiscal second quarter ended April 30, 2022. Q2 Revenue: $949.2 million Q2 Net Income per Share: $0.25 GAAP; $0.50 adjusted (non-GAAP) Share Repurchases: Repurchased approximately 1.5 million shares of common stock for an aggregate price of $87.0 million, and received 0.9 million shares of common stock pursuant to the final settlement of the Accelerated Share Repurchase program, during the quarter. “Our strong execution in the fiscal second quarter enabled us to deliver 14% year-over-year revenue growth despite an increasingly challenging supply environment,” said Gary Smith, president and CEO of Ciena. “We also saw continued strength in order flow and backlog growth in the quarter, reflecting the durability of longer-term secular demand drivers. At a time when industry-wide supply chain constraints are resulting in increased uncertainty and a wider range of potential outcomes in the coming quarters, our near-term financial performance is entirely a function of component availability – not the strong underlying demand in our business.” For the fiscal second quarter 2022, Ciena reported revenue of $949.2 million as compared to $833.9 million for the fiscal second quarter 2021. Ciena's GAAP net income for the fiscal second quarter 2022 was $38.9 million, or $0.25 per diluted common share, which compares to a GAAP net income of $103.1 million, or $0.66 per diluted common share, for the fiscal second quarter 2021. Ciena's GAAP net income for the fiscal second quarter of 2021 benefited from recording $40.4 million in pre-tax amounts from the Canadian Emergency Wage Subsidy program, which expired in October 2021. 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 second quarter 2022 was $76.4 million, or $0.50 per diluted common share, which compares to an adjusted (non-GAAP) net income of $97.6 million, or $0.62 per diluted common share, for the fiscal second quarter 2021. Fiscal Second Quarter 2022 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 Q2 Q2 Period Change FY 2022 FY 2021 Y-T-Y* Revenue $ 949.2 $ 833.9 13.8 % Gross margin 42.3 % 49.5 % (7.2 )% Operating expense $ 343.4 $ 278.8 23.2 % Operating margin 6.2 % 16.0 % (9.8 )% Non-GAAP Results Q2 Q2 Period Change FY 2022 FY 2021 Y-T-Y* Revenue $ 949.2 $ 833.9 13.8 % Adj. gross margin 43.0 % 49.2 % (6.2 )% Adj. operating expense $ 301.1 $ 278.7 8.0 % Adj. operating margin 11.3 % 15.8 % (4.5 )% Adj. EBITDA $ 129.3 $ 156.2 (17.2 )% * Denotes % change, or in the case of margin, absolute change Revenue by Segment Q2 FY 2022 Q2 FY 2021 Revenue %** Revenue %** Networking Platforms Converged Packet Optical $ 625.3 65.8 $ 573.7 68.8 Routing and Switching 109.2 11.5 63.6 7.6 Total Networking Platforms 734.5 77.3 637.3 76.4 Platform Software and Services 69.1 7.3 56.7 6.8 Blue Planet Automation Software and Services 16.9 1.8 23.9 2.9 Global Services Maintenance Support and Training 74.0 7.8 70.4 8.4 Installation and Deployment 41.4 4.4 38.0 4.6 Consulting and Network Design 13.3 1.4 7.6 0.9 Total Global Services 128.7 13.6 116.0 13.9 Total $ 949.2 100.0 $ 833.9 100.0 ** Denotes % of total revenue Additional Performance Metrics for Fiscal Second Quarter 2022 Revenue by Geographic Region Q2 FY 2022 Q2 FY 2021 Revenue % ** Revenue % ** Americas $ 700.8 73.8 $ 587.5 70.4 Europe, Middle East and Africa 145.1 15.3 155.0 18.6 Asia Pacific 103.3 10.9 91.4 11.0 Total $ 949.2 100.0 $ 833.9 100.0 ** Denotes % of total revenue One 10%-plus customer represented a total of 11.0% of revenue Cash and investments totaled $1.6 billion Cash flow from operations totaled $105.8 million Average days' sales outstanding (DSOs) were 87 Accounts receivable, net balance was $774.9 million Unbilled contract asset, net balance was $144.3 million Inventories totaled $536.9 million, including: Raw materials: $373.5 million Work in process: $12.3 million Finished goods: $157.9 million Deferred cost of sales: $28.9 million Reserve for excess and obsolescence: $(35.7) million Product inventory turns were 3.4 Headcount totaled 7,536 Supplemental Materials and Live Web Broadcast of Unaudited Fiscal Second Quarter 2022 Results Today, Thursday, June 2, 2022, in conjunction with this announcement, Ciena has posted to the Quarterly Results page of the Investor Relations section of its website certain related supporting materials for its unaudited fiscal second quarter 2022 results. Ciena's management will also host a discussion today with investors and financial analysts that will include the Company's outlook. The live audio web broadcast beginning at 8:30 a.m. Eastern will be accessible via www.ciena.com. An archived replay of the live broadcast will be available shortly following its conclusion on the Investor Relations page of Ciena's website. Notes to Investors Forward-Looking Statements. You are encouraged to review the Investors section of our website, where we routinely post press releases, Securities and Exchange Commission ("SEC") filings, recent news, financial results, supplemental financial information, and other announcements. From time to time we exclusively post material information to this website along with other disclosure channels that we use. This press release contains certain forward-looking statements that involve risks and uncertainties. These statements are based on current expectations, forecasts, assumptions and other information available to the Company as of the date hereof. Forward-looking statements include statements regarding Ciena's expectations, beliefs, intentions or strategies regarding the future and can be identified by forward-looking words such as "anticipate," "believe," "could," "estimate," "expect," "intend," "may," "should," "will," and "would" or similar words. Forward-looking statements in this release include: "Our strong execution in the fiscal second quarter enabled us to deliver 14% year-over-year revenue growth despite an increasingly challenging supply environment; "We also saw continued strength in order flow and backlog growth in the quarter, reflecting the durability of longer-term secular demand drivers"; "At a time when industry-wide supply chain constraints are resulting in increased uncertainty and a wider range of potential outcomes in the coming quarters, our near-term financial performance is entirely a function of component availability – not the strong underlying demand in our business." 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 our business and growth strategies; the impact of supply chain constraints or disruptions; the duration and severity of the COVID-19 pandemic and the impact of countermeasures taken to mitigate its spread 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 our 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; changes in foreign currency exchange rates; factors beyond our control such as natural disasters, climate change, acts of war or terrorism, geopolitical events, including but not limited to the ongoing conflict between Ukraine and Russia, and public health emergencies; changes in tax or trade regulations, including the imposition of tariffs, duties or efforts to withdraw from or materially modify international trade agreements; and the other risk factors disclosed in Ciena’s periodic reports filed with the Securities and Exchange Commission (SEC) including Ciena’s Annual Report on Form 10-K filed with the SEC on December 17, 2021 and included in its Quarterly Report on Form 10-Q for the second quarter of fiscal 2022 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 Six Months Ended April 30, May 1, April 30, May 1, 2022 2021 2022 2021 Revenue: Products $ 759,948 $ 670,043 $ 1,424,955 $ 1,267,263 Services 189,279 163,884 368,715 323,794 Total revenue 949,227 833,927 1,793,670 1,591,057 Cost of goods sold: Products 452,057 339,601 824,622 654,699 Services 95,389 81,907 183,080 166,048 Total cost of goods sold 547,446 421,508 1,007,702 820,747 Gross profit 401,781 412,419 785,968 770,310 Operating expenses: Research and development 159,324 110,246 307,733 242,987 Selling and marketing 119,939 110,387 238,820 207,665 General and administrative 45,572 43,635 90,070 83,628 Significant asset impairments and restructuring costs 9,102 8,209 12,511 14,076 Amortization of intangible assets 8,920 6,019 17,838 11,929 Acquisition and integration costs 495 294 563 601 Total operating expenses 343,352 278,790 667,535 560,886 Income from operations 58,429 133,629 118,433 209,424 Interest and other income (loss), net 808 (1,274 ) 4,494 (2,395 ) Interest expense (11,985 ) (7,785 ) (20,633 ) (15,145 ) Income before income taxes 47,252 124,570 102,294 191,884 Provision for income taxes 8,330 21,453 17,549 33,419 Net income $ 38,922 $ 103,117 $ 84,745 $ 158,465 Net Income per Common Share Basic net income per common share $ 0.26 $ 0.66 $ 0.55 $ 1.02 Diluted net income per potential common share $ 0.25 $ 0.66 $ 0.55 $ 1.01 Weighted average basic common shares outstanding 152,197 155,331 153,179 155,257 Weighted average dilutive potential common shares outstanding 1 153,344 156,876 154,580 156,734 1 Weighted average dilutive potential common shares outstanding used in calculating GAAP diluted net income per potential common share includes the following number of shares underlying certain stock option and stock unit awards: (i) 1.1 million and 1.4 million for the second quarter and first six months of fiscal 2022, respectively; and (ii) 1.5 million shares for each of the second quarter and first six months of fiscal 2021. CIENA CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except share data) (unaudited) April 30, 2022 October 30, 2021 ASSETS Current assets: Cash and cash equivalents $ 1,019,863 $ 1,422,546 Short-term investments 529,552 181,483 Accounts receivable, net 774,896 884,958 Inventories 536,878 374,265 Prepaid expenses and other 367,344 325,654 Total current assets 3,228,533 3,188,906 Long-term investments 87,142 70,038 Equipment, building, furniture and fixtures, net 278,494 284,968 Operating lease right-of-use assets 45,721 44,285 Goodwill 328,924 311,645 Other intangible assets, net 88,956 65,314 Deferred tax asset, net 798,238 800,180 Other long-term assets 108,121 99,891 Total assets $ 4,964,129 $ 4,865,227 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $ 352,999 $ 356,176 Accrued liabilities and other short-term obligations 333,150 409,285 Deferred revenue 156,400 118,007 Operating lease liabilities 19,279 18,632 Current portion of long-term debt 6,930 6,930 Total current liabilities 868,758 909,030 Long-term deferred revenue 62,369 57,457 Other long-term obligations 148,043 166,803 Long-term operating lease liabilities 40,355 41,564 Long-term debt, net 1,062,182 670,355 Total liabilities $ 2,181,707 $ 1,845,209 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; 150,865,553 and 154,858,981 shares issued and outstanding 1,509 1,549 Additional paid-in capital 6,497,359 6,803,162 Accumulated other comprehensive income (loss) (16,059) 439 Accumulated deficit (3,700,387) (3,785,132) Total stockholders’ equity 2,782,422 3,020,018 Total liabilities and stockholders’ equity $ 4,964,129 $ 4,865,227 CIENA CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (unaudited) Six Months Ended April 30, May 1, 2022 2021 Cash flows provided by operating activities: Net income $ 84,745 $ 158,465 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation of equipment, building, furniture and fixtures, and amortization of leasehold improvements 46,030 47,295 Share-based compensation expense 50,970 40,499 Amortization of intangible assets 24,463 18,517 Deferred taxes (13,474 ) (9,606 ) Provision for inventory excess and obsolescence 8,487 10,402 Provision for warranty 7,228 7,937 Other (5,833 ) 5,928 Changes in assets and liabilities: Accounts receivable 104,455 (180 ) Inventories (171,056 ) (66,934 ) Prepaid expenses and other (36,673 ) (8,565 ) Operating lease right-of-use assets 8,222 8,253 Accounts payable, accruals and other obligations (88,960 ) (30,108 ) Deferred revenue 43,753 45,482 Short and long-term operating lease liabilities (10,216 ) (9,726 ) Net cash provided by operating activities 52,141 217,659 Cash flows used in investing activities: Payments for equipment, furniture, fixtures and intellectual property (45,249 ) (51,651 ) Purchase of available for sale securities (461,548 ) (102,429 ) Proceeds from maturities of available for sale securities 90,000 91,810 Settlement of foreign currency forward contracts, net 3,708 9,414 Acquisition of business, net of cash acquired (62,043 ) — Purchase of cost method equity investments (8,000 ) — Proceeds from sale of cost method equity investments — 4,678 Net cash used in investing activities (483,132 ) (48,178 ) Cash flows provided by (used in) financing activities: Proceeds from issuance of senior notes 400,000 — Payment of long term debt (3,465 ) (3,465 ) Payment of debt issuance costs (5,145 ) — Payment of finance lease obligations (1,635 ) (1,463 ) Shares repurchased for tax withholdings on vesting of restricted stock units (35,004 ) (27,893 ) Repurchases of common stock - repurchase program (332,794 ) (38,498 ) Proceeds from issuance of common stock 15,185 13,480 Net cash provided by (used in) financing activities 37,142 (57,839 ) Effect of exchange rate changes on cash, cash equivalents and restricted cash (8,807 ) 2,696 Net increase (decrease) in cash, cash equivalents and restricted cash (402,656 ) 114,338 Cash, cash equivalents and restricted cash at beginning of period 1,422,604 1,088,708 Cash, cash equivalents and restricted cash at end of period $ 1,019,948 $ 1,203,046 Supplemental disclosure of cash flow information Cash paid during the period for interest $ 16,809 $ 14,949 Cash paid during the period for income taxes, net $ 17,905 $ 27,666 Operating lease payments $ 10,917 $ 10,785 Non-cash investing and financing activities Purchase of equipment in accounts payable $ 8,093 $ 4,966 Repurchase of common stock in accrued liabilities from repurchase program $ 5,000 $ 900 Operating right-of-use assets subject to lease liability $ 3,589 $ 1,770 APPENDIX A - Reconciliation of Adjusted (Non- GAAP) Quarterly Measures (in thousands, except per share data) (unaudited) Quarter Ended April 30, May 1, 2022 2021 Gross Profit Reconciliation (GAAP/non-GAAP) GAAP gross profit $ 401,781 $ 412,419 Share-based compensation-products 1,058 498 Share-based compensation-services 1,943 1,421 Canadian Emergency Wage Subsidy-products — (4,189 ) Canadian Emergency Wage Subsidy-services — (2,620 ) Amortization of intangible assets 3,313 2,856 Total adjustments related to gross profit 6,314 (2,034 ) Adjusted (non-GAAP) gross profit $ 408,095 $ 410,385 Adjusted (non-GAAP) gross profit percentage 43.0 % 49.2 % Operating Expense Reconciliation (GAAP/non-GAAP) GAAP operating expense $ 343,352 $ 278,790 Share-based compensation-research and development 8,309 5,844 Share-based compensation-sales and marketing 8,061 6,610 Share-based compensation-general and administrative 7,334 6,743 Canadian Emergency Wage Subsidy-research and development — (28,923 ) Canadian Emergency Wage Subsidy-sales and marketing — (2,551 ) Canadian Emergency Wage Subsidy-general and administrative — (2,161 ) Significant asset impairments and restructuring costs 9,102 8,209 Amortization of intangible assets 8,920 6,019 Acquisition and integration costs 495 294 Total adjustments related to operating expense 42,221 84 Adjusted (non-GAAP) operating expense $ 301,131 $ 278,706 Income from Operations Reconciliation (GAAP/non-GAAP) GAAP income from operations $ 58,429 $ 133,629 Total adjustments related to gross profit 6,314 (2,034 ) Total adjustments related to operating expense 42,221 84 Total adjustments related to income from operations 48,535 (1,950 ) Adjusted (non-GAAP) income from operations $ 106,964 $ 131,679 Adjusted (non-GAAP) operating margin percentage 11.3 % 15.8 % Net Income Reconciliation (GAAP/non-GAAP) GAAP net income $ 38,922 $ 103,117 Exclude GAAP provision for income taxes 8,330 21,453 Income before income taxes 47,252 124,570 Total adjustments related to income from operations 48,535 (1,950 ) Unrealized loss on cost method equity investment — 165 Adjusted income before income taxes 95,787 122,785 Non-GAAP tax provision on adjusted income before income taxes 19,349 25,171 Adjusted (non-GAAP) net income $ 76,438 $ 97,614 Weighted average basic common shares outstanding 152,197 155,331 Weighted average dilutive potential common shares outstanding 1 153,344 156,876 Net Income per Common Share GAAP diluted net income per potential common share $ 0.25 $ 0.66 Adjusted (non-GAAP) diluted net income per potential common share $ 0.50 $ 0.62 1 Weighted average dilutive potential common shares outstanding used in calculating Adjusted (non-GAAP) diluted net income per potential common share for the second quarter of fiscal 2022 includes 1.1 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 second quarter of fiscal 2021 includes 1.5 million shares underlying certain stock option and stock unit awards. APPENDIX B - Calculation of EBITDA and Adjusted EBITDA (unaudited) (in thousands) (unaudited) Quarter Ended April 30, May 1, 2022 2021 Earnings Before Interest, Tax, Depreciation and Amortization (EBITDA) Net income (GAAP) $ 38,922 $ 103,117 Add: Interest expense 11,985 7,785 Less: Interest and other income (loss), net 808 (1,274 ) Add: Provision for income taxes 8,330 21,453 Add: Depreciation of equipment, building, furniture and fixtures, and amortization of leasehold improvements 22,377 24,107 Add: Amortization of intangible assets 12,233 8,875 EBITDA $ 93,039 $ 166,611 Less: Canadian Emergency Wage Subsidy — 40,444 Add: Share-based compensation cost 26,673 21,535 Add: Significant asset impairments and restructuring costs 9,102 8,209 Add: Acquisition and integration costs 495 294 Adjusted EBITDA $ 129,309 $ 156,205 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, the redesign of business processes and a $4.1 million impairment charge due to Ciena's decision to suspend its business operations in Russia in response to the conflict in Ukraine. 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 - includes financial, legal and accounting advisor expenses related to our acquisition of Vyatta during the first quarter of fiscal 2022 and Xelic during the second quarter of fiscal 2022. Acquisition and integration costs for the second quarter of fiscal 2021 include costs of acquisition compensation associated with a three-year earn-out arrangement related to the DonRiver acquisition in fiscal 2018. Unrealized loss on cost method equity investment - reflects a change in the carrying value of a certain cost method equity investment. 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 20.2% for the second fiscal quarter of 2022 and 20.5% for the second fiscal quarter of 2021. 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/20220601006242/en/Contacts 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 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 Second Quarter 2022 Financial Results By: Ciena Corporation via Business Wire June 02, 2022 at 07:00 AM EDT Ciena® Corporation (NYSE: CIEN), a networking systems, services and software company, today announced unaudited financial results for its fiscal second quarter ended April 30, 2022. Q2 Revenue: $949.2 million Q2 Net Income per Share: $0.25 GAAP; $0.50 adjusted (non-GAAP) Share Repurchases: Repurchased approximately 1.5 million shares of common stock for an aggregate price of $87.0 million, and received 0.9 million shares of common stock pursuant to the final settlement of the Accelerated Share Repurchase program, during the quarter. “Our strong execution in the fiscal second quarter enabled us to deliver 14% year-over-year revenue growth despite an increasingly challenging supply environment,” said Gary Smith, president and CEO of Ciena. “We also saw continued strength in order flow and backlog growth in the quarter, reflecting the durability of longer-term secular demand drivers. At a time when industry-wide supply chain constraints are resulting in increased uncertainty and a wider range of potential outcomes in the coming quarters, our near-term financial performance is entirely a function of component availability – not the strong underlying demand in our business.” For the fiscal second quarter 2022, Ciena reported revenue of $949.2 million as compared to $833.9 million for the fiscal second quarter 2021. Ciena's GAAP net income for the fiscal second quarter 2022 was $38.9 million, or $0.25 per diluted common share, which compares to a GAAP net income of $103.1 million, or $0.66 per diluted common share, for the fiscal second quarter 2021. Ciena's GAAP net income for the fiscal second quarter of 2021 benefited from recording $40.4 million in pre-tax amounts from the Canadian Emergency Wage Subsidy program, which expired in October 2021. 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 second quarter 2022 was $76.4 million, or $0.50 per diluted common share, which compares to an adjusted (non-GAAP) net income of $97.6 million, or $0.62 per diluted common share, for the fiscal second quarter 2021. Fiscal Second Quarter 2022 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 Q2 Q2 Period Change FY 2022 FY 2021 Y-T-Y* Revenue $ 949.2 $ 833.9 13.8 % Gross margin 42.3 % 49.5 % (7.2 )% Operating expense $ 343.4 $ 278.8 23.2 % Operating margin 6.2 % 16.0 % (9.8 )% Non-GAAP Results Q2 Q2 Period Change FY 2022 FY 2021 Y-T-Y* Revenue $ 949.2 $ 833.9 13.8 % Adj. gross margin 43.0 % 49.2 % (6.2 )% Adj. operating expense $ 301.1 $ 278.7 8.0 % Adj. operating margin 11.3 % 15.8 % (4.5 )% Adj. EBITDA $ 129.3 $ 156.2 (17.2 )% * Denotes % change, or in the case of margin, absolute change Revenue by Segment Q2 FY 2022 Q2 FY 2021 Revenue %** Revenue %** Networking Platforms Converged Packet Optical $ 625.3 65.8 $ 573.7 68.8 Routing and Switching 109.2 11.5 63.6 7.6 Total Networking Platforms 734.5 77.3 637.3 76.4 Platform Software and Services 69.1 7.3 56.7 6.8 Blue Planet Automation Software and Services 16.9 1.8 23.9 2.9 Global Services Maintenance Support and Training 74.0 7.8 70.4 8.4 Installation and Deployment 41.4 4.4 38.0 4.6 Consulting and Network Design 13.3 1.4 7.6 0.9 Total Global Services 128.7 13.6 116.0 13.9 Total $ 949.2 100.0 $ 833.9 100.0 ** Denotes % of total revenue Additional Performance Metrics for Fiscal Second Quarter 2022 Revenue by Geographic Region Q2 FY 2022 Q2 FY 2021 Revenue % ** Revenue % ** Americas $ 700.8 73.8 $ 587.5 70.4 Europe, Middle East and Africa 145.1 15.3 155.0 18.6 Asia Pacific 103.3 10.9 91.4 11.0 Total $ 949.2 100.0 $ 833.9 100.0 ** Denotes % of total revenue One 10%-plus customer represented a total of 11.0% of revenue Cash and investments totaled $1.6 billion Cash flow from operations totaled $105.8 million Average days' sales outstanding (DSOs) were 87 Accounts receivable, net balance was $774.9 million Unbilled contract asset, net balance was $144.3 million Inventories totaled $536.9 million, including: Raw materials: $373.5 million Work in process: $12.3 million Finished goods: $157.9 million Deferred cost of sales: $28.9 million Reserve for excess and obsolescence: $(35.7) million Product inventory turns were 3.4 Headcount totaled 7,536 Supplemental Materials and Live Web Broadcast of Unaudited Fiscal Second Quarter 2022 Results Today, Thursday, June 2, 2022, in conjunction with this announcement, Ciena has posted to the Quarterly Results page of the Investor Relations section of its website certain related supporting materials for its unaudited fiscal second quarter 2022 results. Ciena's management will also host a discussion today with investors and financial analysts that will include the Company's outlook. The live audio web broadcast beginning at 8:30 a.m. Eastern will be accessible via www.ciena.com. An archived replay of the live broadcast will be available shortly following its conclusion on the Investor Relations page of Ciena's website. Notes to Investors Forward-Looking Statements. You are encouraged to review the Investors section of our website, where we routinely post press releases, Securities and Exchange Commission ("SEC") filings, recent news, financial results, supplemental financial information, and other announcements. From time to time we exclusively post material information to this website along with other disclosure channels that we use. This press release contains certain forward-looking statements that involve risks and uncertainties. These statements are based on current expectations, forecasts, assumptions and other information available to the Company as of the date hereof. Forward-looking statements include statements regarding Ciena's expectations, beliefs, intentions or strategies regarding the future and can be identified by forward-looking words such as "anticipate," "believe," "could," "estimate," "expect," "intend," "may," "should," "will," and "would" or similar words. Forward-looking statements in this release include: "Our strong execution in the fiscal second quarter enabled us to deliver 14% year-over-year revenue growth despite an increasingly challenging supply environment; "We also saw continued strength in order flow and backlog growth in the quarter, reflecting the durability of longer-term secular demand drivers"; "At a time when industry-wide supply chain constraints are resulting in increased uncertainty and a wider range of potential outcomes in the coming quarters, our near-term financial performance is entirely a function of component availability – not the strong underlying demand in our business." 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 our business and growth strategies; the impact of supply chain constraints or disruptions; the duration and severity of the COVID-19 pandemic and the impact of countermeasures taken to mitigate its spread 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 our 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; changes in foreign currency exchange rates; factors beyond our control such as natural disasters, climate change, acts of war or terrorism, geopolitical events, including but not limited to the ongoing conflict between Ukraine and Russia, and public health emergencies; changes in tax or trade regulations, including the imposition of tariffs, duties or efforts to withdraw from or materially modify international trade agreements; and the other risk factors disclosed in Ciena’s periodic reports filed with the Securities and Exchange Commission (SEC) including Ciena’s Annual Report on Form 10-K filed with the SEC on December 17, 2021 and included in its Quarterly Report on Form 10-Q for the second quarter of fiscal 2022 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 Six Months Ended April 30, May 1, April 30, May 1, 2022 2021 2022 2021 Revenue: Products $ 759,948 $ 670,043 $ 1,424,955 $ 1,267,263 Services 189,279 163,884 368,715 323,794 Total revenue 949,227 833,927 1,793,670 1,591,057 Cost of goods sold: Products 452,057 339,601 824,622 654,699 Services 95,389 81,907 183,080 166,048 Total cost of goods sold 547,446 421,508 1,007,702 820,747 Gross profit 401,781 412,419 785,968 770,310 Operating expenses: Research and development 159,324 110,246 307,733 242,987 Selling and marketing 119,939 110,387 238,820 207,665 General and administrative 45,572 43,635 90,070 83,628 Significant asset impairments and restructuring costs 9,102 8,209 12,511 14,076 Amortization of intangible assets 8,920 6,019 17,838 11,929 Acquisition and integration costs 495 294 563 601 Total operating expenses 343,352 278,790 667,535 560,886 Income from operations 58,429 133,629 118,433 209,424 Interest and other income (loss), net 808 (1,274 ) 4,494 (2,395 ) Interest expense (11,985 ) (7,785 ) (20,633 ) (15,145 ) Income before income taxes 47,252 124,570 102,294 191,884 Provision for income taxes 8,330 21,453 17,549 33,419 Net income $ 38,922 $ 103,117 $ 84,745 $ 158,465 Net Income per Common Share Basic net income per common share $ 0.26 $ 0.66 $ 0.55 $ 1.02 Diluted net income per potential common share $ 0.25 $ 0.66 $ 0.55 $ 1.01 Weighted average basic common shares outstanding 152,197 155,331 153,179 155,257 Weighted average dilutive potential common shares outstanding 1 153,344 156,876 154,580 156,734 1 Weighted average dilutive potential common shares outstanding used in calculating GAAP diluted net income per potential common share includes the following number of shares underlying certain stock option and stock unit awards: (i) 1.1 million and 1.4 million for the second quarter and first six months of fiscal 2022, respectively; and (ii) 1.5 million shares for each of the second quarter and first six months of fiscal 2021. CIENA CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except share data) (unaudited) April 30, 2022 October 30, 2021 ASSETS Current assets: Cash and cash equivalents $ 1,019,863 $ 1,422,546 Short-term investments 529,552 181,483 Accounts receivable, net 774,896 884,958 Inventories 536,878 374,265 Prepaid expenses and other 367,344 325,654 Total current assets 3,228,533 3,188,906 Long-term investments 87,142 70,038 Equipment, building, furniture and fixtures, net 278,494 284,968 Operating lease right-of-use assets 45,721 44,285 Goodwill 328,924 311,645 Other intangible assets, net 88,956 65,314 Deferred tax asset, net 798,238 800,180 Other long-term assets 108,121 99,891 Total assets $ 4,964,129 $ 4,865,227 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $ 352,999 $ 356,176 Accrued liabilities and other short-term obligations 333,150 409,285 Deferred revenue 156,400 118,007 Operating lease liabilities 19,279 18,632 Current portion of long-term debt 6,930 6,930 Total current liabilities 868,758 909,030 Long-term deferred revenue 62,369 57,457 Other long-term obligations 148,043 166,803 Long-term operating lease liabilities 40,355 41,564 Long-term debt, net 1,062,182 670,355 Total liabilities $ 2,181,707 $ 1,845,209 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; 150,865,553 and 154,858,981 shares issued and outstanding 1,509 1,549 Additional paid-in capital 6,497,359 6,803,162 Accumulated other comprehensive income (loss) (16,059) 439 Accumulated deficit (3,700,387) (3,785,132) Total stockholders’ equity 2,782,422 3,020,018 Total liabilities and stockholders’ equity $ 4,964,129 $ 4,865,227 CIENA CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (unaudited) Six Months Ended April 30, May 1, 2022 2021 Cash flows provided by operating activities: Net income $ 84,745 $ 158,465 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation of equipment, building, furniture and fixtures, and amortization of leasehold improvements 46,030 47,295 Share-based compensation expense 50,970 40,499 Amortization of intangible assets 24,463 18,517 Deferred taxes (13,474 ) (9,606 ) Provision for inventory excess and obsolescence 8,487 10,402 Provision for warranty 7,228 7,937 Other (5,833 ) 5,928 Changes in assets and liabilities: Accounts receivable 104,455 (180 ) Inventories (171,056 ) (66,934 ) Prepaid expenses and other (36,673 ) (8,565 ) Operating lease right-of-use assets 8,222 8,253 Accounts payable, accruals and other obligations (88,960 ) (30,108 ) Deferred revenue 43,753 45,482 Short and long-term operating lease liabilities (10,216 ) (9,726 ) Net cash provided by operating activities 52,141 217,659 Cash flows used in investing activities: Payments for equipment, furniture, fixtures and intellectual property (45,249 ) (51,651 ) Purchase of available for sale securities (461,548 ) (102,429 ) Proceeds from maturities of available for sale securities 90,000 91,810 Settlement of foreign currency forward contracts, net 3,708 9,414 Acquisition of business, net of cash acquired (62,043 ) — Purchase of cost method equity investments (8,000 ) — Proceeds from sale of cost method equity investments — 4,678 Net cash used in investing activities (483,132 ) (48,178 ) Cash flows provided by (used in) financing activities: Proceeds from issuance of senior notes 400,000 — Payment of long term debt (3,465 ) (3,465 ) Payment of debt issuance costs (5,145 ) — Payment of finance lease obligations (1,635 ) (1,463 ) Shares repurchased for tax withholdings on vesting of restricted stock units (35,004 ) (27,893 ) Repurchases of common stock - repurchase program (332,794 ) (38,498 ) Proceeds from issuance of common stock 15,185 13,480 Net cash provided by (used in) financing activities 37,142 (57,839 ) Effect of exchange rate changes on cash, cash equivalents and restricted cash (8,807 ) 2,696 Net increase (decrease) in cash, cash equivalents and restricted cash (402,656 ) 114,338 Cash, cash equivalents and restricted cash at beginning of period 1,422,604 1,088,708 Cash, cash equivalents and restricted cash at end of period $ 1,019,948 $ 1,203,046 Supplemental disclosure of cash flow information Cash paid during the period for interest $ 16,809 $ 14,949 Cash paid during the period for income taxes, net $ 17,905 $ 27,666 Operating lease payments $ 10,917 $ 10,785 Non-cash investing and financing activities Purchase of equipment in accounts payable $ 8,093 $ 4,966 Repurchase of common stock in accrued liabilities from repurchase program $ 5,000 $ 900 Operating right-of-use assets subject to lease liability $ 3,589 $ 1,770 APPENDIX A - Reconciliation of Adjusted (Non- GAAP) Quarterly Measures (in thousands, except per share data) (unaudited) Quarter Ended April 30, May 1, 2022 2021 Gross Profit Reconciliation (GAAP/non-GAAP) GAAP gross profit $ 401,781 $ 412,419 Share-based compensation-products 1,058 498 Share-based compensation-services 1,943 1,421 Canadian Emergency Wage Subsidy-products — (4,189 ) Canadian Emergency Wage Subsidy-services — (2,620 ) Amortization of intangible assets 3,313 2,856 Total adjustments related to gross profit 6,314 (2,034 ) Adjusted (non-GAAP) gross profit $ 408,095 $ 410,385 Adjusted (non-GAAP) gross profit percentage 43.0 % 49.2 % Operating Expense Reconciliation (GAAP/non-GAAP) GAAP operating expense $ 343,352 $ 278,790 Share-based compensation-research and development 8,309 5,844 Share-based compensation-sales and marketing 8,061 6,610 Share-based compensation-general and administrative 7,334 6,743 Canadian Emergency Wage Subsidy-research and development — (28,923 ) Canadian Emergency Wage Subsidy-sales and marketing — (2,551 ) Canadian Emergency Wage Subsidy-general and administrative — (2,161 ) Significant asset impairments and restructuring costs 9,102 8,209 Amortization of intangible assets 8,920 6,019 Acquisition and integration costs 495 294 Total adjustments related to operating expense 42,221 84 Adjusted (non-GAAP) operating expense $ 301,131 $ 278,706 Income from Operations Reconciliation (GAAP/non-GAAP) GAAP income from operations $ 58,429 $ 133,629 Total adjustments related to gross profit 6,314 (2,034 ) Total adjustments related to operating expense 42,221 84 Total adjustments related to income from operations 48,535 (1,950 ) Adjusted (non-GAAP) income from operations $ 106,964 $ 131,679 Adjusted (non-GAAP) operating margin percentage 11.3 % 15.8 % Net Income Reconciliation (GAAP/non-GAAP) GAAP net income $ 38,922 $ 103,117 Exclude GAAP provision for income taxes 8,330 21,453 Income before income taxes 47,252 124,570 Total adjustments related to income from operations 48,535 (1,950 ) Unrealized loss on cost method equity investment — 165 Adjusted income before income taxes 95,787 122,785 Non-GAAP tax provision on adjusted income before income taxes 19,349 25,171 Adjusted (non-GAAP) net income $ 76,438 $ 97,614 Weighted average basic common shares outstanding 152,197 155,331 Weighted average dilutive potential common shares outstanding 1 153,344 156,876 Net Income per Common Share GAAP diluted net income per potential common share $ 0.25 $ 0.66 Adjusted (non-GAAP) diluted net income per potential common share $ 0.50 $ 0.62 1 Weighted average dilutive potential common shares outstanding used in calculating Adjusted (non-GAAP) diluted net income per potential common share for the second quarter of fiscal 2022 includes 1.1 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 second quarter of fiscal 2021 includes 1.5 million shares underlying certain stock option and stock unit awards. APPENDIX B - Calculation of EBITDA and Adjusted EBITDA (unaudited) (in thousands) (unaudited) Quarter Ended April 30, May 1, 2022 2021 Earnings Before Interest, Tax, Depreciation and Amortization (EBITDA) Net income (GAAP) $ 38,922 $ 103,117 Add: Interest expense 11,985 7,785 Less: Interest and other income (loss), net 808 (1,274 ) Add: Provision for income taxes 8,330 21,453 Add: Depreciation of equipment, building, furniture and fixtures, and amortization of leasehold improvements 22,377 24,107 Add: Amortization of intangible assets 12,233 8,875 EBITDA $ 93,039 $ 166,611 Less: Canadian Emergency Wage Subsidy — 40,444 Add: Share-based compensation cost 26,673 21,535 Add: Significant asset impairments and restructuring costs 9,102 8,209 Add: Acquisition and integration costs 495 294 Adjusted EBITDA $ 129,309 $ 156,205 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, the redesign of business processes and a $4.1 million impairment charge due to Ciena's decision to suspend its business operations in Russia in response to the conflict in Ukraine. 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 - includes financial, legal and accounting advisor expenses related to our acquisition of Vyatta during the first quarter of fiscal 2022 and Xelic during the second quarter of fiscal 2022. Acquisition and integration costs for the second quarter of fiscal 2021 include costs of acquisition compensation associated with a three-year earn-out arrangement related to the DonRiver acquisition in fiscal 2018. Unrealized loss on cost method equity investment - reflects a change in the carrying value of a certain cost method equity investment. 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 20.2% for the second fiscal quarter of 2022 and 20.5% for the second fiscal quarter of 2021. 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/20220601006242/en/Contacts 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
Ciena® Corporation (NYSE: CIEN), a networking systems, services and software company, today announced unaudited financial results for its fiscal second quarter ended April 30, 2022. Q2 Revenue: $949.2 million Q2 Net Income per Share: $0.25 GAAP; $0.50 adjusted (non-GAAP) Share Repurchases: Repurchased approximately 1.5 million shares of common stock for an aggregate price of $87.0 million, and received 0.9 million shares of common stock pursuant to the final settlement of the Accelerated Share Repurchase program, during the quarter. “Our strong execution in the fiscal second quarter enabled us to deliver 14% year-over-year revenue growth despite an increasingly challenging supply environment,” said Gary Smith, president and CEO of Ciena. “We also saw continued strength in order flow and backlog growth in the quarter, reflecting the durability of longer-term secular demand drivers. At a time when industry-wide supply chain constraints are resulting in increased uncertainty and a wider range of potential outcomes in the coming quarters, our near-term financial performance is entirely a function of component availability – not the strong underlying demand in our business.” For the fiscal second quarter 2022, Ciena reported revenue of $949.2 million as compared to $833.9 million for the fiscal second quarter 2021. Ciena's GAAP net income for the fiscal second quarter 2022 was $38.9 million, or $0.25 per diluted common share, which compares to a GAAP net income of $103.1 million, or $0.66 per diluted common share, for the fiscal second quarter 2021. Ciena's GAAP net income for the fiscal second quarter of 2021 benefited from recording $40.4 million in pre-tax amounts from the Canadian Emergency Wage Subsidy program, which expired in October 2021. 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 second quarter 2022 was $76.4 million, or $0.50 per diluted common share, which compares to an adjusted (non-GAAP) net income of $97.6 million, or $0.62 per diluted common share, for the fiscal second quarter 2021. Fiscal Second Quarter 2022 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 Q2 Q2 Period Change FY 2022 FY 2021 Y-T-Y* Revenue $ 949.2 $ 833.9 13.8 % Gross margin 42.3 % 49.5 % (7.2 )% Operating expense $ 343.4 $ 278.8 23.2 % Operating margin 6.2 % 16.0 % (9.8 )% Non-GAAP Results Q2 Q2 Period Change FY 2022 FY 2021 Y-T-Y* Revenue $ 949.2 $ 833.9 13.8 % Adj. gross margin 43.0 % 49.2 % (6.2 )% Adj. operating expense $ 301.1 $ 278.7 8.0 % Adj. operating margin 11.3 % 15.8 % (4.5 )% Adj. EBITDA $ 129.3 $ 156.2 (17.2 )% * Denotes % change, or in the case of margin, absolute change Revenue by Segment Q2 FY 2022 Q2 FY 2021 Revenue %** Revenue %** Networking Platforms Converged Packet Optical $ 625.3 65.8 $ 573.7 68.8 Routing and Switching 109.2 11.5 63.6 7.6 Total Networking Platforms 734.5 77.3 637.3 76.4 Platform Software and Services 69.1 7.3 56.7 6.8 Blue Planet Automation Software and Services 16.9 1.8 23.9 2.9 Global Services Maintenance Support and Training 74.0 7.8 70.4 8.4 Installation and Deployment 41.4 4.4 38.0 4.6 Consulting and Network Design 13.3 1.4 7.6 0.9 Total Global Services 128.7 13.6 116.0 13.9 Total $ 949.2 100.0 $ 833.9 100.0 ** Denotes % of total revenue Additional Performance Metrics for Fiscal Second Quarter 2022 Revenue by Geographic Region Q2 FY 2022 Q2 FY 2021 Revenue % ** Revenue % ** Americas $ 700.8 73.8 $ 587.5 70.4 Europe, Middle East and Africa 145.1 15.3 155.0 18.6 Asia Pacific 103.3 10.9 91.4 11.0 Total $ 949.2 100.0 $ 833.9 100.0 ** Denotes % of total revenue One 10%-plus customer represented a total of 11.0% of revenue Cash and investments totaled $1.6 billion Cash flow from operations totaled $105.8 million Average days' sales outstanding (DSOs) were 87 Accounts receivable, net balance was $774.9 million Unbilled contract asset, net balance was $144.3 million Inventories totaled $536.9 million, including: Raw materials: $373.5 million Work in process: $12.3 million Finished goods: $157.9 million Deferred cost of sales: $28.9 million Reserve for excess and obsolescence: $(35.7) million Product inventory turns were 3.4 Headcount totaled 7,536 Supplemental Materials and Live Web Broadcast of Unaudited Fiscal Second Quarter 2022 Results Today, Thursday, June 2, 2022, in conjunction with this announcement, Ciena has posted to the Quarterly Results page of the Investor Relations section of its website certain related supporting materials for its unaudited fiscal second quarter 2022 results. Ciena's management will also host a discussion today with investors and financial analysts that will include the Company's outlook. The live audio web broadcast beginning at 8:30 a.m. Eastern will be accessible via www.ciena.com. An archived replay of the live broadcast will be available shortly following its conclusion on the Investor Relations page of Ciena's website. Notes to Investors Forward-Looking Statements. You are encouraged to review the Investors section of our website, where we routinely post press releases, Securities and Exchange Commission ("SEC") filings, recent news, financial results, supplemental financial information, and other announcements. From time to time we exclusively post material information to this website along with other disclosure channels that we use. This press release contains certain forward-looking statements that involve risks and uncertainties. These statements are based on current expectations, forecasts, assumptions and other information available to the Company as of the date hereof. Forward-looking statements include statements regarding Ciena's expectations, beliefs, intentions or strategies regarding the future and can be identified by forward-looking words such as "anticipate," "believe," "could," "estimate," "expect," "intend," "may," "should," "will," and "would" or similar words. Forward-looking statements in this release include: "Our strong execution in the fiscal second quarter enabled us to deliver 14% year-over-year revenue growth despite an increasingly challenging supply environment; "We also saw continued strength in order flow and backlog growth in the quarter, reflecting the durability of longer-term secular demand drivers"; "At a time when industry-wide supply chain constraints are resulting in increased uncertainty and a wider range of potential outcomes in the coming quarters, our near-term financial performance is entirely a function of component availability – not the strong underlying demand in our business." 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 our business and growth strategies; the impact of supply chain constraints or disruptions; the duration and severity of the COVID-19 pandemic and the impact of countermeasures taken to mitigate its spread 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 our 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; changes in foreign currency exchange rates; factors beyond our control such as natural disasters, climate change, acts of war or terrorism, geopolitical events, including but not limited to the ongoing conflict between Ukraine and Russia, and public health emergencies; changes in tax or trade regulations, including the imposition of tariffs, duties or efforts to withdraw from or materially modify international trade agreements; and the other risk factors disclosed in Ciena’s periodic reports filed with the Securities and Exchange Commission (SEC) including Ciena’s Annual Report on Form 10-K filed with the SEC on December 17, 2021 and included in its Quarterly Report on Form 10-Q for the second quarter of fiscal 2022 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 Six Months Ended April 30, May 1, April 30, May 1, 2022 2021 2022 2021 Revenue: Products $ 759,948 $ 670,043 $ 1,424,955 $ 1,267,263 Services 189,279 163,884 368,715 323,794 Total revenue 949,227 833,927 1,793,670 1,591,057 Cost of goods sold: Products 452,057 339,601 824,622 654,699 Services 95,389 81,907 183,080 166,048 Total cost of goods sold 547,446 421,508 1,007,702 820,747 Gross profit 401,781 412,419 785,968 770,310 Operating expenses: Research and development 159,324 110,246 307,733 242,987 Selling and marketing 119,939 110,387 238,820 207,665 General and administrative 45,572 43,635 90,070 83,628 Significant asset impairments and restructuring costs 9,102 8,209 12,511 14,076 Amortization of intangible assets 8,920 6,019 17,838 11,929 Acquisition and integration costs 495 294 563 601 Total operating expenses 343,352 278,790 667,535 560,886 Income from operations 58,429 133,629 118,433 209,424 Interest and other income (loss), net 808 (1,274 ) 4,494 (2,395 ) Interest expense (11,985 ) (7,785 ) (20,633 ) (15,145 ) Income before income taxes 47,252 124,570 102,294 191,884 Provision for income taxes 8,330 21,453 17,549 33,419 Net income $ 38,922 $ 103,117 $ 84,745 $ 158,465 Net Income per Common Share Basic net income per common share $ 0.26 $ 0.66 $ 0.55 $ 1.02 Diluted net income per potential common share $ 0.25 $ 0.66 $ 0.55 $ 1.01 Weighted average basic common shares outstanding 152,197 155,331 153,179 155,257 Weighted average dilutive potential common shares outstanding 1 153,344 156,876 154,580 156,734 1 Weighted average dilutive potential common shares outstanding used in calculating GAAP diluted net income per potential common share includes the following number of shares underlying certain stock option and stock unit awards: (i) 1.1 million and 1.4 million for the second quarter and first six months of fiscal 2022, respectively; and (ii) 1.5 million shares for each of the second quarter and first six months of fiscal 2021. CIENA CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except share data) (unaudited) April 30, 2022 October 30, 2021 ASSETS Current assets: Cash and cash equivalents $ 1,019,863 $ 1,422,546 Short-term investments 529,552 181,483 Accounts receivable, net 774,896 884,958 Inventories 536,878 374,265 Prepaid expenses and other 367,344 325,654 Total current assets 3,228,533 3,188,906 Long-term investments 87,142 70,038 Equipment, building, furniture and fixtures, net 278,494 284,968 Operating lease right-of-use assets 45,721 44,285 Goodwill 328,924 311,645 Other intangible assets, net 88,956 65,314 Deferred tax asset, net 798,238 800,180 Other long-term assets 108,121 99,891 Total assets $ 4,964,129 $ 4,865,227 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $ 352,999 $ 356,176 Accrued liabilities and other short-term obligations 333,150 409,285 Deferred revenue 156,400 118,007 Operating lease liabilities 19,279 18,632 Current portion of long-term debt 6,930 6,930 Total current liabilities 868,758 909,030 Long-term deferred revenue 62,369 57,457 Other long-term obligations 148,043 166,803 Long-term operating lease liabilities 40,355 41,564 Long-term debt, net 1,062,182 670,355 Total liabilities $ 2,181,707 $ 1,845,209 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; 150,865,553 and 154,858,981 shares issued and outstanding 1,509 1,549 Additional paid-in capital 6,497,359 6,803,162 Accumulated other comprehensive income (loss) (16,059) 439 Accumulated deficit (3,700,387) (3,785,132) Total stockholders’ equity 2,782,422 3,020,018 Total liabilities and stockholders’ equity $ 4,964,129 $ 4,865,227 CIENA CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (unaudited) Six Months Ended April 30, May 1, 2022 2021 Cash flows provided by operating activities: Net income $ 84,745 $ 158,465 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation of equipment, building, furniture and fixtures, and amortization of leasehold improvements 46,030 47,295 Share-based compensation expense 50,970 40,499 Amortization of intangible assets 24,463 18,517 Deferred taxes (13,474 ) (9,606 ) Provision for inventory excess and obsolescence 8,487 10,402 Provision for warranty 7,228 7,937 Other (5,833 ) 5,928 Changes in assets and liabilities: Accounts receivable 104,455 (180 ) Inventories (171,056 ) (66,934 ) Prepaid expenses and other (36,673 ) (8,565 ) Operating lease right-of-use assets 8,222 8,253 Accounts payable, accruals and other obligations (88,960 ) (30,108 ) Deferred revenue 43,753 45,482 Short and long-term operating lease liabilities (10,216 ) (9,726 ) Net cash provided by operating activities 52,141 217,659 Cash flows used in investing activities: Payments for equipment, furniture, fixtures and intellectual property (45,249 ) (51,651 ) Purchase of available for sale securities (461,548 ) (102,429 ) Proceeds from maturities of available for sale securities 90,000 91,810 Settlement of foreign currency forward contracts, net 3,708 9,414 Acquisition of business, net of cash acquired (62,043 ) — Purchase of cost method equity investments (8,000 ) — Proceeds from sale of cost method equity investments — 4,678 Net cash used in investing activities (483,132 ) (48,178 ) Cash flows provided by (used in) financing activities: Proceeds from issuance of senior notes 400,000 — Payment of long term debt (3,465 ) (3,465 ) Payment of debt issuance costs (5,145 ) — Payment of finance lease obligations (1,635 ) (1,463 ) Shares repurchased for tax withholdings on vesting of restricted stock units (35,004 ) (27,893 ) Repurchases of common stock - repurchase program (332,794 ) (38,498 ) Proceeds from issuance of common stock 15,185 13,480 Net cash provided by (used in) financing activities 37,142 (57,839 ) Effect of exchange rate changes on cash, cash equivalents and restricted cash (8,807 ) 2,696 Net increase (decrease) in cash, cash equivalents and restricted cash (402,656 ) 114,338 Cash, cash equivalents and restricted cash at beginning of period 1,422,604 1,088,708 Cash, cash equivalents and restricted cash at end of period $ 1,019,948 $ 1,203,046 Supplemental disclosure of cash flow information Cash paid during the period for interest $ 16,809 $ 14,949 Cash paid during the period for income taxes, net $ 17,905 $ 27,666 Operating lease payments $ 10,917 $ 10,785 Non-cash investing and financing activities Purchase of equipment in accounts payable $ 8,093 $ 4,966 Repurchase of common stock in accrued liabilities from repurchase program $ 5,000 $ 900 Operating right-of-use assets subject to lease liability $ 3,589 $ 1,770 APPENDIX A - Reconciliation of Adjusted (Non- GAAP) Quarterly Measures (in thousands, except per share data) (unaudited) Quarter Ended April 30, May 1, 2022 2021 Gross Profit Reconciliation (GAAP/non-GAAP) GAAP gross profit $ 401,781 $ 412,419 Share-based compensation-products 1,058 498 Share-based compensation-services 1,943 1,421 Canadian Emergency Wage Subsidy-products — (4,189 ) Canadian Emergency Wage Subsidy-services — (2,620 ) Amortization of intangible assets 3,313 2,856 Total adjustments related to gross profit 6,314 (2,034 ) Adjusted (non-GAAP) gross profit $ 408,095 $ 410,385 Adjusted (non-GAAP) gross profit percentage 43.0 % 49.2 % Operating Expense Reconciliation (GAAP/non-GAAP) GAAP operating expense $ 343,352 $ 278,790 Share-based compensation-research and development 8,309 5,844 Share-based compensation-sales and marketing 8,061 6,610 Share-based compensation-general and administrative 7,334 6,743 Canadian Emergency Wage Subsidy-research and development — (28,923 ) Canadian Emergency Wage Subsidy-sales and marketing — (2,551 ) Canadian Emergency Wage Subsidy-general and administrative — (2,161 ) Significant asset impairments and restructuring costs 9,102 8,209 Amortization of intangible assets 8,920 6,019 Acquisition and integration costs 495 294 Total adjustments related to operating expense 42,221 84 Adjusted (non-GAAP) operating expense $ 301,131 $ 278,706 Income from Operations Reconciliation (GAAP/non-GAAP) GAAP income from operations $ 58,429 $ 133,629 Total adjustments related to gross profit 6,314 (2,034 ) Total adjustments related to operating expense 42,221 84 Total adjustments related to income from operations 48,535 (1,950 ) Adjusted (non-GAAP) income from operations $ 106,964 $ 131,679 Adjusted (non-GAAP) operating margin percentage 11.3 % 15.8 % Net Income Reconciliation (GAAP/non-GAAP) GAAP net income $ 38,922 $ 103,117 Exclude GAAP provision for income taxes 8,330 21,453 Income before income taxes 47,252 124,570 Total adjustments related to income from operations 48,535 (1,950 ) Unrealized loss on cost method equity investment — 165 Adjusted income before income taxes 95,787 122,785 Non-GAAP tax provision on adjusted income before income taxes 19,349 25,171 Adjusted (non-GAAP) net income $ 76,438 $ 97,614 Weighted average basic common shares outstanding 152,197 155,331 Weighted average dilutive potential common shares outstanding 1 153,344 156,876 Net Income per Common Share GAAP diluted net income per potential common share $ 0.25 $ 0.66 Adjusted (non-GAAP) diluted net income per potential common share $ 0.50 $ 0.62 1 Weighted average dilutive potential common shares outstanding used in calculating Adjusted (non-GAAP) diluted net income per potential common share for the second quarter of fiscal 2022 includes 1.1 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 second quarter of fiscal 2021 includes 1.5 million shares underlying certain stock option and stock unit awards. APPENDIX B - Calculation of EBITDA and Adjusted EBITDA (unaudited) (in thousands) (unaudited) Quarter Ended April 30, May 1, 2022 2021 Earnings Before Interest, Tax, Depreciation and Amortization (EBITDA) Net income (GAAP) $ 38,922 $ 103,117 Add: Interest expense 11,985 7,785 Less: Interest and other income (loss), net 808 (1,274 ) Add: Provision for income taxes 8,330 21,453 Add: Depreciation of equipment, building, furniture and fixtures, and amortization of leasehold improvements 22,377 24,107 Add: Amortization of intangible assets 12,233 8,875 EBITDA $ 93,039 $ 166,611 Less: Canadian Emergency Wage Subsidy — 40,444 Add: Share-based compensation cost 26,673 21,535 Add: Significant asset impairments and restructuring costs 9,102 8,209 Add: Acquisition and integration costs 495 294 Adjusted EBITDA $ 129,309 $ 156,205 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, the redesign of business processes and a $4.1 million impairment charge due to Ciena's decision to suspend its business operations in Russia in response to the conflict in Ukraine. 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 - includes financial, legal and accounting advisor expenses related to our acquisition of Vyatta during the first quarter of fiscal 2022 and Xelic during the second quarter of fiscal 2022. Acquisition and integration costs for the second quarter of fiscal 2021 include costs of acquisition compensation associated with a three-year earn-out arrangement related to the DonRiver acquisition in fiscal 2018. Unrealized loss on cost method equity investment - reflects a change in the carrying value of a certain cost method equity investment. 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 20.2% for the second fiscal quarter of 2022 and 20.5% for the second fiscal quarter of 2021. 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/20220601006242/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