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 2023 Financial Results By: Ciena Corporation via Business Wire August 31, 2023 at 07:00 AM EDT Revenue increased 23% year-over-year Ciena® Corporation (NYSE: CIEN), a networking systems, services and software company, today announced unaudited financial results for its fiscal third quarter ended July 29, 2023. Q3 Revenue: $1.07 billion Q3 Net Income per Share: $0.20 GAAP; $0.59 adjusted (non-GAAP) Share Repurchases: Repurchased approximately 1.4 million shares of common stock for an aggregate price of $61.2 million during the quarter. "We delivered excellent results for the fiscal third quarter with strength across all regions," said Gary Smith, president and CEO of Ciena. "We are encouraged by increased customer activity that, when combined with our elevated backlog, market leadership and expanding addressable market, we believe will drive growth and market share gains going forward." For fiscal third quarter 2023, Ciena reported revenue of $1.07 billion as compared to $868.0 million for the fiscal third quarter 2022. Ciena's GAAP net income for the fiscal third quarter 2023 was $29.7 million, or $0.20 per diluted common share, which compares to a GAAP net income of $10.5 million, or $0.07 per diluted common share, for the fiscal third quarter 2022. Ciena's adjusted (non-GAAP) net income for the fiscal third quarter 2023 was $89.1 million, or $0.59 per diluted common share, which compares to an adjusted (non-GAAP) net income of $49.0 million, or $0.33 per diluted common share, for the fiscal third quarter 2022. Fiscal Third Quarter 2023 Performance Summary The tables below (in millions, except percentage data) provide comparisons of certain quarterly results to the prior year. Appendices A and B set forth reconciliations between the GAAP and adjusted (non-GAAP) measures contained in this release. GAAP Results (unaudited) Q3 Q3 Period Change FY 2023 FY 2022 Y-T-Y* Revenue $ 1,067.9 $ 868.0 23.0 % Gross margin 42.0 % 39.3 % 2.7 % Operating expense $ 370.7 $ 313.7 18.2 % Operating margin 7.3 % 3.1 % 4.2 % Non-GAAP Results (unaudited) Q3 Q3 Period Change FY 2023 FY 2022 Y-T-Y* Revenue $ 1,067.9 $ 868.0 23.0 % Adj. gross margin 42.7 % 40.0 % 2.7 % Adj. operating expense $ 327.9 $ 273.1 20.1 % Adj. operating margin 12.0 % 8.5 % 3.5 % Adj. EBITDA $ 151.3 $ 96.0 57.6 % * Denotes % change, or in the case of margin, absolute change Revenue by Segment (unaudited) Q3 FY 2023 Q3 FY 2022 Revenue %** Revenue %** Networking Platforms Converged Packet Optical $ 719.0 67.3 $ 563.9 65.0 Routing and Switching 127.6 11.9 100.7 11.6 Total Networking Platforms 846.6 79.2 664.6 76.6 Platform Software and Services 78.9 7.4 63.5 7.3 Blue Planet Automation Software and Services 13.1 1.3 17.3 2.0 Global Services Maintenance Support and Training 72.9 6.8 72.8 8.4 Installation and Deployment 46.8 4.4 38.7 4.4 Consulting and Network Design 9.6 0.9 11.1 1.3 Total Global Services 129.3 12.1 122.6 14.1 Total $ 1,067.9 100.0 $ 868.0 100.0 ** Denotes % of total revenue Additional Performance Metrics for Fiscal Third Quarter 2023 Revenue by Geographic Region (unaudited) Q3 FY 2023 Q3 FY 2022 Revenue % ** Revenue % ** Americas $ 749.5 70.2 $ 617.4 71.1 Europe, Middle East and Africa 152.8 14.3 124.2 14.3 Asia Pacific 165.6 15.5 126.4 14.6 Total $ 1,067.9 100.0 $ 868.0 100.0 ** Denotes % of total revenue One customer represented 10%-plus of revenue for a total of 11.7% of revenue Cash and investments totaled $1.28 billion Cash flow from operations totaled $8.7 million Average days' sales outstanding (DSOs) were 96 Accounts receivable, net balance was $997.4 million Unbilled contract assets, net balance was $142.3 million Inventories totaled $1.19 billion, including: Raw materials: $772.0 million Work in process: $51.8 million Finished goods: $333.5 million Deferred cost of sales: $77.5 million Reserve for excess and obsolescence: $(42.3) million Product inventory turns were 1.7 Headcount totaled 8,623 Supplemental Materials and Live Web Broadcast of Unaudited Fiscal Third Quarter 2023 Results Today, Thursday, August 31, 2023, 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 third quarter 2023 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 excellent results for the fiscal third quarter with strength across all regions. We are encouraged by increased customer activity that, when combined with our elevated backlog, market leadership and expanding addressable market, we believe will drive growth and market share gains going forward." 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 16, 2022 and included in its Quarterly Report on Form 10-Q for the third quarter of fiscal 2023 to be filed with the SEC. Ciena assumes no obligation to update any forward-looking information included in this press release. Non-GAAP Presentation of Quarterly and Annual Results. This release includes non-GAAP measures of Ciena's gross profit, operating expense, income from operations, earnings before interest, tax, depreciation and amortization (EBITDA), Adjusted EBITDA, and measures of net income and net income per share. In evaluating the operating performance of Ciena's business, management excludes certain charges and credits that are required by GAAP. These items share one or more of the following characteristics: they are unusual and Ciena does not expect them to recur in the ordinary course of its business; they do not involve the expenditure of cash; they are unrelated to the ongoing operation of the business in the ordinary course; or their magnitude and timing is largely outside of Ciena's control. Management believes that the non-GAAP measures below provide management and investors useful information and meaningful insight to the operating performance of the business. The presentation of these non-GAAP financial measures should be considered in addition to Ciena's GAAP results and these measures are not intended to be a substitute for the financial information prepared and presented in accordance with GAAP. Ciena's non-GAAP measures and the related adjustments may differ from non-GAAP measures used by other companies and should only be used to evaluate Ciena's results of operations in conjunction with our corresponding GAAP results. To the extent not previously disclosed in a prior Ciena financial results press release, Appendices A and B to this press release set forth a complete GAAP to non-GAAP reconciliation of the non-GAAP measures contained in this release. About Ciena. Ciena (NYSE: CIEN) is a global leader in networking systems, services, and software. We build the most adaptive networks in the industry, enabling customers to anticipate and meet ever-increasing digital demands. For three-plus decades, Ciena has brought our humanity to our relentless pursuit of innovation. Prioritizing collaborative relationships with our customers, partners, and communities, we create flexible, open, and sustainable networks that better serve all users—today and into the future. For updates on Ciena, follow us on 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 29, July 30, July 29, July 30, 2023 2022 2023 2022 Revenue: Products $ 865,197 $ 684,284 $ 2,678,242 $ 2,109,239 Services 202,689 183,697 578,820 552,412 Total revenue 1,067,886 867,981 3,257,062 2,661,651 Cost of goods sold: Products 516,900 434,756 1,559,120 1,259,378 Services 102,045 92,446 305,372 275,526 Total cost of goods sold 618,945 527,202 1,864,492 1,534,904 Gross profit 448,941 340,779 1,392,570 1,126,747 Operating expenses: Research and development 189,392 150,025 561,115 457,758 Selling and marketing 118,266 105,880 367,156 344,700 General and administrative 49,349 41,121 151,184 131,191 Significant asset impairments and restructuring costs 4,174 7,692 16,625 20,203 Amortization of intangible assets 9,487 8,919 26,773 26,757 Acquisition and integration costs 59 35 3,474 598 Total operating expenses 370,727 313,672 1,126,327 981,207 Income from operations 78,214 27,107 266,243 145,540 Interest and other income, net 10,187 366 50,711 4,860 Interest expense (24,060 ) (12,642 ) (63,819 ) (33,275 ) Income before income taxes 64,341 14,831 253,135 117,125 Provision for income taxes 34,608 4,319 89,507 21,868 Net income $ 29,733 $ 10,512 $ 163,628 $ 95,257 Net Income per Common Share Basic net income per common share $ 0.20 $ 0.07 $ 1.09 $ 0.63 Diluted net income per potential common share $ 0.20 $ 0.07 $ 1.09 $ 0.62 Weighted average basic common shares outstanding 149,690 149,862 149,472 152,083 Weighted average dilutive potential common shares outstanding 1 149,977 150,463 149,867 153,209 1 Weighted average dilutive potential common shares outstanding used in calculating GAAP diluted net income per potential common share includes the following number of shares underlying certain stock option and stock unit awards: (i) 0.3 million and 0.4 million shares for the third quarter and first nine months of fiscal 2023, respectively; and (ii) 0.6 million and 1.1 million shares for the third quarter and first nine months of fiscal 2022, respectively. CIENA CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except share data) (unaudited) July 29, 2023 October 29, 2022 ASSETS Current assets: Cash and cash equivalents $ 1,117,922 $ 994,352 Short-term investments 141,843 153,989 Accounts receivable, net 997,373 920,772 Inventories 1,192,522 946,730 Prepaid expenses and other 361,692 370,053 Total current assets 3,811,352 3,385,896 Long-term investments 21,098 35,385 Equipment, building, furniture and fixtures, net 287,455 267,779 Operating lease right-of-use assets 40,482 45,108 Goodwill 446,596 328,322 Other intangible assets, net 219,085 69,517 Deferred tax asset, net 792,299 824,008 Other long-term assets 104,847 113,617 Total assets $ 5,723,214 $ 5,069,632 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $ 393,144 $ 516,047 Accrued liabilities and other short-term obligations 355,622 360,782 Deferred revenue 188,104 137,899 Operating lease liabilities 16,941 18,925 Current portion of long-term debt 11,930 6,930 Total current liabilities 965,741 1,040,583 Long-term deferred revenue 71,873 62,336 Other long-term obligations 156,893 150,335 Long-term operating lease liabilities 37,800 42,392 Long-term debt, net 1,543,900 1,061,125 Total liabilities 2,776,207 2,356,771 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; 148,772,513 and 148,412,943 shares issued and outstanding 1,488 1,484 Additional paid-in capital 6,425,899 6,390,252 Accumulated other comprehensive loss (11,778 ) (46,645 ) Accumulated deficit (3,468,602 ) (3,632,230 ) Total stockholders’ equity 2,947,007 2,712,861 Total liabilities and stockholders’ equity $ 5,723,214 $ 5,069,632 CIENA CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (unaudited) Nine Months Ended July 29, July 30, 2023 2022 Cash flows used in operating activities: Net income $ 163,628 $ 95,257 Adjustments to reconcile net income to net cash used in operating activities: Depreciation of equipment, building, furniture and fixtures, and amortization of leasehold improvements 69,213 68,280 Share-based compensation expense 95,405 77,827 Amortization of intangible assets 36,274 36,521 Deferred taxes (64,005 ) (19,824 ) Provision for inventory excess and obsolescence 18,767 12,038 Provision for warranty 18,860 12,416 Gain on cost method equity investments, net (26,368 ) (4,120 ) Other 13,694 3,678 Changes in assets and liabilities: Accounts receivable (80,399 ) 74,478 Inventories (262,345 ) (464,664 ) Prepaid expenses and other 72,062 (39,805 ) Operating lease right-of-use assets 11,003 12,504 Accounts payable, accruals and other obligations (133,880 ) (37,587 ) Deferred revenue 57,547 34,949 Short and long-term operating lease liabilities (16,596 ) (15,197 ) Net cash used in operating activities (27,140 ) (153,249 ) Cash flows used in investing activities: Payments for equipment, furniture, fixtures and intellectual property (83,422 ) (66,908 ) Purchases of investments (119,240 ) (614,333 ) Proceeds from sales and maturities of investments 150,646 460,000 Settlement of foreign currency forward contracts, net (3,272 ) 4,450 Purchase of cost method equity investments — (8,000 ) Acquisition of business, net of cash acquired (230,048 ) (62,043 ) Net cash used in investing activities (285,336 ) (286,834 ) Cash flows provided by (used in) financing activities: Proceeds from issuance of senior notes — 400,000 Proceeds from issuance of term loan, net 497,500 — Payment of long term debt (6,448 ) (3,465 ) Payment of debt issuance costs (5,422 ) (5,159 ) Payment of finance lease obligations (2,830 ) (2,555 ) Shares repurchased for tax withholdings on vesting of stock unit awards (29,794 ) (41,280 ) Repurchases of common stock - repurchase program (57,736 ) (487,792 ) Proceeds from issuance of common stock 31,276 30,224 Net cash provided by (used in) financing activities 426,546 (110,027 ) Effect of exchange rate changes on cash, cash equivalents and restricted cash 9,501 (12,780 ) Net increase (decrease) in cash, cash equivalents and restricted cash 123,571 (562,890 ) Cash, cash equivalents and restricted cash at beginning of period 994,378 1,422,604 Cash, cash equivalents and restricted cash at end of period $ 1,117,949 $ 859,714 Supplemental disclosure of cash flow information Cash paid during the period for interest $ 56,709 $ 24,823 Cash paid during the period for income taxes, net $ 68,058 $ 28,593 Operating lease payments $ 18,038 $ 16,342 Non-cash investing and financing activities Purchase of equipment in accounts payable $ 4,579 $ 9,320 Repurchase of common stock in accrued liabilities from repurchase program $ 3,500 $ 5,000 Operating right-of-use assets subject to lease liability $ 9,771 $ 8,226 Gain on cost method equity investments, net $ 26,368 $ 4,120 APPENDIX A - Reconciliation of Adjusted (Non- GAAP) Measurements (in thousands, except per share data) (unaudited) Quarter Ended July 29, July 30, 2023 2022 Gross Profit Reconciliation (GAAP/non-GAAP) GAAP gross profit $ 448,941 $ 340,779 Share-based compensation-products 1,118 1,002 Share-based compensation-services 2,687 1,940 Amortization of intangible assets 3,187 3,140 Total adjustments related to gross profit 6,992 6,082 Adjusted (non-GAAP) gross profit $ 455,933 $ 346,861 Adjusted (non-GAAP) gross profit percentage 42.7 % 40.0 % Operating Expense Reconciliation (GAAP/non-GAAP) GAAP operating expense $ 370,727 $ 313,672 Share-based compensation-research and development 10,954 8,233 Share-based compensation-sales and marketing 8,770 8,075 Share-based compensation-general and administrative 9,377 7,579 Significant asset impairments and restructuring costs 4,174 7,692 Amortization of intangible assets 9,487 8,919 Acquisition and integration costs 59 35 Total adjustments related to operating expense 42,821 40,533 Adjusted (non-GAAP) operating expense $ 327,906 $ 273,139 Income from Operations Reconciliation (GAAP/non-GAAP) GAAP income from operations $ 78,214 $ 27,107 Total adjustments related to gross profit 6,992 6,082 Total adjustments related to operating expense 42,821 40,533 Total adjustments related to income from operations 49,813 46,615 Adjusted (non-GAAP) income from operations $ 128,027 $ 73,722 Adjusted (non-GAAP) operating margin percentage 12.0 % 8.5 % Net Income Reconciliation (GAAP/non-GAAP) GAAP net income $ 29,733 $ 10,512 Exclude GAAP provision for income taxes 34,608 4,319 Income before income taxes 64,341 14,831 Total adjustments related to income from operations 49,813 46,615 Loss on cost method equity investment 87 — Adjusted income before income taxes 114,241 61,446 Non-GAAP tax provision on adjusted income before income taxes 25,133 12,412 Adjusted (non-GAAP) net income $ 89,108 $ 49,034 Weighted average basic common shares outstanding 149,690 149,862 Weighted average dilutive potential common shares outstanding 1 149,977 150,463 Net Income per Common Share GAAP diluted net income per potential common share $ 0.20 $ 0.07 Adjusted (non-GAAP) diluted net income per potential common share $ 0.59 $ 0.33 1 Weighted average dilutive potential common shares outstanding used in calculating Adjusted (non-GAAP) diluted net income per potential common share includes the following number of shares underlying certain stock option and stock unit awards: (i) 0.3 million for the third quarter of fiscal 2023; and (ii) 0.6 million for the third quarter of fiscal 2022. APPENDIX B - Calculation of EBITDA and Adjusted EBITDA (unaudited) (in thousands) (unaudited) Quarter Ended July 29, July 30, 2023 2022 Earnings Before Interest, Tax, Depreciation and Amortization (EBITDA) Net income (GAAP) $ 29,733 $ 10,512 Add: Interest expense 24,060 12,642 Less: Interest and other income, net 10,187 366 Add: Provision for income taxes 34,608 4,319 Add: Depreciation of equipment, building, furniture and fixtures, and amortization of leasehold improvements 23,310 22,250 Add: Amortization of intangible assets 12,674 12,059 EBITDA $ 114,198 $ 61,416 Add: Share-based compensation cost 32,906 26,857 Add: Significant asset impairments and restructuring costs 4,174 7,692 Add: Acquisition and integration costs 59 35 Adjusted EBITDA $ 151,337 $ 96,000 * * * The adjusted (non-GAAP) measures above and their reconciliation to Ciena's GAAP results for the periods presented reflect adjustments relating to the following items: Share-based compensation - a non-cash expense incurred in accordance with share-based compensation accounting guidance. Significant asset impairments and restructuring costs - costs incurred as a result of restructuring activities taken to align resources with perceived market opportunities, and the redesign of business processes including restructuring certain real estate facilities. Amortization of intangible assets - a non-cash expense arising from the acquisition of intangible assets, principally developed technologies and customer-related intangibles, that Ciena is required to amortize over its expected useful life. Acquisition and integration costs - primarily consist of financial, legal and accounting advisors' costs and employment-related costs related to Ciena's acquisitions in fiscal 2022 and fiscal 2023. Loss on cost method equity investment - reflects changes in the carrying value of a certain cost method equity investment due to triggering events. Non-GAAP tax provision - consists of current and deferred income tax expense commensurate with the level of adjusted income before income taxes and utilizes a current, blended U.S. and foreign statutory annual tax rate of 22.0% for the third fiscal quarter of 2023 and 20.2% for the third fiscal quarter of 2022. 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/20230830958357/en/Contacts Press Contact: Jamie Moody Ciena Corporation +1 (410) 694-5761 pr@ciena.com Investor Contact: Gregg Lampf Ciena Corporation +1 (877) 243-6273 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 2023 Financial Results By: Ciena Corporation via Business Wire August 31, 2023 at 07:00 AM EDT Revenue increased 23% year-over-year Ciena® Corporation (NYSE: CIEN), a networking systems, services and software company, today announced unaudited financial results for its fiscal third quarter ended July 29, 2023. Q3 Revenue: $1.07 billion Q3 Net Income per Share: $0.20 GAAP; $0.59 adjusted (non-GAAP) Share Repurchases: Repurchased approximately 1.4 million shares of common stock for an aggregate price of $61.2 million during the quarter. "We delivered excellent results for the fiscal third quarter with strength across all regions," said Gary Smith, president and CEO of Ciena. "We are encouraged by increased customer activity that, when combined with our elevated backlog, market leadership and expanding addressable market, we believe will drive growth and market share gains going forward." For fiscal third quarter 2023, Ciena reported revenue of $1.07 billion as compared to $868.0 million for the fiscal third quarter 2022. Ciena's GAAP net income for the fiscal third quarter 2023 was $29.7 million, or $0.20 per diluted common share, which compares to a GAAP net income of $10.5 million, or $0.07 per diluted common share, for the fiscal third quarter 2022. Ciena's adjusted (non-GAAP) net income for the fiscal third quarter 2023 was $89.1 million, or $0.59 per diluted common share, which compares to an adjusted (non-GAAP) net income of $49.0 million, or $0.33 per diluted common share, for the fiscal third quarter 2022. Fiscal Third Quarter 2023 Performance Summary The tables below (in millions, except percentage data) provide comparisons of certain quarterly results to the prior year. Appendices A and B set forth reconciliations between the GAAP and adjusted (non-GAAP) measures contained in this release. GAAP Results (unaudited) Q3 Q3 Period Change FY 2023 FY 2022 Y-T-Y* Revenue $ 1,067.9 $ 868.0 23.0 % Gross margin 42.0 % 39.3 % 2.7 % Operating expense $ 370.7 $ 313.7 18.2 % Operating margin 7.3 % 3.1 % 4.2 % Non-GAAP Results (unaudited) Q3 Q3 Period Change FY 2023 FY 2022 Y-T-Y* Revenue $ 1,067.9 $ 868.0 23.0 % Adj. gross margin 42.7 % 40.0 % 2.7 % Adj. operating expense $ 327.9 $ 273.1 20.1 % Adj. operating margin 12.0 % 8.5 % 3.5 % Adj. EBITDA $ 151.3 $ 96.0 57.6 % * Denotes % change, or in the case of margin, absolute change Revenue by Segment (unaudited) Q3 FY 2023 Q3 FY 2022 Revenue %** Revenue %** Networking Platforms Converged Packet Optical $ 719.0 67.3 $ 563.9 65.0 Routing and Switching 127.6 11.9 100.7 11.6 Total Networking Platforms 846.6 79.2 664.6 76.6 Platform Software and Services 78.9 7.4 63.5 7.3 Blue Planet Automation Software and Services 13.1 1.3 17.3 2.0 Global Services Maintenance Support and Training 72.9 6.8 72.8 8.4 Installation and Deployment 46.8 4.4 38.7 4.4 Consulting and Network Design 9.6 0.9 11.1 1.3 Total Global Services 129.3 12.1 122.6 14.1 Total $ 1,067.9 100.0 $ 868.0 100.0 ** Denotes % of total revenue Additional Performance Metrics for Fiscal Third Quarter 2023 Revenue by Geographic Region (unaudited) Q3 FY 2023 Q3 FY 2022 Revenue % ** Revenue % ** Americas $ 749.5 70.2 $ 617.4 71.1 Europe, Middle East and Africa 152.8 14.3 124.2 14.3 Asia Pacific 165.6 15.5 126.4 14.6 Total $ 1,067.9 100.0 $ 868.0 100.0 ** Denotes % of total revenue One customer represented 10%-plus of revenue for a total of 11.7% of revenue Cash and investments totaled $1.28 billion Cash flow from operations totaled $8.7 million Average days' sales outstanding (DSOs) were 96 Accounts receivable, net balance was $997.4 million Unbilled contract assets, net balance was $142.3 million Inventories totaled $1.19 billion, including: Raw materials: $772.0 million Work in process: $51.8 million Finished goods: $333.5 million Deferred cost of sales: $77.5 million Reserve for excess and obsolescence: $(42.3) million Product inventory turns were 1.7 Headcount totaled 8,623 Supplemental Materials and Live Web Broadcast of Unaudited Fiscal Third Quarter 2023 Results Today, Thursday, August 31, 2023, 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 third quarter 2023 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 excellent results for the fiscal third quarter with strength across all regions. We are encouraged by increased customer activity that, when combined with our elevated backlog, market leadership and expanding addressable market, we believe will drive growth and market share gains going forward." 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 16, 2022 and included in its Quarterly Report on Form 10-Q for the third quarter of fiscal 2023 to be filed with the SEC. Ciena assumes no obligation to update any forward-looking information included in this press release. Non-GAAP Presentation of Quarterly and Annual Results. This release includes non-GAAP measures of Ciena's gross profit, operating expense, income from operations, earnings before interest, tax, depreciation and amortization (EBITDA), Adjusted EBITDA, and measures of net income and net income per share. In evaluating the operating performance of Ciena's business, management excludes certain charges and credits that are required by GAAP. These items share one or more of the following characteristics: they are unusual and Ciena does not expect them to recur in the ordinary course of its business; they do not involve the expenditure of cash; they are unrelated to the ongoing operation of the business in the ordinary course; or their magnitude and timing is largely outside of Ciena's control. Management believes that the non-GAAP measures below provide management and investors useful information and meaningful insight to the operating performance of the business. The presentation of these non-GAAP financial measures should be considered in addition to Ciena's GAAP results and these measures are not intended to be a substitute for the financial information prepared and presented in accordance with GAAP. Ciena's non-GAAP measures and the related adjustments may differ from non-GAAP measures used by other companies and should only be used to evaluate Ciena's results of operations in conjunction with our corresponding GAAP results. To the extent not previously disclosed in a prior Ciena financial results press release, Appendices A and B to this press release set forth a complete GAAP to non-GAAP reconciliation of the non-GAAP measures contained in this release. About Ciena. Ciena (NYSE: CIEN) is a global leader in networking systems, services, and software. We build the most adaptive networks in the industry, enabling customers to anticipate and meet ever-increasing digital demands. For three-plus decades, Ciena has brought our humanity to our relentless pursuit of innovation. Prioritizing collaborative relationships with our customers, partners, and communities, we create flexible, open, and sustainable networks that better serve all users—today and into the future. For updates on Ciena, follow us on 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 29, July 30, July 29, July 30, 2023 2022 2023 2022 Revenue: Products $ 865,197 $ 684,284 $ 2,678,242 $ 2,109,239 Services 202,689 183,697 578,820 552,412 Total revenue 1,067,886 867,981 3,257,062 2,661,651 Cost of goods sold: Products 516,900 434,756 1,559,120 1,259,378 Services 102,045 92,446 305,372 275,526 Total cost of goods sold 618,945 527,202 1,864,492 1,534,904 Gross profit 448,941 340,779 1,392,570 1,126,747 Operating expenses: Research and development 189,392 150,025 561,115 457,758 Selling and marketing 118,266 105,880 367,156 344,700 General and administrative 49,349 41,121 151,184 131,191 Significant asset impairments and restructuring costs 4,174 7,692 16,625 20,203 Amortization of intangible assets 9,487 8,919 26,773 26,757 Acquisition and integration costs 59 35 3,474 598 Total operating expenses 370,727 313,672 1,126,327 981,207 Income from operations 78,214 27,107 266,243 145,540 Interest and other income, net 10,187 366 50,711 4,860 Interest expense (24,060 ) (12,642 ) (63,819 ) (33,275 ) Income before income taxes 64,341 14,831 253,135 117,125 Provision for income taxes 34,608 4,319 89,507 21,868 Net income $ 29,733 $ 10,512 $ 163,628 $ 95,257 Net Income per Common Share Basic net income per common share $ 0.20 $ 0.07 $ 1.09 $ 0.63 Diluted net income per potential common share $ 0.20 $ 0.07 $ 1.09 $ 0.62 Weighted average basic common shares outstanding 149,690 149,862 149,472 152,083 Weighted average dilutive potential common shares outstanding 1 149,977 150,463 149,867 153,209 1 Weighted average dilutive potential common shares outstanding used in calculating GAAP diluted net income per potential common share includes the following number of shares underlying certain stock option and stock unit awards: (i) 0.3 million and 0.4 million shares for the third quarter and first nine months of fiscal 2023, respectively; and (ii) 0.6 million and 1.1 million shares for the third quarter and first nine months of fiscal 2022, respectively. CIENA CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except share data) (unaudited) July 29, 2023 October 29, 2022 ASSETS Current assets: Cash and cash equivalents $ 1,117,922 $ 994,352 Short-term investments 141,843 153,989 Accounts receivable, net 997,373 920,772 Inventories 1,192,522 946,730 Prepaid expenses and other 361,692 370,053 Total current assets 3,811,352 3,385,896 Long-term investments 21,098 35,385 Equipment, building, furniture and fixtures, net 287,455 267,779 Operating lease right-of-use assets 40,482 45,108 Goodwill 446,596 328,322 Other intangible assets, net 219,085 69,517 Deferred tax asset, net 792,299 824,008 Other long-term assets 104,847 113,617 Total assets $ 5,723,214 $ 5,069,632 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $ 393,144 $ 516,047 Accrued liabilities and other short-term obligations 355,622 360,782 Deferred revenue 188,104 137,899 Operating lease liabilities 16,941 18,925 Current portion of long-term debt 11,930 6,930 Total current liabilities 965,741 1,040,583 Long-term deferred revenue 71,873 62,336 Other long-term obligations 156,893 150,335 Long-term operating lease liabilities 37,800 42,392 Long-term debt, net 1,543,900 1,061,125 Total liabilities 2,776,207 2,356,771 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; 148,772,513 and 148,412,943 shares issued and outstanding 1,488 1,484 Additional paid-in capital 6,425,899 6,390,252 Accumulated other comprehensive loss (11,778 ) (46,645 ) Accumulated deficit (3,468,602 ) (3,632,230 ) Total stockholders’ equity 2,947,007 2,712,861 Total liabilities and stockholders’ equity $ 5,723,214 $ 5,069,632 CIENA CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (unaudited) Nine Months Ended July 29, July 30, 2023 2022 Cash flows used in operating activities: Net income $ 163,628 $ 95,257 Adjustments to reconcile net income to net cash used in operating activities: Depreciation of equipment, building, furniture and fixtures, and amortization of leasehold improvements 69,213 68,280 Share-based compensation expense 95,405 77,827 Amortization of intangible assets 36,274 36,521 Deferred taxes (64,005 ) (19,824 ) Provision for inventory excess and obsolescence 18,767 12,038 Provision for warranty 18,860 12,416 Gain on cost method equity investments, net (26,368 ) (4,120 ) Other 13,694 3,678 Changes in assets and liabilities: Accounts receivable (80,399 ) 74,478 Inventories (262,345 ) (464,664 ) Prepaid expenses and other 72,062 (39,805 ) Operating lease right-of-use assets 11,003 12,504 Accounts payable, accruals and other obligations (133,880 ) (37,587 ) Deferred revenue 57,547 34,949 Short and long-term operating lease liabilities (16,596 ) (15,197 ) Net cash used in operating activities (27,140 ) (153,249 ) Cash flows used in investing activities: Payments for equipment, furniture, fixtures and intellectual property (83,422 ) (66,908 ) Purchases of investments (119,240 ) (614,333 ) Proceeds from sales and maturities of investments 150,646 460,000 Settlement of foreign currency forward contracts, net (3,272 ) 4,450 Purchase of cost method equity investments — (8,000 ) Acquisition of business, net of cash acquired (230,048 ) (62,043 ) Net cash used in investing activities (285,336 ) (286,834 ) Cash flows provided by (used in) financing activities: Proceeds from issuance of senior notes — 400,000 Proceeds from issuance of term loan, net 497,500 — Payment of long term debt (6,448 ) (3,465 ) Payment of debt issuance costs (5,422 ) (5,159 ) Payment of finance lease obligations (2,830 ) (2,555 ) Shares repurchased for tax withholdings on vesting of stock unit awards (29,794 ) (41,280 ) Repurchases of common stock - repurchase program (57,736 ) (487,792 ) Proceeds from issuance of common stock 31,276 30,224 Net cash provided by (used in) financing activities 426,546 (110,027 ) Effect of exchange rate changes on cash, cash equivalents and restricted cash 9,501 (12,780 ) Net increase (decrease) in cash, cash equivalents and restricted cash 123,571 (562,890 ) Cash, cash equivalents and restricted cash at beginning of period 994,378 1,422,604 Cash, cash equivalents and restricted cash at end of period $ 1,117,949 $ 859,714 Supplemental disclosure of cash flow information Cash paid during the period for interest $ 56,709 $ 24,823 Cash paid during the period for income taxes, net $ 68,058 $ 28,593 Operating lease payments $ 18,038 $ 16,342 Non-cash investing and financing activities Purchase of equipment in accounts payable $ 4,579 $ 9,320 Repurchase of common stock in accrued liabilities from repurchase program $ 3,500 $ 5,000 Operating right-of-use assets subject to lease liability $ 9,771 $ 8,226 Gain on cost method equity investments, net $ 26,368 $ 4,120 APPENDIX A - Reconciliation of Adjusted (Non- GAAP) Measurements (in thousands, except per share data) (unaudited) Quarter Ended July 29, July 30, 2023 2022 Gross Profit Reconciliation (GAAP/non-GAAP) GAAP gross profit $ 448,941 $ 340,779 Share-based compensation-products 1,118 1,002 Share-based compensation-services 2,687 1,940 Amortization of intangible assets 3,187 3,140 Total adjustments related to gross profit 6,992 6,082 Adjusted (non-GAAP) gross profit $ 455,933 $ 346,861 Adjusted (non-GAAP) gross profit percentage 42.7 % 40.0 % Operating Expense Reconciliation (GAAP/non-GAAP) GAAP operating expense $ 370,727 $ 313,672 Share-based compensation-research and development 10,954 8,233 Share-based compensation-sales and marketing 8,770 8,075 Share-based compensation-general and administrative 9,377 7,579 Significant asset impairments and restructuring costs 4,174 7,692 Amortization of intangible assets 9,487 8,919 Acquisition and integration costs 59 35 Total adjustments related to operating expense 42,821 40,533 Adjusted (non-GAAP) operating expense $ 327,906 $ 273,139 Income from Operations Reconciliation (GAAP/non-GAAP) GAAP income from operations $ 78,214 $ 27,107 Total adjustments related to gross profit 6,992 6,082 Total adjustments related to operating expense 42,821 40,533 Total adjustments related to income from operations 49,813 46,615 Adjusted (non-GAAP) income from operations $ 128,027 $ 73,722 Adjusted (non-GAAP) operating margin percentage 12.0 % 8.5 % Net Income Reconciliation (GAAP/non-GAAP) GAAP net income $ 29,733 $ 10,512 Exclude GAAP provision for income taxes 34,608 4,319 Income before income taxes 64,341 14,831 Total adjustments related to income from operations 49,813 46,615 Loss on cost method equity investment 87 — Adjusted income before income taxes 114,241 61,446 Non-GAAP tax provision on adjusted income before income taxes 25,133 12,412 Adjusted (non-GAAP) net income $ 89,108 $ 49,034 Weighted average basic common shares outstanding 149,690 149,862 Weighted average dilutive potential common shares outstanding 1 149,977 150,463 Net Income per Common Share GAAP diluted net income per potential common share $ 0.20 $ 0.07 Adjusted (non-GAAP) diluted net income per potential common share $ 0.59 $ 0.33 1 Weighted average dilutive potential common shares outstanding used in calculating Adjusted (non-GAAP) diluted net income per potential common share includes the following number of shares underlying certain stock option and stock unit awards: (i) 0.3 million for the third quarter of fiscal 2023; and (ii) 0.6 million for the third quarter of fiscal 2022. APPENDIX B - Calculation of EBITDA and Adjusted EBITDA (unaudited) (in thousands) (unaudited) Quarter Ended July 29, July 30, 2023 2022 Earnings Before Interest, Tax, Depreciation and Amortization (EBITDA) Net income (GAAP) $ 29,733 $ 10,512 Add: Interest expense 24,060 12,642 Less: Interest and other income, net 10,187 366 Add: Provision for income taxes 34,608 4,319 Add: Depreciation of equipment, building, furniture and fixtures, and amortization of leasehold improvements 23,310 22,250 Add: Amortization of intangible assets 12,674 12,059 EBITDA $ 114,198 $ 61,416 Add: Share-based compensation cost 32,906 26,857 Add: Significant asset impairments and restructuring costs 4,174 7,692 Add: Acquisition and integration costs 59 35 Adjusted EBITDA $ 151,337 $ 96,000 * * * The adjusted (non-GAAP) measures above and their reconciliation to Ciena's GAAP results for the periods presented reflect adjustments relating to the following items: Share-based compensation - a non-cash expense incurred in accordance with share-based compensation accounting guidance. Significant asset impairments and restructuring costs - costs incurred as a result of restructuring activities taken to align resources with perceived market opportunities, and the redesign of business processes including restructuring certain real estate facilities. Amortization of intangible assets - a non-cash expense arising from the acquisition of intangible assets, principally developed technologies and customer-related intangibles, that Ciena is required to amortize over its expected useful life. Acquisition and integration costs - primarily consist of financial, legal and accounting advisors' costs and employment-related costs related to Ciena's acquisitions in fiscal 2022 and fiscal 2023. Loss on cost method equity investment - reflects changes in the carrying value of a certain cost method equity investment due to triggering events. Non-GAAP tax provision - consists of current and deferred income tax expense commensurate with the level of adjusted income before income taxes and utilizes a current, blended U.S. and foreign statutory annual tax rate of 22.0% for the third fiscal quarter of 2023 and 20.2% for the third fiscal quarter of 2022. 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/20230830958357/en/Contacts Press Contact: Jamie Moody Ciena Corporation +1 (410) 694-5761 pr@ciena.com Investor Contact: Gregg Lampf Ciena Corporation +1 (877) 243-6273 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 29, 2023. Q3 Revenue: $1.07 billion Q3 Net Income per Share: $0.20 GAAP; $0.59 adjusted (non-GAAP) Share Repurchases: Repurchased approximately 1.4 million shares of common stock for an aggregate price of $61.2 million during the quarter. "We delivered excellent results for the fiscal third quarter with strength across all regions," said Gary Smith, president and CEO of Ciena. "We are encouraged by increased customer activity that, when combined with our elevated backlog, market leadership and expanding addressable market, we believe will drive growth and market share gains going forward." For fiscal third quarter 2023, Ciena reported revenue of $1.07 billion as compared to $868.0 million for the fiscal third quarter 2022. Ciena's GAAP net income for the fiscal third quarter 2023 was $29.7 million, or $0.20 per diluted common share, which compares to a GAAP net income of $10.5 million, or $0.07 per diluted common share, for the fiscal third quarter 2022. Ciena's adjusted (non-GAAP) net income for the fiscal third quarter 2023 was $89.1 million, or $0.59 per diluted common share, which compares to an adjusted (non-GAAP) net income of $49.0 million, or $0.33 per diluted common share, for the fiscal third quarter 2022. Fiscal Third Quarter 2023 Performance Summary The tables below (in millions, except percentage data) provide comparisons of certain quarterly results to the prior year. Appendices A and B set forth reconciliations between the GAAP and adjusted (non-GAAP) measures contained in this release. GAAP Results (unaudited) Q3 Q3 Period Change FY 2023 FY 2022 Y-T-Y* Revenue $ 1,067.9 $ 868.0 23.0 % Gross margin 42.0 % 39.3 % 2.7 % Operating expense $ 370.7 $ 313.7 18.2 % Operating margin 7.3 % 3.1 % 4.2 % Non-GAAP Results (unaudited) Q3 Q3 Period Change FY 2023 FY 2022 Y-T-Y* Revenue $ 1,067.9 $ 868.0 23.0 % Adj. gross margin 42.7 % 40.0 % 2.7 % Adj. operating expense $ 327.9 $ 273.1 20.1 % Adj. operating margin 12.0 % 8.5 % 3.5 % Adj. EBITDA $ 151.3 $ 96.0 57.6 % * Denotes % change, or in the case of margin, absolute change Revenue by Segment (unaudited) Q3 FY 2023 Q3 FY 2022 Revenue %** Revenue %** Networking Platforms Converged Packet Optical $ 719.0 67.3 $ 563.9 65.0 Routing and Switching 127.6 11.9 100.7 11.6 Total Networking Platforms 846.6 79.2 664.6 76.6 Platform Software and Services 78.9 7.4 63.5 7.3 Blue Planet Automation Software and Services 13.1 1.3 17.3 2.0 Global Services Maintenance Support and Training 72.9 6.8 72.8 8.4 Installation and Deployment 46.8 4.4 38.7 4.4 Consulting and Network Design 9.6 0.9 11.1 1.3 Total Global Services 129.3 12.1 122.6 14.1 Total $ 1,067.9 100.0 $ 868.0 100.0 ** Denotes % of total revenue Additional Performance Metrics for Fiscal Third Quarter 2023 Revenue by Geographic Region (unaudited) Q3 FY 2023 Q3 FY 2022 Revenue % ** Revenue % ** Americas $ 749.5 70.2 $ 617.4 71.1 Europe, Middle East and Africa 152.8 14.3 124.2 14.3 Asia Pacific 165.6 15.5 126.4 14.6 Total $ 1,067.9 100.0 $ 868.0 100.0 ** Denotes % of total revenue One customer represented 10%-plus of revenue for a total of 11.7% of revenue Cash and investments totaled $1.28 billion Cash flow from operations totaled $8.7 million Average days' sales outstanding (DSOs) were 96 Accounts receivable, net balance was $997.4 million Unbilled contract assets, net balance was $142.3 million Inventories totaled $1.19 billion, including: Raw materials: $772.0 million Work in process: $51.8 million Finished goods: $333.5 million Deferred cost of sales: $77.5 million Reserve for excess and obsolescence: $(42.3) million Product inventory turns were 1.7 Headcount totaled 8,623 Supplemental Materials and Live Web Broadcast of Unaudited Fiscal Third Quarter 2023 Results Today, Thursday, August 31, 2023, 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 third quarter 2023 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 excellent results for the fiscal third quarter with strength across all regions. We are encouraged by increased customer activity that, when combined with our elevated backlog, market leadership and expanding addressable market, we believe will drive growth and market share gains going forward." 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 16, 2022 and included in its Quarterly Report on Form 10-Q for the third quarter of fiscal 2023 to be filed with the SEC. Ciena assumes no obligation to update any forward-looking information included in this press release. Non-GAAP Presentation of Quarterly and Annual Results. This release includes non-GAAP measures of Ciena's gross profit, operating expense, income from operations, earnings before interest, tax, depreciation and amortization (EBITDA), Adjusted EBITDA, and measures of net income and net income per share. In evaluating the operating performance of Ciena's business, management excludes certain charges and credits that are required by GAAP. These items share one or more of the following characteristics: they are unusual and Ciena does not expect them to recur in the ordinary course of its business; they do not involve the expenditure of cash; they are unrelated to the ongoing operation of the business in the ordinary course; or their magnitude and timing is largely outside of Ciena's control. Management believes that the non-GAAP measures below provide management and investors useful information and meaningful insight to the operating performance of the business. The presentation of these non-GAAP financial measures should be considered in addition to Ciena's GAAP results and these measures are not intended to be a substitute for the financial information prepared and presented in accordance with GAAP. Ciena's non-GAAP measures and the related adjustments may differ from non-GAAP measures used by other companies and should only be used to evaluate Ciena's results of operations in conjunction with our corresponding GAAP results. To the extent not previously disclosed in a prior Ciena financial results press release, Appendices A and B to this press release set forth a complete GAAP to non-GAAP reconciliation of the non-GAAP measures contained in this release. About Ciena. Ciena (NYSE: CIEN) is a global leader in networking systems, services, and software. We build the most adaptive networks in the industry, enabling customers to anticipate and meet ever-increasing digital demands. For three-plus decades, Ciena has brought our humanity to our relentless pursuit of innovation. Prioritizing collaborative relationships with our customers, partners, and communities, we create flexible, open, and sustainable networks that better serve all users—today and into the future. For updates on Ciena, follow us on 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 29, July 30, July 29, July 30, 2023 2022 2023 2022 Revenue: Products $ 865,197 $ 684,284 $ 2,678,242 $ 2,109,239 Services 202,689 183,697 578,820 552,412 Total revenue 1,067,886 867,981 3,257,062 2,661,651 Cost of goods sold: Products 516,900 434,756 1,559,120 1,259,378 Services 102,045 92,446 305,372 275,526 Total cost of goods sold 618,945 527,202 1,864,492 1,534,904 Gross profit 448,941 340,779 1,392,570 1,126,747 Operating expenses: Research and development 189,392 150,025 561,115 457,758 Selling and marketing 118,266 105,880 367,156 344,700 General and administrative 49,349 41,121 151,184 131,191 Significant asset impairments and restructuring costs 4,174 7,692 16,625 20,203 Amortization of intangible assets 9,487 8,919 26,773 26,757 Acquisition and integration costs 59 35 3,474 598 Total operating expenses 370,727 313,672 1,126,327 981,207 Income from operations 78,214 27,107 266,243 145,540 Interest and other income, net 10,187 366 50,711 4,860 Interest expense (24,060 ) (12,642 ) (63,819 ) (33,275 ) Income before income taxes 64,341 14,831 253,135 117,125 Provision for income taxes 34,608 4,319 89,507 21,868 Net income $ 29,733 $ 10,512 $ 163,628 $ 95,257 Net Income per Common Share Basic net income per common share $ 0.20 $ 0.07 $ 1.09 $ 0.63 Diluted net income per potential common share $ 0.20 $ 0.07 $ 1.09 $ 0.62 Weighted average basic common shares outstanding 149,690 149,862 149,472 152,083 Weighted average dilutive potential common shares outstanding 1 149,977 150,463 149,867 153,209 1 Weighted average dilutive potential common shares outstanding used in calculating GAAP diluted net income per potential common share includes the following number of shares underlying certain stock option and stock unit awards: (i) 0.3 million and 0.4 million shares for the third quarter and first nine months of fiscal 2023, respectively; and (ii) 0.6 million and 1.1 million shares for the third quarter and first nine months of fiscal 2022, respectively. CIENA CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except share data) (unaudited) July 29, 2023 October 29, 2022 ASSETS Current assets: Cash and cash equivalents $ 1,117,922 $ 994,352 Short-term investments 141,843 153,989 Accounts receivable, net 997,373 920,772 Inventories 1,192,522 946,730 Prepaid expenses and other 361,692 370,053 Total current assets 3,811,352 3,385,896 Long-term investments 21,098 35,385 Equipment, building, furniture and fixtures, net 287,455 267,779 Operating lease right-of-use assets 40,482 45,108 Goodwill 446,596 328,322 Other intangible assets, net 219,085 69,517 Deferred tax asset, net 792,299 824,008 Other long-term assets 104,847 113,617 Total assets $ 5,723,214 $ 5,069,632 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $ 393,144 $ 516,047 Accrued liabilities and other short-term obligations 355,622 360,782 Deferred revenue 188,104 137,899 Operating lease liabilities 16,941 18,925 Current portion of long-term debt 11,930 6,930 Total current liabilities 965,741 1,040,583 Long-term deferred revenue 71,873 62,336 Other long-term obligations 156,893 150,335 Long-term operating lease liabilities 37,800 42,392 Long-term debt, net 1,543,900 1,061,125 Total liabilities 2,776,207 2,356,771 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; 148,772,513 and 148,412,943 shares issued and outstanding 1,488 1,484 Additional paid-in capital 6,425,899 6,390,252 Accumulated other comprehensive loss (11,778 ) (46,645 ) Accumulated deficit (3,468,602 ) (3,632,230 ) Total stockholders’ equity 2,947,007 2,712,861 Total liabilities and stockholders’ equity $ 5,723,214 $ 5,069,632 CIENA CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (unaudited) Nine Months Ended July 29, July 30, 2023 2022 Cash flows used in operating activities: Net income $ 163,628 $ 95,257 Adjustments to reconcile net income to net cash used in operating activities: Depreciation of equipment, building, furniture and fixtures, and amortization of leasehold improvements 69,213 68,280 Share-based compensation expense 95,405 77,827 Amortization of intangible assets 36,274 36,521 Deferred taxes (64,005 ) (19,824 ) Provision for inventory excess and obsolescence 18,767 12,038 Provision for warranty 18,860 12,416 Gain on cost method equity investments, net (26,368 ) (4,120 ) Other 13,694 3,678 Changes in assets and liabilities: Accounts receivable (80,399 ) 74,478 Inventories (262,345 ) (464,664 ) Prepaid expenses and other 72,062 (39,805 ) Operating lease right-of-use assets 11,003 12,504 Accounts payable, accruals and other obligations (133,880 ) (37,587 ) Deferred revenue 57,547 34,949 Short and long-term operating lease liabilities (16,596 ) (15,197 ) Net cash used in operating activities (27,140 ) (153,249 ) Cash flows used in investing activities: Payments for equipment, furniture, fixtures and intellectual property (83,422 ) (66,908 ) Purchases of investments (119,240 ) (614,333 ) Proceeds from sales and maturities of investments 150,646 460,000 Settlement of foreign currency forward contracts, net (3,272 ) 4,450 Purchase of cost method equity investments — (8,000 ) Acquisition of business, net of cash acquired (230,048 ) (62,043 ) Net cash used in investing activities (285,336 ) (286,834 ) Cash flows provided by (used in) financing activities: Proceeds from issuance of senior notes — 400,000 Proceeds from issuance of term loan, net 497,500 — Payment of long term debt (6,448 ) (3,465 ) Payment of debt issuance costs (5,422 ) (5,159 ) Payment of finance lease obligations (2,830 ) (2,555 ) Shares repurchased for tax withholdings on vesting of stock unit awards (29,794 ) (41,280 ) Repurchases of common stock - repurchase program (57,736 ) (487,792 ) Proceeds from issuance of common stock 31,276 30,224 Net cash provided by (used in) financing activities 426,546 (110,027 ) Effect of exchange rate changes on cash, cash equivalents and restricted cash 9,501 (12,780 ) Net increase (decrease) in cash, cash equivalents and restricted cash 123,571 (562,890 ) Cash, cash equivalents and restricted cash at beginning of period 994,378 1,422,604 Cash, cash equivalents and restricted cash at end of period $ 1,117,949 $ 859,714 Supplemental disclosure of cash flow information Cash paid during the period for interest $ 56,709 $ 24,823 Cash paid during the period for income taxes, net $ 68,058 $ 28,593 Operating lease payments $ 18,038 $ 16,342 Non-cash investing and financing activities Purchase of equipment in accounts payable $ 4,579 $ 9,320 Repurchase of common stock in accrued liabilities from repurchase program $ 3,500 $ 5,000 Operating right-of-use assets subject to lease liability $ 9,771 $ 8,226 Gain on cost method equity investments, net $ 26,368 $ 4,120 APPENDIX A - Reconciliation of Adjusted (Non- GAAP) Measurements (in thousands, except per share data) (unaudited) Quarter Ended July 29, July 30, 2023 2022 Gross Profit Reconciliation (GAAP/non-GAAP) GAAP gross profit $ 448,941 $ 340,779 Share-based compensation-products 1,118 1,002 Share-based compensation-services 2,687 1,940 Amortization of intangible assets 3,187 3,140 Total adjustments related to gross profit 6,992 6,082 Adjusted (non-GAAP) gross profit $ 455,933 $ 346,861 Adjusted (non-GAAP) gross profit percentage 42.7 % 40.0 % Operating Expense Reconciliation (GAAP/non-GAAP) GAAP operating expense $ 370,727 $ 313,672 Share-based compensation-research and development 10,954 8,233 Share-based compensation-sales and marketing 8,770 8,075 Share-based compensation-general and administrative 9,377 7,579 Significant asset impairments and restructuring costs 4,174 7,692 Amortization of intangible assets 9,487 8,919 Acquisition and integration costs 59 35 Total adjustments related to operating expense 42,821 40,533 Adjusted (non-GAAP) operating expense $ 327,906 $ 273,139 Income from Operations Reconciliation (GAAP/non-GAAP) GAAP income from operations $ 78,214 $ 27,107 Total adjustments related to gross profit 6,992 6,082 Total adjustments related to operating expense 42,821 40,533 Total adjustments related to income from operations 49,813 46,615 Adjusted (non-GAAP) income from operations $ 128,027 $ 73,722 Adjusted (non-GAAP) operating margin percentage 12.0 % 8.5 % Net Income Reconciliation (GAAP/non-GAAP) GAAP net income $ 29,733 $ 10,512 Exclude GAAP provision for income taxes 34,608 4,319 Income before income taxes 64,341 14,831 Total adjustments related to income from operations 49,813 46,615 Loss on cost method equity investment 87 — Adjusted income before income taxes 114,241 61,446 Non-GAAP tax provision on adjusted income before income taxes 25,133 12,412 Adjusted (non-GAAP) net income $ 89,108 $ 49,034 Weighted average basic common shares outstanding 149,690 149,862 Weighted average dilutive potential common shares outstanding 1 149,977 150,463 Net Income per Common Share GAAP diluted net income per potential common share $ 0.20 $ 0.07 Adjusted (non-GAAP) diluted net income per potential common share $ 0.59 $ 0.33 1 Weighted average dilutive potential common shares outstanding used in calculating Adjusted (non-GAAP) diluted net income per potential common share includes the following number of shares underlying certain stock option and stock unit awards: (i) 0.3 million for the third quarter of fiscal 2023; and (ii) 0.6 million for the third quarter of fiscal 2022. APPENDIX B - Calculation of EBITDA and Adjusted EBITDA (unaudited) (in thousands) (unaudited) Quarter Ended July 29, July 30, 2023 2022 Earnings Before Interest, Tax, Depreciation and Amortization (EBITDA) Net income (GAAP) $ 29,733 $ 10,512 Add: Interest expense 24,060 12,642 Less: Interest and other income, net 10,187 366 Add: Provision for income taxes 34,608 4,319 Add: Depreciation of equipment, building, furniture and fixtures, and amortization of leasehold improvements 23,310 22,250 Add: Amortization of intangible assets 12,674 12,059 EBITDA $ 114,198 $ 61,416 Add: Share-based compensation cost 32,906 26,857 Add: Significant asset impairments and restructuring costs 4,174 7,692 Add: Acquisition and integration costs 59 35 Adjusted EBITDA $ 151,337 $ 96,000 * * * The adjusted (non-GAAP) measures above and their reconciliation to Ciena's GAAP results for the periods presented reflect adjustments relating to the following items: Share-based compensation - a non-cash expense incurred in accordance with share-based compensation accounting guidance. Significant asset impairments and restructuring costs - costs incurred as a result of restructuring activities taken to align resources with perceived market opportunities, and the redesign of business processes including restructuring certain real estate facilities. Amortization of intangible assets - a non-cash expense arising from the acquisition of intangible assets, principally developed technologies and customer-related intangibles, that Ciena is required to amortize over its expected useful life. Acquisition and integration costs - primarily consist of financial, legal and accounting advisors' costs and employment-related costs related to Ciena's acquisitions in fiscal 2022 and fiscal 2023. Loss on cost method equity investment - reflects changes in the carrying value of a certain cost method equity investment due to triggering events. Non-GAAP tax provision - consists of current and deferred income tax expense commensurate with the level of adjusted income before income taxes and utilizes a current, blended U.S. and foreign statutory annual tax rate of 22.0% for the third fiscal quarter of 2023 and 20.2% for the third fiscal quarter of 2022. 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/20230830958357/en/
Press Contact: Jamie Moody Ciena Corporation +1 (410) 694-5761 pr@ciena.com Investor Contact: Gregg Lampf Ciena Corporation +1 (877) 243-6273 ir@ciena.com