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Press Release -- October 18th, 2010
Source: Infinera
Tags: 100G, Earnings, Ethernet, Exchange

Infinera Corporation Reports Third Quarter 2010 Financial Results

Revenue of $130.1 Million on Year-Over-Year Growth of 56%; Non-GAAP Profit of $0.18 per Diluted Share; Non-GAAP Gross Margin at 51%

Sunnyvale, CA, October 18, 2010 - Infinera Corporation (NASDAQ:INFN, news, filings), a leading provider of digital optical communications systems, today released financial results for the third quarter ended September 25, 2010.

  • GAAP revenues for the quarter were $130.1 million compared to $111.4 million in the second quarter of 2010 and $83.4 million in the third quarter of 2009, representing year-over-year growth of 56%.
  • GAAP gross margins for the quarter were 50% compared to 42% in the second quarter of 2010 and 33% in the third quarter of 2009.  GAAP net income for the quarter was $4.4 million, or $0.04 per basic and diluted share, compared to a net loss of $9.6 million, or $(0.10) per share, in the second quarter of 2010 and a net loss of $16.5 million, or $(0.17) per share, in the third quarter of 2009.
  • Non-GAAP gross margins for the quarter were 51% compared to 44% in the second quarter of 2010 and 38% in the third quarter of 2009, which excludes restructuring and other related costs and non-cash stock-based compensation.  Non-GAAP net income for the quarter was $18.7 million, or $0.18 per diluted share, compared to net income of $3.0 million, or $0.03 per diluted share in the second quarter of 2010 and a net loss of $3.1 million, or $(0.03) per share, in the third quarter of 2009.

Management Commentary

"I am pleased with the outstanding financial performance delivered by the Infinera team in the third quarter," said Tom Fallon, president and chief executive officer. "We achieved new records for quarterly revenue,  gross margin and tributary adapter module shipments.  The stronger revenue, higher profit margins and ongoing operating expense control resulted in significant income leverage, with a non-GAAP operating income contribution of $18.5 million for the quarter. We believe this operating income contribution, combined with our achievement of 51% gross margin, validates our long-term business model and demonstrates the leverage that is achievable.

"We believe that our continued solid financial performance stems from our customers' confidence in Infinera's unique and differentiated PIC-based networks and our expanded product portfolio that provides the end-to-end solutions that they are demanding," continued Fallon.

The company also noted the following developments in the third quarter and more recently:

1. Positive cash from operations of $10.0 million;

2. TAM shipments of more than 3,000 units;

3. The addition of two new invoiced customers bringing its customer roster to 77;

4. The addition of six new ATN metro customers, bringing total ATN customers to 15;

5. The launch of new hardware and software products for the company’s DTN and ATN platforms that enable a new end-to-end "Digital OTN" solution; and

6. Two important technical demonstrations, including:

  • PIC-based 100 Gigabit per second (100G) coherent transmission and reception over a 1,348 kilometer route on an XO Communications nationwide network on a production Infinera line system, and
  • 100 Gigabit Ethernet services over Colt’s existing London to Frankfurt Infinera network.

Conference Call Information:

Infinera will host a conference call for analysts and investors to discuss its third quarter results and fourth quarter outlook today at 5:00 p.m. Eastern Time (2:00 p.m. Pacific Time).  A live webcast of the conference call will also be accessible from the "Investor Relations" section of the company's website at www.infinera.com.  Following the webcast, an archived version will be available on the website for 90 days. To hear the replay, parties in the United States and Canada should call 1-866-380-8126.  International parties can access the replay at 1-203-369-0357.

Infinera Q310 GAAP Condensed Consolidated Statements of Operations
Infinera Q310 GAAP to Non-GAAP Reconciliation
Infinera Q310 Condensed Consolidated Balance Sheets
Infinera Q310 Condensed Consolidated Statements of Cash Flows
Infinera Q310 Supplemental Financial Information


About Infinera

Infinera provides Digital Optical Networking systems to telecommunications carriers worldwide.  Infinera's systems are unique in their use of a breakthrough semiconductor technology: the photonic integrated circuit (PIC). Infinera's systems and PIC technology are designed to provide customers with simpler and more flexible engineering and operations, faster time-to-service, and the ability to rapidly deliver differentiated services without reengineering their optical infrastructure. For more information, please visit www.infinera.com.

Forward-Looking Statements

This press release contains forward-looking statements, including statements about our belief in the power and achievement of our long-term business model, our belief in our customers' confidence in our PIC-based networks and expanded product portfolio, and our belief that the quarterly results validates our long-term business model and demonstrates the leverage that is achievable. These forward-looking statements involve risks and uncertainties, as well as assumptions that if they do not fully materialize or prove incorrect, could cause our results to differ materially from those expressed or implied by such forward-looking statements. The risks and uncertainties that could cause our results to differ materially from those expressed or implied by such forward-looking statements include our ability to react to trends and challenges in our business and the markets in which we operate; our ability to anticipate market needs and develop new or enhanced products to meet those needs; the adoption rate of our products; our ability to establish and maintain successful relationships with our customers; our ability to reduce customer concentration; our ability to compete in our industry; fluctuations in demand, sales cycles and prices for our products and services; shortages or price fluctuations in our supply chain; our ability to protect our intellectual property rights; general political, economic and market conditions and events; and other risks and uncertainties described more fully in our documents filed with or furnished to the U.S. Securities and Exchange Commission (SEC).  More information about these and other risks that may impact Infinera's business are set forth in our annual report on Form 10-K, which was filed with the SEC on March 1, 2010, as well as subsequent reports filed with the SEC. All forward-looking statements in this press release are based on information available to us as of the date hereof, and we assume no obligation to update these forward-looking statements.

Use of Non-GAAP financial information

In addition to disclosing financial measures prepared in accordance with U.S. Generally Accepted Accounting Principles (GAAP), this press release and the accompanying tables contain certain non-GAAP measures that exclude non-cash stock-based compensation expenses and non-recurring restructuring and other related costs.  We believe these adjustments are appropriate to enhance an overall understanding of our underlying financial performance and also our prospects for the future and are considered by management for the purpose of making operational decisions. In addition, these results are the primary indicators management uses as a basis for our planning and forecasting of future periods. The presentation of this additional information is not meant to be considered in isolation or as a substitute for net income (loss), basic and diluted net income (loss) per share, or gross margin prepared in accordance with GAAP.  Non-GAAP financial measures are not based on a comprehensive set of accounting rules or principles and are subject to limitations.  For a description of these non-GAAP financial measures to the most directly comparable GAAP financial measures, please see the section titled, "GAAP to Non-GAAP Reconciliations."  We anticipate disclosing forward-looking non-GAAP information in our conference call to discuss our third quarter 2010 results, including an estimate of non-GAAP earnings for the fourth quarter of 2010 that excludes non-cash stock-based compensation expenses.

A copy of this press release can be found on the investor relations page of Infinera's website at www.infinera.com.

Infinera Corporation and the Infinera logo are trademarks or registered trademarks of Infinera Corporation. All other trademarks used or mentioned herein belong to their respective owners.

Contacts:
Press:

Jeff Ferry

Investors/Analysts:

Bob Blair

jferry@infinera.com bblair@infinera.com
Infinera Corporation Infinera Corporation
408-572-5213 408-716-4879

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