Announces Intent to Acquire Packet Design to Accelerate Automation Software Strategy
HANOVER, Md. – May 31, 2018 – Ciena® Corporation (NYSE: CIEN)
- Q2 Revenue: $730.0 million, increasing 3% year over year
- Q2 Net Income per Share:$0.09 GAAP; $0.23 adjusted (non-GAAP)
- Share Repurchases: Repurchased approximately 1.4 million shares of common stock for an aggregate price of $33.4 million during the quarte
Ciena, a network strategy and technology company, today announced unaudited financial results for its fiscal second quarter ended April 30, 2018.
Ciena President and CEO Gary B. Smith remarked: “We delivered strong revenue and record order flow in the second quarter as we continue to broaden our leadership and capture market share. Gross margin was impacted by several new, international service provider deployments in their early stages; however, we are confident in our ability to return to our normalized gross margin levels. We anticipate strong revenue growth in the second half of fiscal 2018 and we remain confident in our three-year financial targets.
For the fiscal second quarter 2018, Ciena reported revenue of $730.0 million as compared to $707.0 million for the fiscal second quarter 2017
Ciena’s GAAP net income for the fiscal second quarter 2018 was $13.9 million, or $0.09 per diluted common share, which compares to a GAAP net income of $38.0 million, or $0.25 per diluted common share, for the fiscal second quarter 2017.
Ciena’s adjusted (non-GAAP) net income for the fiscal second quarter 2018 was $33.8 million, or $0.23 per diluted common share, which compares to an adjusted (non-GAAP) net income of $48.2 million, or $0.30 per diluted common share, for the fiscal second quarter 2017.
Fiscal Second Quarter 2018 Performance Summary
The tables below (in millions, except percentage data) provide comparisons of certain quarterly results to the prior year. Appendix A and B set forth reconciliations between the GAAP and adjusted (non-GAAP) measures contained in this release.
|FY 2018||FY 2017||Y-T-Y*|
|FY 2018||FY 2017||Y-T-Y*|
|Adj. gross margin||40.7||%||45.7||%||(5.0||)%|
|Adj. operating expense||$||240.6||$||234.6||2.6||%|
|Adj. operating margin||7.7||%||12.5||%||(4.8||)%|
* Denotes % change, or in the case of margin, absolute change
|Revenue by Segment|
|Q2 FY 2018||Q2 FY 2017|
|Converged Packet Optical||$||527.9||72.4||$||505.2||71.4|
|Total Networking Platforms||591.7||81.1||571.5||80.8|
|Software and Software-Related Services|
|Total Software and Software-Related Services||38.7||5.3||37.7||5.4|
|Maintenance Support and Training||60.9||8.3||58.2||8.2|
|Installation and Deployment||28.2||3.9||28.7||4.1|
|Consulting and Network Design||10.5||1.4||10.9||1.5|
|Total Global Services||99.6||13.6||97.8||13.8|
Additional Performance Metrics for Fiscal Second Quarter 2018
|Revenue by Geographic Region|
|Q2 FY 2018||Q2 FY 2017|
|Revenue||% **||Revenue||% **|
|Europe, Middle East and Africa||121.7||16.7||105.8||15.0|
|Caribbean and Latin America||25.1||3.4||33.9||4.8|
** Denotes % of total revenue
- S. customers contributed 53.8% of total revenue
- One customer accounted for greater than 10% of revenue and represented 12% of total revenue
- Cash and investments totaled $979.6 million
- Cash flow from operations totaled $37.4 million
- Free cash flow totaled $31.1 million
- Average days’ sales outstanding (DSOs) were 80
- Accounts receivable balance was $647.4 million
- Inventories totaled $231.3 million, including:
- Raw materials: $48.4 million
- Work in process: $13.2 million
- Finished goods: $165.7 million
- Deferred cost of sales: $55.2 million
- Reserve for excess and obsolescence: $(51.2) million
- Product inventory turns were 6.4
- Headcount totaled 5,688
Acquisition of Packet Design
Ciena also announced today that it has entered into a definitive agreement to acquire privately-held Packet Design, LLC, a provider of network performance management software focused on Layer 3 network optimization, topology and route analytics. The acquisition is intended to accelerate Ciena’s Blue Planet software strategy, extending its intelligent automation capabilities into IP with critical new features that help customers optimize service delivery and maximize network utilization.
Supplemental Materials and Live Web Broadcast of Unaudited Fiscal Second Quarter 2018 Results
Today, Thursday, May 31, 2018, in conjunction with this announcement, Ciena has posted to the Quarterly Results page of the Investor Relations section of its website supporting materials for its unaudited fiscal second quarter 2018 results.
Ciena’s management will also host a discussion today with investors and financial analysts that will include the Company’s fiscal second quarter 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, 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 strong revenue and record order flow in the second quarter as we continue to broaden our leadership and capture market share.”; “Gross margin was impacted by several new, international service provider deployments in their early stages; however, we are confident in our ability to return to our normalized gross margin levels.”; “We anticipate strong revenue growth in the second half of fiscal 2018 and we remain confident in our three-year financial targets.”
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; changes in network spending or network strategy by large communication service providers; seasonality and the timing and size of customer orders, including our ability to recognize revenue relating to such sales; the level of competitive pressure we encounter; the product, customer and geographic mix of sales within the period; supply chain disruptions and the level of success relating to efforts to optimize Ciena’s operations; changes in foreign currency exchange rates affecting revenue and operating expense; the impact of the Tax Cuts and Jobs Act, changes in estimates of prospective income tax rates and any adjustments to Ciena’s provisional estimates whether related to further guidance, analysis or otherwise, and the other risk factors disclosed in Ciena’s periodic reports filed with the Securities and Exchange Commission, including its Quarterly Report on Form 10-Q filed with the SEC on March 7, 2018 and its Annual Report on Form 10-K filed with the SEC on December 22, 2017. 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, Appendix 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 (NASDAQ:CIEN, news, filings) is a network strategy and technology company. We translate best-in-class technology into value through a high-touch, consultative business model – with a relentless drive to create exceptional experiences measured by outcomes. For updates on Ciena, follow us on Twitter @Ciena, LinkedIn, the Ciena Insights blog, or visit www.ciena.com.
Ciena Announces Intent to Acquire Packet Design
Enhances Blue Planet intelligent automation platform with IP capabilities critical in building more adaptive networks
HANOVER, Md. — May 31, 2018 – Ciena® Corporation (NYSE: CIEN) has entered into a definitive agreement to acquire privately-held Packet Design, LLC, a provider of network performance management software focused on Layer 3 network optimization, topology and route analytics.
The acquisition of Packet Design will help accelerate Ciena’s Blue Planet software strategy by extending its intelligent automation capabilities beyond Layers 0-2 and into IP with critical new capabilities to help customers optimize service delivery and maximize network utilization. Specifically, the combination of the Blue Planet software platform and Packet Design’s performance analytics and service path computation capabilities will form a unique, micro-services-based platform that delivers real-time analytics, optimization and orchestration capabilities to support the broadest range of closed-loop automation use cases across multi-layer, multi-vendor networks.
“Blue Planet is already one of the premier brands in the network automation space. The addition of Packet Design will enhance our position by enabling customers to realize networks that are more adaptive – capable of self-optimizing and self-healing for faster time-to-market for new services, more efficient and lower cost network operations, and the ability to deliver an overall better customer experience,” said Rick Hamilton, senior vice president of Global Software and Services at Ciena.
The transaction is expected to close during Ciena’s fiscal third quarter 2018 and is subject to customary closing conditions.