San Jose, Calif. – May 14, 2024, 4:05 p.m. ET – Infinera Corporation (NASDAQ:INFN, news, filings) today released preliminary financial results for its first quarter ended March 30, 2024. Although presented with numerical specificity, all amounts in this press release are preliminary and based on management’s current expectations as of the date of this press release. These results are subject to all aspects of the final quarterly review process and may change as a result of new information that arises, or new determinations that are made, in this process.
GAAP revenue for the quarter was $306.9 million compared to $453.5 million in the fourth quarter of 2023 and $392.1 million in the first quarter of 2023.
GAAP gross margin for the quarter was 36.0% compared to 38.6% in the fourth quarter of 2023 and 37.5% in the first quarter of 2023. GAAP operating margin for the quarter was (14.0)% compared to 2.5% in the fourth quarter of 2023 and (2.4)% in the first quarter of 2023.
GAAP net loss for the quarter was $(61.4) million, or $(0.27) per diluted share, compared to net income of $12.9 million, or $0.06 per diluted share, in the fourth quarter of 2023, and net loss of $(8.4) million, or $(0.04) per diluted share, in the first quarter of 2023.
Non-GAAP gross margin for the quarter was 36.6% compared to 39.6% in the fourth quarter of 2023 and 38.8% in the first quarter of 2023. Non-GAAP operating margin for the quarter was (8.4)% compared to 7.2% in the fourth quarter of 2023 and 3.5% in the first quarter of 2023.
Non-GAAP net loss for the quarter was $(38.3) million, or $(0.17) per diluted share, compared to non-GAAP net income of $28.6 million, or $0.12 per diluted share, in the fourth quarter of 2023, and non-GAAP net income of $5.7 million, or $0.02 per diluted share, in the first quarter of 2023.
Generated $24.0 million of operating cash flow and free cash flow of $16.0 million for the quarter, and ended the quarter with cash, cash equivalents and restricted cash at $192.2 million.
A further explanation of the use of non-GAAP financial information and a reconciliation of each of the non-GAAP financial measures to the most directly comparable GAAP financial measure can be found at the end of this press release.
Infinera CEO, David Heard said “Q1 2024 was an important quarter for us marked by significant customer, RFP, and design-win momentum, but also a quarter where the industry was challenged as customers held back spending and pushed out projects. Our bookings were up year-over-year, and met our plan, with the multi-year revenue opportunity associated with our design wins representing potentially the largest in the company’s history. During the quarter, we gained further traction with our new GX line system, won major awards with our ICE-X pluggables, and launched ICE-D, a new line of intra-datacenter solutions with the potential to drive dramatic power reductions, especially for artificial intelligence (AI) workloads.”
“On the operational front, our preliminary expectation is that revenue came in 4% below our outlook range, while all other key financial metrics were within the outlook range. We believe that the first half of the year represents the bottom of a demand cycle for the optical industry, and we expect to see improvements in the back half of the year leading to a very strong demand cycle in 2025. With key industry trends that include the penetration of fiber optics deeper into networks, proliferation of datacenters and AI workloads, and a record number of cables being laid underneath the ocean, we believe optical networking and related technologies have never been more important.”
Financial Outlook
Infinera’s outlook for the quarter ending June 29, 2024, is as follows:
- Revenue is expected to be $330 million +/- $20 million.
- GAAP gross margin is expected to be 38.5% +/- 150 bps. Non-GAAP gross margin is expected to be 39.5% +/- 150 bps.
- GAAP operating expenses are expected to be $162.5 million +/- $1.5 million. Non-GAAP operating expenses are expected to be $139.5 million +/- $1.5 million.
- GAAP operating margin is expected to be (11.5)% +/- 300 bps. Non-GAAP operating margin is expected to be (3.5)% +/- 300 bps.
- GAAP net loss per share is expected to be $(0.21) +/- $0.04. Non-GAAP net loss per share is expected to be $(0.09) +/- $0.04.
First Quarter 2024 Investor Slides to be Made Available Online After the Filing of Form 10-Q
Investor slides reviewing Infinera’s first quarter of 2024 financial results will be furnished to the U.S. Securities and Exchange Commission (SEC) on a Current Report on Form 8-K and published on Infinera’s Investor Relations website after filing its Form 10-Q.
Conference Call Information
Infinera will host a conference call for analysts and investors to discuss its preliminary results for the first quarter of 2024 and its outlook for the second quarter of 2024 today at 5:00 p.m. Eastern Time (2:00 p.m. Pacific Time). Interested parties may register for the conference call at https://events.q4inc.com/attendee/155487025 or dial in at (888) 330-2398, conference ID 60869. A live webcast of the conference call will also be accessible from the Events section of Infinera’s website at investors.infinera.com. Replay of the audio webcast will be available at investors.infinera.com approximately two hours after the end of the live call.
The full press release, including the Condensed Consolidated Statements of Operations, GAAP to Non-GAAP Reconciliations, Condensed Consolidated Balance Sheets, Condensed Consolidated Statements of Cash Flows, Supplemental Financial Information, and GAAP to Non-GAAP Reconciliation of Financial Outlook is also available.
Contacts:
Media:
Anna Vue
Tel. +1 (916) 595-8157
avue@infinera.com
Investors:
Amitabh Passi
Head of Investor Relations
Tel. +1 (669) 295-1489
apassi@infinera.com
About Infinera
Infinera is a global supplier of innovative open optical networking solutions and advanced optical semiconductors that enable carriers, cloud operators, governments, and enterprises to scale network bandwidth, accelerate service innovation, and automate network operations. Infinera solutions deliver industry-leading economics and performance in long-haul, submarine, data center interconnect, and metro transport applications. To learn more about Infinera, visit www.infinera.com, follow us on X and LinkedIn, and subscribe for updates.
Infinera and the Infinera logo are registered trademarks of Infinera Corporation.
Forward-Looking Statements
This press release contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements generally relate to future events or Infinera’s future financial or operating performance. In some cases, you can identify forward-looking statements because they contain words such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “should,” “will,” and “would” or the negative of these words or similar terms or expressions that concern Infinera’s expectations, strategy, priorities, plans or intentions. Forward-looking statements in this press release include, but are not limited to, statements regarding the Company’s preliminary financial results for the first quarter of fiscal 2024; Infinera’s future business plans, strategy and growth opportunities; statements about design wins; expectations regarding industry demand and key industry trends; expectations regarding Infinera’s future performance; and Infinera’s financial outlook for the second quarter of 2024.
Infinera’s financial results for the first quarter of fiscal year 2024 are subject to all aspects of the final quarterly review process and may change as a result of new information that arises, or new determinations that are made, in this process.
These forward-looking statements are based on estimates and information available to Infinera as of the date hereof and are not guarantees of actual or future performance; actual results could differ materially from those stated or implied due to risks and uncertainties. The risks and uncertainties that could cause Infinera’s results to differ materially from those expressed or implied by such forward-looking statements include demand growth for additional network capacity and the level and timing of customer capital spending and excess inventory held by customers beyond normalized levels; delays in the development, introduction or acceptance of new products or in releasing enhancements to existing products; aggressive business tactics by Infinera’s competitors and new entrants and Infinera’s ability to compete in a highly competitive market; supply chain and logistics issues, including delays, shortages, components that have been discontinued and increased costs, and Infinera’s dependency on sole source, limited source or high-cost suppliers; dependence on a small number of key customers; product performance problems; the complexity of Infinera’s manufacturing process; Infinera’s ability to identify, attract, upskill and retain qualified personnel; challenges with our contract manufacturers and other third-party partners; the effects of customer and supplier consolidation; dependence on third-party service partners; Infinera’s ability to respond to rapid technological changes; failure to accurately forecast Infinera’s manufacturing requirements or customer demand; the effects of public health emergencies; Infinera’s future capital needs and its ability to generate the cash flow or otherwise secure the capital necessary to meet such capital needs; the effect of global and regional economic conditions on Infinera’s business, including effects on purchasing decisions by customers; the adverse impact inflation and higher interest rates may have on Infinera by increasing costs beyond what it can recover through price increases; restrictions to our operations resulting from loan or other credit agreements; the impacts of any restructuring plans or other strategic efforts on our business; Infinera’s international sales and operations; the impacts of foreign currency fluctuations; the effective tax rate of Infinera, which may increase or fluctuate; potential dilution from the issuance of additional shares of common stock in connection with the conversion of Infinera’s convertible senior notes; Infinera’s ability to protect its intellectual property; claims by others that Infinera infringes on their intellectual property rights; security incidents, such as data breaches or cyber-attacks; Infinera’s ability to comply with various rules and regulations, including with respect to export control and trade compliance, environmental, social, governance, privacy and data protection matters; events that are outside of Infinera’s control, such as natural disasters, acts of war or terrorism, or other catastrophic events that could harm Infinera’s operations; Infinera’s ability to remediate its recently disclosed material weaknesses in internal control over financial reporting in a timely and effective manner, and other risks and uncertainties detailed in Infinera’s SEC filings from time to time; and statements of assumptions underlying any of the foregoing. More information on potential factors that may impact Infinera’s business are set forth in Infinera’s period reports filed with the SEC, including its Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC on February 27, 2023, and amended February 29, 2024, and its Quarterly Report on Form 10-Q for the quarter ended September 30, 2023, filed with the SEC on February 29, 2024, as well as subsequent reports filed with or furnished to the SEC from time to time. These SEC filings are available on Infinera’s website at www.infinera.com and the SEC’s website at www.sec.gov. Infinera assumes no obligation to, and does not currently intend to, update any such 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 financial measures that exclude in certain cases stock-based compensation expense, amortization of acquired intangible assets, restructuring and other related costs, warehouse fire recovery, foreign exchange (gains) losses, net, and income tax effects. Infinera believes these adjustments are appropriate to enhance an overall understanding of its underlying financial performance and also its prospects for the future and are considered by management for the purpose of making operational decisions. In addition, the non-GAAP financial measures presented in this press release are the primary indicators management uses as a basis for its 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 gross margin, operating expenses, operating margin, net income (loss) and net income (loss) per common share 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 and a reconciliation to the most directly comparable GAAP financial measures, please see the table titled “GAAP to Non-GAAP Reconciliations” and related footnotes.
Infinera has included forward-looking non-GAAP information in this press release, including an estimate of certain non-GAAP financial measures for the second quarter of 2024 that excludes stock-based compensation expense, amortization of acquired intangible assets and restructuring and other related costs. Please see the section titled “GAAP to Non-GAAP Reconciliation of Financial Outlook” below for specific adjustments.
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