8-K
CIENA CORP (CIEN)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of report (Date of earliest event reported): December 7, 2023
Ciena Corporation
(Exact name of registrant as specified in its charter)
Commission File Number: 001-36250
Delaware
(State or other jurisdiction of incorporation)
7035 Ridge Road, Hanover, MD
(Address of principal executive offices)
23-2725311
(IRS Employer Identification No.)
21076
(Zip Code)
Registrant's telephone number, including area code: (410) 694-5700
Not Applicable
(Former name or former address, if changed since last report)
| Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below): | |||||
|---|---|---|---|---|---|
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | ||||
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | ||||
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | ||||
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) | Securities registered pursuant to Section 12(b) of the Act: | |||
| --- | --- | --- | |||
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | |||
| Common stock, $0.01 par value | CIEN | New York Stock Exchange |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
ITEM 2.02 – RESULTS OF OPERATIONS AND FINANCIAL CONDITION
On December 7, 2023, Ciena Corporation ("Ciena") issued a press release announcing its financial results for its fiscal fourth quarter ended October 28, 2023. The text of the press release is furnished as Exhibit 99.1 to this Report. As discussed in this press release, Ciena will be hosting an investor call to discuss its results of operations for its fiscal fourth quarter ended October 28, 2023.
In conjunction with the issuance of this press release, Ciena posted to the quarterly results page of the Investors section of www.ciena.com an accompanying investor presentation. The investor presentation is furnished as Exhibit 99.2 to this Report.
The information in Exhibits 99.1 and 99.2, as well as Item 2.02 of this Report, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section, and shall not be incorporated by reference into any registration statement pursuant to the Securities Act of 1933, as amended. Investors are encouraged to review the “Investors” page of our website at www.ciena.com because, as with the other disclosure channels that we use, from time to time we may post material information exclusively on that site.
ITEM 9.01 – FINANCIAL STATEMENTS AND EXHIBITS
| Exhibit Number | Description of Document |
|---|---|
| Exhibit 99.1 | Text of Press Release dated December 7, 2023, issued by Ciena Corporation, reporting its results of operations for its fiscal fourth quarter ended October 28, 2023. |
| Exhibit 99.2 | Investor Presentation for Ciena Corporation'sfiscalex9922023q4earningsprese.htmfourthquarter endedOctober28, 2023. |
| Exhibit 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). |
SIGNATURES
| Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. | ||
|---|---|---|
| Ciena Corporation | ||
| --- | --- | --- |
| Date: December 7, 2023 | By: | /s/ Sheela Kosaraju |
| Sheela Kosaraju | ||
| Senior Vice President, General Counsel and Assistant Secretary |
Document
FOR IMMEDIATE RELEASE
Ciena Reports Fiscal Fourth Quarter 2023 Financial Results
Annual revenue increased 21%
HANOVER, Md. - December 7, 2023 - Ciena® Corporation (NYSE: CIEN), a networking systems, services and software company, today announced unaudited financial results for its fiscal fourth quarter ended October 28, 2023.
•Q4 Revenue: $1.13 billion
•Q4 Net Income per Share: $0.62 GAAP; $0.75 adjusted (non-GAAP)
•Share Repurchases: Repurchased approximately 4.2 million shares of common stock for an aggregate price of $188.8 million during the quarter
"Today we reported strong fiscal fourth quarter results, driven by positive demand dynamics, particularly with cloud provider customers. We delivered an outstanding fiscal year with 21% growth in revenue, gaining significant market share and further advancing our industry leadership position," said Gary Smith, president and CEO, Ciena. "Looking ahead, as we execute on our strategy to extend our market leadership in optical while expanding our opportunities in routing and switching, we expect to continue to grow revenue faster than the market and take share."
For fiscal fourth quarter 2023, Ciena reported revenue of $1.13 billion as compared to $971.0 million for the fiscal fourth quarter 2022. For fiscal year 2023, Ciena reported revenue of $4.39 billion, as compared to $3.63 billion for fiscal year 2022.
Ciena's GAAP net income for the fiscal fourth quarter 2023 was $91.2 million, or $0.62 per diluted common share, which compares to a GAAP net income of $57.6 million, or $0.39 per diluted common share, for the fiscal fourth quarter 2022. For fiscal year 2023, Ciena's GAAP net income was $254.8 million, or $1.71 per diluted common share, as compared to GAAP net income of $152.9 million, or $1.00 per diluted common share, for fiscal year 2022.
Ciena's adjusted (non-GAAP) net income for the fiscal fourth quarter 2023 was $111.2 million, or $0.75 per diluted common share, which compares to an adjusted (non-GAAP) net income of $90.9 million, or $0.61 per diluted common share, for the fiscal fourth quarter 2022. For fiscal year 2023, Ciena's adjusted (non-GAAP) net income was $406.3, or $2.72 per diluted common share, as compared to adjusted (non-GAAP) net income of $288.9, or $1.90 per diluted common share, for fiscal year 2022.
Performance Summary For Fiscal Fourth Quarter and Year Ended October 28, 2023
The tables below (in millions, except percentage data) provide comparisons of certain quarterly and annual 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) | ||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Quarter Ended | Period | Year Ended | Period | |||||||||||||||||||||||||||||||
| October 28, | October 29, | Change | October 28, | October 29, | Change | |||||||||||||||||||||||||||||
| 2023 | 2022 | Y-T-Y* | 2023 | 2022 | Y-T-Y* | |||||||||||||||||||||||||||||
| Revenue | $ | 1,129.5 | $ | 971.0 | 16.3 | % | $ | 4,386.5 | $ | 3,632.7 | 20.8 | % | ||||||||||||||||||||||
| Gross margin | 43.1 | % | 44.7 | % | (1.6) | % | 42.8 | % | 43.0 | % | (0.2) | % | ||||||||||||||||||||||
| Operating expense | $ | 395.0 | $ | 356.3 | 10.9 | % | $ | 1,521.3 | $ | 1,337.5 | 13.7 | % | ||||||||||||||||||||||
| Operating margin | 8.1 | % | 8.0 | % | 0.1 | % | 8.2 | % | 6.1 | % | 2.1 | % | Non-GAAP Results (unaudited) | |||||||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | ||||||||||||||||||
| Quarter Ended | Period | Year Ended | Period | |||||||||||||||||||||||||||||||
| October 28, | October 29, | Change | October 28, | October 29, | Change | |||||||||||||||||||||||||||||
| 2023 | 2022 | Y-T-Y* | 2023 | 2022 | Y-T-Y* | |||||||||||||||||||||||||||||
| Revenue | $ | 1,129.5 | $ | 971.0 | 16.3 | % | $ | 4,386.5 | $ | 3,632.7 | 20.8 | % | ||||||||||||||||||||||
| Adj. gross margin | 43.7 | % | 45.2 | % | (1.5) | % | 43.5 | % | 43.6 | % | (0.1) | % | ||||||||||||||||||||||
| Adj. operating expense | $ | 337.6 | $ | 312.8 | 7.9 | % | $ | 1,332.8 | $ | 1,177.0 | 13.2 | % | ||||||||||||||||||||||
| Adj. operating margin | 13.8 | % | 13.0 | % | 0.8 | % | 13.1 | % | 11.2 | % | 1.9 | % | ||||||||||||||||||||||
| Adj. EBITDA | $ | 178.8 | $ | 153.5 | 16.5 | % | $ | 665.8 | $ | 502.4 | 32.5 | % |
* Denotes % change, or in the case of margin, absolute change
| Revenue by Segment (unaudited) | ||||||
|---|---|---|---|---|---|---|
| Quarter Ended | ||||||
| October 28, 2023 | October 29, 2022 | |||||
| Revenue | %** | Revenue | %** | |||
| Networking Platforms | ||||||
| Optical Networking 1 | $ | 748.0 | 66.2 | $ | 649.9 | 66.9 |
| Routing and Switching | 128.9 | 11.4 | 102.8 | 10.6 | ||
| Total Networking Platforms | 876.9 | 77.6 | 752.7 | 77.5 | ||
| Platform Software and Services | 82.1 | 7.3 | 71.6 | 7.4 | ||
| Blue Planet Automation Software and Services | 20.0 | 1.8 | 21.2 | 2.2 | ||
| Global Services | ||||||
| Maintenance Support and Training | 74.4 | 6.6 | 73.1 | 7.5 | ||
| Installation and Deployment | 60.1 | 5.3 | 36.9 | 3.8 | ||
| Consulting and Network Design | 16.0 | 1.4 | 15.5 | 1.6 | ||
| Total Global Services | 150.5 | 13.3 | 125.5 | 12.9 | ||
| Total | $ | 1,129.5 | 100.0 | $ | 971.0 | 100.0 |
| Revenue by Segment (unaudited) | ||||||
| --- | --- | --- | --- | --- | --- | --- |
| Year Ended | ||||||
| October 28, 2023 | October 29, 2022 | |||||
| Revenue | %** | Revenue | %** | |||
| Networking Platforms | ||||||
| Optical Networking 1 | $ | 2,987.3 | 68.1 | $ | 2,380.0 | 65.5 |
| Routing and Switching | 506.2 | 11.5 | 398.4 | 11.0 | ||
| Total Networking Platforms | 3,493.5 | 79.6 | 2,778.4 | 76.5 | ||
| Platform Software and Services | 303.9 | 6.9 | 277.2 | 7.6 | ||
| Blue Planet Automation Software and Services | 69.1 | 1.6 | 76.6 | 2.1 | ||
| Global Services | ||||||
| Maintenance Support and Training | 288.3 | 6.6 | 292.4 | 8.1 | ||
| Installation and Deployment | 181.0 | 4.1 | 157.4 | 4.3 | ||
| Consulting and Network Design | 50.7 | 1.2 | 50.7 | 1.4 | ||
| Total Global Services | 520.0 | 11.9 | 500.5 | 13.8 | ||
| Total | $ | 4,386.5 | 100.0 | $ | 3,632.7 | 100.0 |
** Denotes % of total revenue
1 Ciena renamed its former “Converged Packet Optical” product line “Optical Networking” effective as of the fourth quarter of fiscal 2023. This change, affecting only the presentation of such information, was made on a prospective basis and does not impact comparability of previous financial results or the composition of this product category.
Additional Performance Metrics for Fiscal Fourth Quarter and Year Ended October 28, 2023
| Revenue by Geographic Region (unaudited) | ||||||
|---|---|---|---|---|---|---|
| Quarter Ended | ||||||
| October 28, 2023 | October 29, 2022 | |||||
| Revenue | % ** | Revenue | % ** | |||
| Americas | $ | 801.4 | 71.0 | $ | 723.5 | 74.5 |
| Europe, Middle East and Africa | 164.1 | 14.5 | 135.1 | 13.9 | ||
| Asia Pacific | 164.0 | 14.5 | 112.4 | 11.6 | ||
| Total | $ | 1,129.5 | 100.0 | $ | 971.0 | 100.0 |
| Revenue by Geographic Region (unaudited) | ||||||
| --- | --- | --- | --- | --- | --- | --- |
| Year Ended | ||||||
| October 28, 2023 | October 29, 2022 | |||||
| Revenue | % ** | Revenue | % ** | |||
| Americas | $ | 3,110.3 | 70.9 | $ | 2,636.9 | 72.6 |
| Europe, Middle East and Africa | 643.1 | 14.7 | 555.2 | 15.3 | ||
| Asia Pacific | 633.1 | 14.4 | 440.6 | 12.1 | ||
| Total | $ | 4,386.5 | 100.0 | $ | 3,632.7 | 100.0 |
** Denotes % of total revenue
•Two customers represented 10%-plus of revenue for the fiscal fourth quarter 2023, combining for a total of 29.7% of revenue. Two customers represented 10%-plus of revenue for the fiscal year 2023, combining for a total of 23.4% of revenue.
•Cash and investments at the end of fiscal year 2023 totaled $1.25 billion
•Cash flow from operations totaled $195.5 million and $168.3 million for the fiscal fourth quarter and the fiscal year 2023, respectively
•Average days' sales outstanding (DSOs) were 92 and 95 for the fiscal fourth quarter and the fiscal year 2023, respectively
•Accounts receivable, net balance was $1.00 billion
•Unbilled contract assets, net balance was $150.3 million
•Inventories totaled $1.05 billion, including:
◦Raw materials: $664.8 million
◦Work in process: $55.2 million
◦Finished goods: $314.2 million
◦Deferred cost of sales: $66.6 million
◦Reserve for excess and obsolescence: $(50.0) million
•Product inventory turns were 2.0 for both the fiscal fourth quarter and the fiscal year 2023.
•Headcount totaled 8,483 at the end of fiscal year 2023
Supplemental Materials and Live Web Broadcast of Unaudited Fiscal Fourth Quarter 2023 Results
Today, Thursday, December 7, 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 fourth 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: "Today we reported strong fiscal fourth quarter results, driven by positive demand dynamics, particularly with cloud provider customers"; "We delivered an outstanding fiscal year with 21% growth in revenue, gaining significant market share and further advancing our industry leadership position"; "Looking ahead, as we execute on our
strategy to extend our market leadership in optical while expanding our opportunities in routing and switching, we expect to continue to grow revenue faster than the market and take share."
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, their spending and their businesses and markets; our ability to execute our business and growth strategies; the impact of macroeconomic conditions and global supply chain constraints or disruptions including increased supply costs and lead times; the impact of the introduction of new technologies by us or our competitors; seasonality and the timing and size of customer orders, their delivery dates and 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 tensions or events, including but not limited to the ongoing conflicts between Ukraine and Russia, and Israel and Hamas, and public health emergencies or epidemics, including the COVID-19 pandemic; changes in tax or trade regulations, including the imposition of tariffs, duties or efforts to withdraw from or materially modify international trade agreements; cyberattacks, data breaches or other security incidents involving our enterprise network environment or our products; regulatory changes, litigation involving our intellectual property or government investigations; and the other risk factors disclosed in Ciena’s periodic reports filed with the Securities and Exchange Commission (SEC) including Ciena's Quarterly Report on Form 10-Q filed with the SEC on September 6, 2023 and its Annual Report on Form 10-K 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 | Year Ended | |||||||
|---|---|---|---|---|---|---|---|---|
| October 28, | October 29, | October 28, | October 29, | |||||
| 2023 | 2022 | 2023 | 2022 | |||||
| Revenue: | ||||||||
| Products | $ | 902,797 | $ | 779,609 | $ | 3,581,039 | $ | 2,888,848 |
| Services | 226,690 | 191,401 | 805,510 | 743,813 | ||||
| Total revenue | 1,129,487 | 971,010 | 4,386,549 | 3,632,661 | ||||
| Cost of goods sold: | ||||||||
| Products | 529,320 | 440,253 | 2,088,440 | 1,699,631 | ||||
| Services | 113,886 | 97,160 | 419,258 | 372,686 | ||||
| Total cost of goods sold | 643,206 | 537,413 | 2,507,698 | 2,072,317 | ||||
| Gross profit | 486,281 | 433,597 | 1,878,851 | 1,560,344 | ||||
| Operating expenses: | ||||||||
| Research and development | 189,444 | 166,898 | 750,559 | 624,656 | ||||
| Selling and marketing | 123,648 | 121,865 | 490,804 | 466,565 | ||||
| General and administrative | 64,100 | 48,191 | 215,284 | 179,382 | ||||
| Significant asset impairments and restructuring costs | 7,209 | 13,621 | 23,834 | 33,824 | ||||
| Amortization of intangible assets | 10,578 | 5,754 | 37,351 | 32,511 | ||||
| Acquisition and integration costs | — | — | 3,474 | 598 | ||||
| Total operating expenses | 394,979 | 356,329 | 1,521,306 | 1,337,536 | ||||
| Income from operations | 91,302 | 77,268 | 357,545 | 222,808 | ||||
| Interest and other income, net | 11,297 | 1,887 | 62,008 | 6,747 | ||||
| Interest expense | (24,207) | (13,775) | (88,026) | (47,050) | ||||
| Loss on extinguishment and modification of debt | (7,874) | — | (7,874) | — | ||||
| Income before income taxes | 70,518 | 65,380 | 323,653 | 182,505 | ||||
| Provision (benefit) for income taxes1 | (20,681) | 7,735 | 68,826 | 29,603 | ||||
| Net income | $ | 91,199 | $ | 57,645 | $ | 254,827 | $ | 152,902 |
| Net Income per Common Share | ||||||||
| Basic net income per common share | $ | 0.62 | $ | 0.39 | $ | 1.71 | $ | 1.01 |
| Diluted net income per potential common share | $ | 0.62 | $ | 0.39 | $ | 1.71 | $ | 1.00 |
| Weighted average basic common shares outstanding | 147,437 | 148,548 | 148,971 | 151,208 | ||||
| Weighted average dilutive potential common shares outstanding 2 | 147,891 | 149,111 | 149,380 | 152,193 |
1 For the fourth quarter and year ended fiscal 2023, reflects a tax benefit resulting, in part, from guidance in Notice 2023-63 issued by the IRS addressing capitalization and amortization of specified research or experimental expenditures under Section 174 in accordance with the Tax Cuts and Jobs Act.
2 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) 0.5 million and 0.4 million shares for the fourth quarter and year ended fiscal 2023, respectively; and (ii) 0.6 million and 1.0 million shares for the fourth quarter and year ended fiscal 2022, respectively.
CIENA CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
(unaudited)
| October 28,<br>2023 | October 29,<br>2022 | |||
|---|---|---|---|---|
| ASSETS | ||||
| Current assets: | ||||
| Cash and cash equivalents | $ | 1,010,618 | $ | 994,352 |
| Short-term investments | 104,753 | 153,989 | ||
| Accounts receivable, net | 1,003,876 | 920,772 | ||
| Inventories, net | 1,050,838 | 946,730 | ||
| Prepaid expenses and other | 405,694 | 370,053 | ||
| Total current assets | 3,575,779 | 3,385,896 | ||
| Long-term investments | 134,278 | 35,385 | ||
| Equipment, building, furniture and fixtures, net | 280,147 | 267,779 | ||
| Operating lease right-of-use assets | 35,140 | 45,108 | ||
| Goodwill | 444,765 | 328,322 | ||
| Other intangible assets, net | 205,627 | 69,517 | ||
| Deferred tax asset, net | 809,306 | 824,008 | ||
| Other long-term assets | 116,453 | 113,617 | ||
| Total assets | $ | 5,601,495 | $ | 5,069,632 |
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||
| Current liabilities: | ||||
| Accounts payable | $ | 317,828 | $ | 516,047 |
| Accrued liabilities and other short-term obligations | 431,419 | 360,782 | ||
| Deferred revenue | 154,419 | 137,899 | ||
| Operating lease liabilities | 16,655 | 18,925 | ||
| Current portion of long-term debt | 11,700 | 6,930 | ||
| Total current liabilities | 932,021 | 1,040,583 | ||
| Long-term deferred revenue | 74,041 | 62,336 | ||
| Other long-term obligations | 170,407 | 150,335 | ||
| Long-term operating lease liabilities | 33,259 | 42,392 | ||
| Long-term debt, net | 1,543,406 | 1,061,125 | ||
| Total liabilities | 2,753,134 | 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; 144,829,938 and 148,412,943 shares issued and outstanding | 1,448 | 1,484 | ||
| Additional paid-in capital | 6,262,083 | 6,390,252 | ||
| Accumulated other comprehensive loss | (37,767) | (46,645) | ||
| Accumulated deficit | (3,377,403) | (3,632,230) | ||
| Total stockholders’ equity | 2,848,361 | 2,712,861 | ||
| Total liabilities and stockholders’ equity | $ | 5,601,495 | $ | 5,069,632 |
CIENA CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands) (unaudited)
| Year Ended | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| October 28, | October 29, | |||||||||||
| 2023 | 2022 | |||||||||||
| Cash flows used in operating activities: | ||||||||||||
| Net income | $ | 254,827 | $ | 152,902 | ||||||||
| Adjustments to reconcile net income to net cash used in operating activities: | ||||||||||||
| Loss on extinguishment of debt | 1,864 | — | ||||||||||
| Depreciation of equipment, building, furniture and fixtures, and amortization of leasehold improvements | 92,564 | 95,922 | ||||||||||
| Share-based compensation expense | 130,455 | 105,131 | ||||||||||
| Amortization of intangible assets | 49,616 | 44,281 | ||||||||||
| Deferred taxes | (14,852) | (27,502) | ||||||||||
| Provision for inventory excess and obsolescence | 29,464 | 16,184 | ||||||||||
| Provision for warranty | 31,742 | 17,440 | ||||||||||
| Gain on cost method equity investments, net | (26,368) | (4,120) | ||||||||||
| Other | 15,771 | 4,120 | ||||||||||
| Changes in assets and liabilities: | ||||||||||||
| Accounts receivable | (94,565) | (47,069) | ||||||||||
| Inventories | (132,497) | (589,113) | ||||||||||
| Prepaid expenses and other | (51,965) | (58,996) | ||||||||||
| Operating lease right-of-use assets | 14,190 | 16,453 | ||||||||||
| Accounts payable, accruals and other obligations | (138,469) | 100,327 | ||||||||||
| Deferred revenue | 27,412 | 26,380 | ||||||||||
| Short and long-term operating lease liabilities | (20,857) | (20,096) | ||||||||||
| Net cash used in operating activities | 168,332 | (167,756) | ||||||||||
| Cash flows used in investing activities: | ||||||||||||
| Payments for equipment, furniture, fixtures and intellectual property | (106,197) | (90,818) | ||||||||||
| Purchases of investments | (252,329) | (647,526) | ||||||||||
| Proceeds from sales and maturities of investments | 208,104 | 702,197 | ||||||||||
| Settlement of foreign currency forward contracts, net | (2,984) | 4,942 | ||||||||||
| 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 | (383,454) | (101,248) | ||||||||||
| 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 | (9,430) | (5,197) | ||||||||||
| Proceeds for modification of term loan | 830 | — | ||||||||||
| Payment of debt issuance costs | (6,379) | (5,484) | ||||||||||
| Payment of finance lease obligations | (3,791) | (3,468) | ||||||||||
| Shares repurchased for tax withholdings on vesting of stock unit awards | (38,506) | (48,454) | ||||||||||
| Repurchases of common stock - repurchase program | (242,201) | (500,800) | ||||||||||
| Proceeds from issuance of common stock | 31,357 | 30,348 | ||||||||||
| Net cash provided by (used in) financing activities | 229,380 | (133,055) | ||||||||||
| Effect of exchange rate changes on cash, cash equivalents and restricted cash | 2,150 | (26,167) | ||||||||||
| Net increase (decrease) in cash, cash equivalents and restricted cash | 16,408 | (428,226) | ||||||||||
| 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 | $ | 1,010,786 | $ | 994,378 | ||||||||
| Supplemental disclosure of cash flow information | ||||||||||||
| Cash paid during the period for interest | $ | 84,465 | $ | 42,812 | ||||||||
| Cash paid during the period for income taxes, net | $ | 78,242 | $ | 34,967 | ||||||||
| Operating lease payments | $ | 22,782 | $ | 21,661 | ||||||||
| Non-cash investing and financing activities | ||||||||||||
| Purchase of equipment in accounts payable | $ | 6,990 | $ | 12,373 | ||||||||
| Repurchase of common stock in accrued liabilities from repurchase program | $ | 9,310 | $ | — | ||||||||
| Operating right-of-use assets subject to lease liability | $ | 10,236 | $ | 23,242 | ||||||||
| 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 | Year Ended | |||||||||||
| October 28, | October 29, | October 28, | October 29, | |||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||
| Gross Profit Reconciliation (GAAP/non-GAAP) | ||||||||||||
| GAAP gross profit | $ | 486,281 | $ | 433,597 | $ | 1,878,851 | $ | 1,560,344 | ||||
| Share-based compensation-products | 1,194 | 907 | 4,518 | 3,867 | ||||||||
| Share-based compensation-services | 2,827 | 2,066 | 10,470 | 7,533 | ||||||||
| Amortization of intangible assets | 2,763 | 2,005 | 12,264 | 11,770 | ||||||||
| Total adjustments related to gross profit | 6,784 | 4,978 | 27,252 | 23,170 | ||||||||
| Adjusted (non-GAAP) gross profit | $ | 493,065 | $ | 438,575 | $ | 1,906,103 | $ | 1,583,514 | ||||
| Adjusted (non-GAAP) gross profit percentage | 43.7 | % | 45.2 | % | 43.5 | % | 43.6 | % | ||||
| Operating Expense Reconciliation (GAAP/non-GAAP) | ||||||||||||
| GAAP operating expense | $ | 394,979 | $ | 356,329 | $ | 1,521,306 | $ | 1,337,536 | ||||
| Share-based compensation-research and development | 11,412 | 8,507 | 42,331 | 31,879 | ||||||||
| Share-based compensation-sales and marketing | 9,187 | 8,084 | 35,136 | 31,280 | ||||||||
| Share-based compensation-general and administrative | 10,274 | 7,610 | 37,587 | 30,435 | ||||||||
| Significant asset impairments and restructuring costs | 7,209 | 13,621 | 23,834 | 33,824 | ||||||||
| Amortization of intangible assets | 10,578 | 5,754 | 37,351 | 32,511 | ||||||||
| Acquisition and integration costs | — | — | 3,474 | 598 | ||||||||
| Legal settlement | 8,750 | — | 8,750 | — | ||||||||
| Total adjustments related to operating expense | 57,410 | 43,576 | 188,463 | 160,527 | ||||||||
| Adjusted (non-GAAP) operating expense | $ | 337,569 | $ | 312,753 | $ | 1,332,843 | $ | 1,177,009 | ||||
| Income from Operations Reconciliation (GAAP/non-GAAP) | ||||||||||||
| GAAP income from operations | $ | 91,302 | $ | 77,268 | $ | 357,545 | $ | 222,808 | ||||
| Total adjustments related to gross profit | 6,784 | 4,978 | 27,252 | 23,170 | ||||||||
| Total adjustments related to operating expense | 57,410 | 43,576 | 188,463 | 160,527 | ||||||||
| Total adjustments related to income from operations | 64,194 | 48,554 | 215,715 | 183,697 | ||||||||
| Adjusted (non-GAAP) income from operations | $ | 155,496 | $ | 125,822 | $ | 573,260 | $ | 406,505 | ||||
| Adjusted (non-GAAP) operating margin percentage | 13.8 | % | 13.0 | % | 13.1 | % | 11.2 | % | ||||
| Net Income Reconciliation (GAAP/non-GAAP) | ||||||||||||
| GAAP net income | $ | 91,199 | $ | 57,645 | $ | 254,827 | $ | 152,902 | ||||
| Exclude GAAP provision for income taxes | (20,681) | 7,735 | 68,826 | 29,603 | ||||||||
| Income before income taxes | 70,518 | 65,380 | 323,653 | 182,505 | ||||||||
| Total adjustments related to income from operations | 64,194 | 48,554 | 215,715 | 183,697 | ||||||||
| Loss on extinguishment and modification of debt | 7,874 | — | 7,874 | — | ||||||||
| Gain on cost method equity investments, net | — | — | (26,368) | (4,120) | ||||||||
| Adjusted income before income taxes | 142,586 | 113,934 | 520,874 | 362,082 | ||||||||
| Non-GAAP tax provision on adjusted income before income taxes | 31,369 | 23,015 | 114,592 | 73,141 | ||||||||
| Adjusted (non-GAAP) net income | $ | 111,217 | $ | 90,919 | $ | 406,282 | $ | 288,941 | ||||
| APPENDIX A - Reconciliation of Adjusted (Non- GAAP) Measurements | ||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | ||||
| (in thousands, except per share data) (unaudited) | ||||||||||||
| Quarter Ended | Year Ended | |||||||||||
| October 28, | October 29, | October 28, | October 29, | |||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||
| Weighted average basic common shares outstanding | 147,437 | 148,548 | 148,971 | 151,208 | ||||||||
| Weighted average dilutive potential common shares outstanding 1 | 147,891 | 149,111 | 149,380 | 152,193 | ||||||||
| Net Income per Common Share | ||||||||||||
| GAAP diluted net income per potential common share | $ | 0.62 | $ | 0.39 | $ | 1.71 | $ | 1.00 | ||||
| Adjusted (non-GAAP) diluted net income per potential common share | $ | 0.75 | $ | 0.61 | $ | 2.72 | $ | 1.90 |
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) 0.5 million and 0.4 million for the fourth quarter and year ended fiscal 2023, respectively; and (ii) 0.6 million and 1.0 million for the fourth quarter and year ended fiscal 2022, respectively.
| APPENDIX B - Calculation of EBITDA and Adjusted EBITDA (unaudited) | ||||||||
|---|---|---|---|---|---|---|---|---|
| (in thousands) (unaudited) | ||||||||
| Quarter Ended | Year Ended | |||||||
| October 28, | October 29, | October 28, | October 29, | |||||
| 2023 | 2022 | 2023 | 2022 | |||||
| Earnings Before Interest, Tax, Depreciation and Amortization (EBITDA) | ||||||||
| Net income (GAAP) | $ | 91,199 | $ | 57,645 | $ | 254,827 | $ | 152,902 |
| Add: Interest expense | 24,207 | 13,775 | 88,026 | 47,050 | ||||
| Less: Interest and other income, net | 11,297 | 1,887 | 62,008 | 6,747 | ||||
| Add: Loss on extinguishment and modification of debt | 7,874 | — | 7,874 | — | ||||
| Add: Provision (benefit) for income taxes | (20,681) | 7,735 | 68,826 | 29,603 | ||||
| Add: Depreciation of equipment, building, furniture and fixtures, and amortization of leasehold improvements | 23,351 | 27,642 | 92,564 | 95,922 | ||||
| Add: Amortization of intangible assets | 13,342 | 7,759 | 49,616 | 44,281 | ||||
| EBITDA | $ | 127,995 | $ | 112,669 | $ | 499,725 | $ | 363,011 |
| Add: Share-based compensation cost | 34,894 | 27,174 | 130,042 | 104,994 | ||||
| Add: Significant asset impairments and restructuring costs | 7,209 | 13,621 | 23,834 | 33,824 | ||||
| Add: Acquisition and integration costs | — | — | 3,474 | 598 | ||||
| Add: Legal settlement | 8,750 | — | 8,750 | — | ||||
| Adjusted EBITDA | $ | 178,848 | $ | 153,464 | $ | 665,825 | $ | 502,427 |
* * *
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 an 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 extinguishment and modification of debt - reflects extinguishment and debt modification expenses related to refinancing our then existing term loans which occurred during the fourth quarter of fiscal 2023.
•Gain on cost method equity investments, net - reflects changes in the carrying value of certain cost method equity investments due to triggering events.
•Legal settlements - costs incurred as a result of the settlement of certain patent infringement claims and the resolution of related legal proceedings during the fourth quarter of fiscal 2023.
•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 fiscal fourth quarter and fiscal year 2023 and 20.2% for the fiscal fourth quarter and fiscal year 2022. This rate may be subject to change in the future, including as a result of changes in tax policy or tax strategy.
11
ex9922023q4earningsprese
© Ciena Corporation 2023. All rights reserved. Proprietary Information. Ciena Corporation Fiscal Q4 and 2023 Earnings Presentation Period ended October 28, 2023 December 7, 2023
© Ciena Corporation 2023. All rights reserved. Proprietary Information.2 Forward-looking statements and non-GAAP measures 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. Information in this presentation and related comments of presenters contain a number of 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 Ciena’s prospective financial results, return of capital plans, business strategies, expectations about its addressable markets and market share, and business outlook for future periods, as well as statements regarding Ciena’s expectations, beliefs, intentions or strategies regarding the future. Often, these can be identified by forward-looking words such as “target” “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “should,” “will,” “plan,” “predict,” “potential,” “project", “continue,” and “would” or similar words. 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, their spending, and their businesses and markets; our ability to execute our business and growth strategies; the impact of macroeconomic conditions and global supply chain constraints or disruptions, including increased supply costs and lead times; the impact of the introduction of new technologies by us or our competitors; seasonality and the timing and size of customer orders, their delivery dates, and 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 tensions or events, including but not limited to the ongoing conflicts between Ukraine and Russia and Israel and Hamas, and public health emergencies or epidemics, including the COVID-19 pandemic; changes in tax or trade regulations, including the imposition of tariffs, duties or efforts to withdraw from or materially modify international trade agreements; cyberattacks, data breaches or other security incidents involving our enterprise network environment or our products; regulatory changes, litigation involving our intellectual property or government investigations; and the other risk factors disclosed in Ciena’s periodic reports filed with the Securities and Exchange Commission (SEC) including Ciena’s Quarterly Report on Form 10-Q filed with the SEC on September 6, 2023 and Ciena’s Annual Report on Form 10-K to be filed with the SEC. All information, statements, and projections in this presentation and the related earnings call speak only as of the date of this presentation and related earnings call. Ciena assumes no obligation to update any forward-looking or other information included in this presentation or related earnings calls, whether as a result of new information, future events or otherwise. In addition, this presentation includes historical, and may include prospective, non-GAAP measures of Ciena’s gross margin, operating expense, operating margin, EBITDA, and net income per share. These measures are not intended to be a substitute for financial information presented in accordance with GAAP. A reconciliation of non-GAAP measures used in this presentation to Ciena’s GAAP results for the relevant period can be found in the Appendix to this presentation. Additional information can also be found in our press release filed this morning and in our report on Form 10K filed with the Securities and Exchange Commission.
© Ciena Corporation 2023. All rights reserved. Proprietary Information.3 Table of Contents 1. Overview and recent achievements 2. Market context and Ciena's portfolio 3. Fiscal year 2023 financial performance 4. Fiscal Q4 2023 financial performance 5. Appendix
© Ciena Corporation 2023. All rights reserved. Proprietary Information. Overview and Recent Achievements
© Ciena Corporation 2023. All rights reserved. Proprietary Information.5 Ciena is an industry-leading global networking systems, services, and software company ….. Leading technology and innovation … with a strong track record of creating shareholder value Diversification and scale of business Leader in Optical markets and disruptor in emerging opportunities Demonstrated track record of financial performance Flexibility with strong balance sheet
© Ciena Corporation 2023. All rights reserved. Proprietary Information.6 FY 2023 key achievements • Announced WaveLogic™ 6, our next generation of coherent optics and the industry's first to support up to 1.6Tbps single-carrier wavelengths • Delivering industry-leading coherent technology with WaveLogic 5 Extreme (WL5e), the most widely deployed 800G solution, and WaveLogic 5 Nano interoperable and performance pluggables ▪ Launched WaveRouter, a purpose-built Coherent Router and industry-first platform architecture optimally designed for the converged metro ▪ Offering a fully integrated per port architecture for Broadband Access Solution encompassing products across our Routing and Switching portfolio We are driving the pace of innovation We are committed to our people, communities, and the environment We have a resilient business and financial model • Delivered revenue growth of 21% over fiscal 2022 • We repurchased approximately 5.7 million shares for $250 million as part of our $1 billion stock repurchase program ◦ Under this program, we have repurchased a total of 14.1 million shares for $750 million and we are committed to completing the program by FYE 2024 • Our balance sheet remains a significant differentiator ◦ Ended the fiscal quarter with approximately $1.25B in cash and investments • Released our updated Sustainability Report, detailing our progress and performance across environmental, social, and governance programs • Obtained approval from the Science Based Target Initiative (SBTi) of new greenhouse gas reduction goals to address our direct operations, as well as our innovative technology solutions, which can reduce the environmental impact of networks across the globe • Awarded 20 schools with a Ciena Solutions Challenge Sustainability Award, helping them bring to life their innovative solutions to sustainability challenges affecting their local communities
© Ciena Corporation 2023. All rights reserved. Proprietary Information. Market context and Ciena's portfolio
© Ciena Corporation 2023. All rights reserved. Proprietary Information.8 Mega-trends driving strong network traffic growth Digital Transformation & Automation AI & Cloud Data Center Mobility & 5G IoT and Connected Objects Virtual & Hybrid Lifestyles
© Ciena Corporation 2023. All rights reserved. Proprietary Information.9 The Adaptive Network enables customers to create flexible, open, and sustainable networks
© Ciena Corporation 2023. All rights reserved. Proprietary Information.10 Our market leadership Optical Transport Report, 3Q23Optical Networking Report, 3Q23 Service Provider Switching & Routing Report, 3Q23 Transport Hardware and Markets Report, 3Q23 Transport Applications Report, 2Q23 #1 Globally • Data center interconnect • Optical for internet content provider customers • Optical for cable MSO customers #1 N. America • Data center interconnect • Total optical networking • Optical packet #2 Globally • Total optical networking • Optical packet • Purpose-built/compact modular DCI • Communication service provider customers #1 Globally • Purpose-built/compact modular DCI • SLTE WDM • Access switching #1 N. America • Total optical networking • Purpose-built/compact modular DCI • Access switching #2 Globally • Total optical networking #1 Globally • Purpose-built/compact modular DCI • Optical for cloud & COLO • SLTE WDM #1 N. America • Total optical networking • Purpose-built/compact modular DCI • Optical for cloud & COLO • Packet access #2 Globally • Total optical networking • Optical for service provider • Optical for enterprise & government • Packet access
© Ciena Corporation 2023. All rights reserved. Proprietary Information.11 Next-Gen Metro and Edge is a strategic growth segment Fiber Broadband Access is a key driver in this space
© Ciena Corporation 2023. All rights reserved. Proprietary Information. Fiscal full year 2023 results
© Ciena Corporation 2023. All rights reserved. Proprietary Information.13 Fiscal FY 2023 comparative financial highlights * Reconciliations of these non-GAAP measures to our GAAP results are included in the Appendix and in the press release for the relative period. FY 2023 FY 2022 Revenue $4,386.5M $3,632.7M Adjusted Gross Margin* 43.5% 43.6% Adjusted Operating Expense* $1,332.8M $1,177.0M Adjusted Operating Margin* 13.1% 11.2% Adjusted EBITDA* $665.8M $502.4M Adjusted EPS* $2.72 $1.90
© Ciena Corporation 2023. All rights reserved. Proprietary Information. Q4 FY 2023 results
© Ciena Corporation 2023. All rights reserved. Proprietary Information.15 Q4 FY 2023 key highlights ▪ Non-telco represented a record high 52% of total revenue • Direct Cloud Provider revenue more than doubled YoY ▪ Routing and Switching revenue increased 25% YoY ▪ APAC revenue increased 46% YoY ▪ EMEA revenue increased 21% YoY ▪ Record quarter for both WL5e and 6500 RLS shipments driven by Cloud provider network expansion • Customer traction continues with WL5e 800G technology, surpassing 100,000 WL5e shipments in the quarter • Received first submarine order for WaveLogic 6 ▪ Reached a milestone of over 300 Routing and Switching customers and surpassed 50 broadband access customers ▪ Received initial orders for WaveRouter, an industry-first platform architecture optimally designed for the converged metro • Total shareholder return five-year CAGR of 8%1 • Under our authorized $1 billion stock repurchase program, repurchased ~4.2 million shares for $189 million - fulfilling our $250 million goal for FY 2023 1 Based on closing share price between 11/27//2018 to 11/27/2023 Achieving balanced growth Prioritizing long term shareholder valueDriving the pace of innovation
© Ciena Corporation 2023. All rights reserved. Proprietary Information.16 Q4 FY 2023 comparative financial highlights * Reconciliations of these non-GAAP measures to our GAAP results are included in the Appendix and in the press release for the relative period. Q4 FY 2023 Q4 FY 2022 Revenue $1,129.5M $971.0M Adjusted Gross Margin* 43.7% 45.2% Adjusted Operating Expense* $337.6M $312.8M Adjusted Operating Margin* 13.8% 13.0% Adjusted EBITDA* $178.8M $153.5M Adjusted EPS* $0.75 $0.61
© Ciena Corporation 2023. All rights reserved. Proprietary Information.17 Q4 FY 2023 comparative operating metrics Q4 FY 2023 Q4 FY 2022 Cash and investments $1.25B $1.18B Cash from (used in) operations $196M $(15)M DSO 92.0 100.0 Inventory Turns 2.0 1.9 Gross Leverage 2.44x 2.25x Net Cash (Debt) $(373)M $51M
© Ciena Corporation 2023. All rights reserved. Proprietary Information.18 Revenue by segment (Amounts in millions) Q4 FY 2023 Q4 FY 2022 Revenue %** Revenue %** Networking Platforms Optical Networking $748.0 66.2 $649.9 66.9 Routing and Switching 128.9 11.4 102.8 10.6 Total Networking Platforms 876.9 77.6 752.7 77.5 Platform Software and Services 82.1 7.3 71.6 7.4 Blue Planet Automation Software and Services 20.0 1.8 21.2 2.2 Global Services Maintenance Support and Training 74.4 6.6 73.1 7.5 Installation and Deployment 60.1 5.3 36.9 3.8 Consulting and Network Design 16.0 1.4 15.5 1.6 Total Global Services 150.5 13.3 125.5 12.9 Total $1,129.5 100.0 $971.0 100.0 * A reconciliation of these non-GAAP measures to GAAP results is included in the appendix to this presentation. ** Denotes % of total revenue
© Ciena Corporation 2023. All rights reserved. Proprietary Information.19 Record revenue derived from non-telco customers
© Ciena Corporation 2023. All rights reserved. Proprietary Information.20 Revenue by geographic region 12% 13% 16% 14% 15% 14% 74% 72% 70% 70% 15% 15% 14% 15% 71%
© Ciena Corporation 2023. All rights reserved. Proprietary Information. Q4 FY 2023 appendix
© Ciena Corporation 2023. All rights reserved. Proprietary Information.22 Q4 FY 2023 Q3 FY 2023 Q2 FY 2023 Q1 FY 2023 Q4 FY 2022 GAAP gross profit $486,281 $448,941 $487,683 $455,946 $433,597 Share-based compensation-products 1,194 1,118 1,155 1,051 907 Share-based compensation-services 2,827 2,687 2,659 2,297 2,066 Amortization of intangible assets 2,763 3,187 3,431 2,883 2,005 Total adjustments related to gross profit 6,784 6,992 7,245 6,231 4,978 Adjusted (non-GAAP) gross profit $493,065 $455,933 $494,928 $462,177 $438,575 Adjusted (non-GAAP) gross profit percentage 43.7 % 42.7 % 43.7 % 43.7 % 45.2 % Gross Profit Reconciliation (Amounts in thousands)
© Ciena Corporation 2023. All rights reserved. Proprietary Information.23 Q4 FY 2023 Q3 FY 2023 Q2 FY 2023 Q1 FY 2023 Q4 FY 2022 GAAP operating expense $394,979 $370,727 $384,870 $370,730 $356,329 Share-based compensation-research and development 11,412 10,954 10,731 9,234 8,507 Share-based compensation-sales and marketing 9,187 8,770 8,755 8,424 8,084 Share-based compensation-general and administrative 10,274 9,377 8,468 9,468 7,610 Significant asset impairments and restructuring costs 7,209 4,174 8,153 4,298 13,621 Amortization of intangible assets 10,578 9,487 9,845 7,441 5,754 Acquisition and integration costs — 59 857 2,558 — Legal Settlement 8,750 — — — — Total adjustments related to operating expense 57,410 42,821 46,809 41,423 43,576 Adjusted (non-GAAP) operating expense $337,569 $327,906 $338,061 $329,307 $312,753 Q4 FY 2023 Q3 FY 2023 Q2 FY 2023 Q1 FY 2023 Q4 FY 2022 GAAP income from operations $91,302 $78,214 $102,813 $85,216 $77,268 Total adjustments related to gross profit 6,784 6,992 7,245 6,231 4,978 Total adjustments related to operating expense 57,410 42,821 46,809 41,423 43,576 Total adjustments related to income from operations 64,194 49,813 54,054 47,654 48,554 Adjusted (non-GAAP) income from operations $155,496 $128,027 $156,867 $132,870 $125,822 Adjusted (non-GAAP) operating margin percentage 13.8 % 12.0 % 13.8 % 12.6 % 13.0 % Operating Expense Reconciliation (Amounts in thousands) Income from Operations Reconciliation (Amounts in thousands)
© Ciena Corporation 2023. All rights reserved. Proprietary Information.24 Q4 FY 2023 Q3 FY 2023 Q2 FY 2023 Q1 FY 2023 Q4 FY 2022 GAAP net income $91,199 $29,733 $57,654 $76,241 $57,645 Exclude GAAP provision (benefit) for income taxes (20,681) 34,608 29,821 25,078 7,735 Income before income taxes 70,518 64,341 87,475 101,319 65,380 Total adjustments related to income from operations 64,194 49,813 54,054 47,654 48,554 Loss on extinguishment and modification of debt 7,874 — — — — (Gain) loss on cost method equity investment — 87 — (26,455) — Adjusted income before income taxes 142,586 114,241 141,529 122,518 113,934 Non-GAAP tax provision on adjusted income before income taxes 31,369 25,133 31,136 26,954 23,015 Adjusted (non-GAAP) net income $111,217 $89,108 $110,393 $95,564 $90,919 Weighted average basic common shares outstanding 147,437 149,690 149,616 149,081 148,548 Weighted average diluted potential common shares outstanding(1) 147,891 149,977 150,147 149,551 149,111 Q4 FY 2023 Q3 FY 2023 Q2 FY 2023 Q1 FY 2023 Q4 FY 2022 GAAP diluted net income per potential common share $ 0.62 $ 0.20 $ 0.38 $ 0.51 $ 0.39 Adjusted (non-GAAP) diluted net income per potential common share $ 0.75 $ 0.59 $ 0.74 $ 0.64 $ 0.61 1. Weighted average dilutive potential common shares outstanding used in calculating Adjusted (non-GAAP) diluted net income per potential common share for the fourth quarter of fiscal 2023 includes 0.5 million shares underlying certain stock option and stock unit awards. Net Income Reconciliation (Amounts in thousands) Net Income per Common Share
© Ciena Corporation 2023. All rights reserved. Proprietary Information.25 Earnings Before Interest, Tax, Depreciation and Amortization (EBITDA) Q4 FY 2023 Q3 FY 2023 Q2 FY 2023 Q1 FY 2023 Q4 FY 2022 Net income (GAAP) $91,199 $29,733 $57,654 $76,241 $57,645 Add: Interest expense 24,207 24,060 23,889 15,870 13,775 Less: Interest and other income, net 11,297 10,187 8,551 31,973 1,887 Add: Loss on extinguishment and modification of debt 7,874 — — — — Add: Provision (benefit) for income taxes (20,681) 34,608 29,821 25,078 7,735 Add: Depreciation of equipment, building, furniture and fixtures, and amortization of leasehold improvements 23,351 23,310 23,695 22,208 27,642 Add: Amortization of intangible assets 13,342 12,674 13,275 10,325 7,759 EBITDA $127,995 $114,198 $139,783 $117,749 $112,669 Add: Share-based compensation cost 34,894 32,906 31,768 30,474 27,174 Add: Significant asset impairments and restructuring costs 7,209 4,174 8,153 4,298 13,621 Add: Acquisition and integration costs — 59 857 2,558 — Add: Legal settlement 8,750 — — — — Adjusted EBITDA $178,848 $151,337 $180,561 $155,079 $153,464 Earnings Before Interest, Tax, Depreciation and Amortization (EBITDA) (Amounts in thousands)