INFN - Earnings call transcript Q4 2018

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Operator

Welcome to the Fourth Quarter Year 2018 Investment Community Conference Call of Infinera Corporation. [Operator Instructions] Today's call is being recorded. If anyone has any objections, you may disconnect at this time. I would now like to turn the call over to Mr. Jeff Hustis of Infinera Investor Relations. begin. may you Jeff,

Jeff Hustis

fourth of fiscal Commentary today's Investor our in Infinera's call. are XXXX A the website. of section copy earnings Relations quarter to year and conference available Welcome and CFO

and date with year our our the Fallon. Commentary. Today's of fiscal call over financial to as integration recorded being statements and the today. are expectations. comparable regarding reflect website. filed recently to strategy, uncertainties circumstances directly our constitute and cause arise These statements various undertakes business, most statements the that will statements differ plans forward-looking filed is our call Officer, CFO in Chief I G, including these well call has included or any Infinera of Commentary about differ as this first reminded fourth earnings and quarter be the call XX-Quarter, no non-GAAP release factors, the will Executive Tom not replay to results financial Today's quarter the results Actual call. non-GAAP subject that forward-looking estimates measures. GAAP the release available Regulation and projections that turn in well and are outlook. statements Pursuant financial about as our Infinera's but as plans, earnings statements as provided will as current a acquisition Infinera and include statements; certain measures and to to and of or materially now risks its revise of products measures XXXX from reconciliation most management's for that as today, CFO may after materially to from furnished to Please Coriant's, synergies, result to, Additionally, of all update could made risk limited this events be obligation conference may X-K includes

Thomas Fallon

for you XXXX thank fourth Good joining afternoon us conference quarter and call. our on

gross our me outlook performance the Joining then I COO, range was in of to pause as a and in million in QX was noted due from with high-end. and Infinera. Non-GAAP provide for customer QX at in strength acquisition. QX combined was rebounded customers financial Brad performance exceeded the was base. traditional that I’ll $XXX expected pleased margins start Coriant our from I revenue the on revenue particularly our new by by the the CFO, are I and bookings Overall Coriant and driven bookings update today announced after encouraged Feller; QX the significantly integration of David Heard. status

broad fast our execution, our the start on of much our on customers more roadmap the and based are combined comfortable believe strength are I making With with decisions network integration now consolidated portfolio.

Coriant of will the I our we significant of reiterate merits three Now with long-term goals I progress why to objectives. achieve acquisition deal the acquisition a We key announced and feel to-date. our commitment so with did the confident the both and

the near-term. in synergies business achieve to deliver - cost a First, significant synergies profitable

necessary engine that the which This half the on made cornerstone hard we of million model. demonstrates and leverage investment from operating a with XX% reduction decisiveness vertical focus half. as traction the solutions synergies. down speed XXXX win on an topline. of increase of ICPs second cost considerable grow portfolio expense differentiated needed note, with scale over from decisions. update combined business was optical we we the the Second, Xs non-GAAP And integration expanded a a market and and with the progress our In the reduced customer the of of Of expense to QX are realizing in of Tier have by third, in with end-to-end making the management Starting to company driving a a costs $XX the company's. and combined broad first allows differentiated

workforce As population of notified jobs or be than that the more end members the over eliminated. their of our XX% QX, we of of will had XXX

of As our a combined positions site a decision redundant sometime our we Berlin XXXX. in In entity late January is priority. to reducing the cost announce close necessary manufacturing in

to reducing We move plans executing model our partner contract further workforce to with a cost significantly. are work manufacturing this a global low-cost variable

positively remain will of the progress savings line to we QX see we capability. the current we committed We million have the an side for the And committed and successfully is year. coming leverage details quarters year. and this track on XXX exceeding that expect through XXXX the integrated have million his sales at team in magnitude the agreements the specific will more integrated team bottom structure commentary. management supplier vertical integration is functional With locked completed on impact place on and Brad over end in cost XXXX of synergies by overall plan the total as and of the savings that timing $XXX our our in least the ERP provide of we our

returned strong Coriant In second Since levels. business acquisition position customers. X customers we customers my with continues of spent to the and ultimately the service a from from have world. largest I things the in bookings of highlight key objective of expanded With close for and customers three to significantly There Coriant's with significant customer combined preserve On common that combination a hear will were expand historic to time provider expected opportunities QX our the our the the we're corporate I around with amount portfolio. enthusiasm seeing grow. up from I are believe traction, QX traditional the in I some products meeting are of Tier orders

innovator of to and continue and as invest financial from First our innovation packet today looking down core that technologies scale capacity edge. impressive that and complete are automation leading in its necessary at aggregated the set to end-to-end solutions to optical the customers and CapEx portfolio the is a drive at These for there solutions OpEx.

is enough we role network important in And with competitive then of now before. a network to third, level new plans solution end-to-end ideal increasing forward large meaningful concerns continues not as as timing market are viewed the the is leading be and created we landscape for on grow to move a were a bandwidth our a scale security to play opening us provider. Second,

While concrete ramp opportunities success time are to-date XXXX, to there mentioning. are and to worth examples are take expected throughout of that develop

network network automation enabling by was In First service rapid our relationship activation. capabilities and strategically. expand chosen expand DTN filling its gaps to end-to-end enhancing ultimately in Verizon Infinera with embedded XXXX, to Express continues network

Verizon EMEA the as partner capabilities selected continues in based to by major efficiency to newest and both Software our Additionally to on of network. Infinera, long-term the relationship next-generation broader this Suite with is with optical Coriant project deployment spectral Transcend we efficiency Vodafone the With first In enabled migration SDN for and our network Vodafone's selected that were in a delivers long-term that expand market. opportunity a leading greater of pave automation ICEX. lead position Infinera our subsea the Verizon's will engine for our automation and way network

customers, strong company creating In also position the current with is addition new a of to strengthening base the customers combined our world. around

in awarded win in consortium a last new resurgence we weeks XT-XXXX and first our we with and for capability Marea efficiency we over QX our mTera our of upgrade, accomplished our the the solution In achieved now set XXXX grew $X of and significant of a existing ICEX nationwide by million market and This continues customers carrier the customers mTera ownership and over network of we were customers market. announced team. an by our cable of in platform equity XX of number benchmark QX. XX infrastructure site and private The continues won that ICP. was the year-over-year. just alone. leading the of to XXX WDM be competitors the LatAm QX new in customer one spectral a revenue professional deployed added from a added a is In XX revenue. opportunity by these adding in subsea include in the new global adding our XXXX, This or week, cloud of and first the platform QX XX ease opportunities. significant XXXX and national new to network accounted the with group into major out group under XXXX customers in with was Mexico. ICEX XXXX. branding we XX% being also DTN-X is well XX received XX selected more that highlights demonstrating In implementation driven new Some services Three for

for significant opportunities that new the several of been but particular On A subsea. group, the combined with next also to quarters. decisions be front, ICP portfolio the we've the is opportunities ICEX in exceptional over couple with of with made invited pipeline will for

we new we in instant model beginning the differentiated materialize. With to end-to-end phase to of I portfolio opportunity now the network be our While see combined our and company envisioned the in early bid want be integration deployment key the an successful continue business current complete customers objective our us respect With vertical inviting half plan of to and of customers with across portfolio. the us to, year. the are opportunities the acquisition, to new third second

to of week, the the is end-to-end making updated differentiated DAA both We Infinera of unification performance This which architecture our architectural we strategy service leadership emerging challenges to guide expanded customers XG, an services Expectation the framework R&D million annual innovative we are network progress. $XXX deliver efficiency. on new to the as designed be will Infinite going solutions and through this will to Infinite address and services. and vision our our refer optical and to of investment Earlier of the track cloud-based delivery like our network represents Network customers Network. investment and business new enable value announced forward.

OFC solution plans to of core seeing network synergy our industry-leading ICE gig portfolio Gig specific the Gig release end based sharing are solution the At ICEX XXX On networks. enter We of demonstration Gig across XXX XXX the announced a strategy. pic side our will our the market our this our track results and March. quarter. in some of scalability XXX for of be We on acquisition live deploying customer will we are XXXX, begin the a the of in remain element in will OFC we by at have

service are progress. enabling making significant we also the On front

than solution This those disruptive to such XG DAA open the the optimized and This quarter business be as networks networking with router disaggregated is available. generally aligned solution DRx and has that support more like our or will XX is opportunities. a solutions address automation testing customers companies networking The XX SDN based being customer deployed by Transcend of additional at currently our acceptance AT&T. evaluated promoted and continue advancement in to

will remains launch that more our expect services. to financial our these on We enable In FY solutions plan track. customers summary, easily XXXX new for revenue-generating

the except the quarter a customer linear more America very the billion expect or weighted their aggregate, first first for patterns purchase we in greater through year. year the recently revenue for spending we into are Looking throughout as in expansion and to to customer margin buying see the significant seeing that activity plans Taking revenue and heavily from XXXX. X.X patterns, predicted and shifted we half North continue gross order in opportunities see

We balance continue our as in well in expense profitability non-GAAP XXXX cash million leading in expect with also will XXXX anticipate $XXX QX. decline reductions We to to mid-year will as cash. rates We in QX and net bottom before cash rates positive in approximately slower out progress QX. and significantly million QX, decline turning $XXX we our in QX as ended consultant

industry favorable. We is opportunity. As and sharing opportunities day around competitive confidence to our Infinera set to Employees customer leadership due to that, call results. be to at vertical whether expect of our forward Company on security our our plan, Longer committed even scheduled that The work with term, I'll integration, enhanced more through a promising to over of analyst appears of the the us. With goals growing will an we is growing ahead our transformed go or Brad, over demand new and look capitalize concerns approach team a general plans greatly the to we financial in environment and scale, in network now turn depth achieve vertical financial growth, and QX. we to healthy unique are this materially results. environment integration consolidation see the

Brad Feller

results Today, everyone. QX, the afternoon The provide overall for outlook In is the customer website. Relations new for good large and momentum Investor highlights QX including QX. Tom, of non-GAAP a new updated in Thanks available color QX recap our revenue fourth acceleration requested opportunity our ensure will Infinera, QX, on outlook was discuss range strong detailed our on the our by I Commentary from some above of for CFO the a end high of guidance $XXX our driven quarter million, into XXXX.

Infinera Our as closed we first from and several spending solid the business quarter as large opportunities resume both sides was new of on customers Coriant portfolio. new

of Coriant margins, was in to quarter. gross QX licenses business of including non-GAAP Instant to end the of mix due range high our result improved This Regarding levels XX% margin XX%. with higher in margins XX.X% in along was the at business late in of the the former quarter guidance a favorable achieved Bandwidth

a structure our during levels. As the call, the and we the negative the last initial deal impact on had knew cost inclusion earnings at time the margin discussed of business significant Coriant of

actions took our reduction ahead committed benefit the our which During the plan. quarter, in levels put fourth of targets will cost integration gross we margin us several synergy included and

new and certain key First, scale. XX% from to We're in and cost we suppliers begin multiple renegotiations take cases. This complete. close based our with stronger suppliers reductions XX% quarters increased to will on agreements down seeing our process relationships

lower we to which fixed forward. infrastructure move variable took actions our cost allow to and changes structural going us more reductions model cost headcount via to Additionally, a initiated will

approach aggressive the all margin enable deals. process, combine low of entered reevaluating right new global approval allowing consistency will deals Finally, a deals, into pricing margin the we maximizing opportunities. pricing to one also investment drive previously be on to balanced while us enabling discipline processes on scrutinizing controlled into and This us accounts, across

and confident margin combined plan, these gross actions we in integration throughout year. With with overall improve our remain ability our the to

in synergy on we With and believe are margin can of the XXXX. mid-XX%s we gross achieve vertical XXXX, the expectations we in path integration

$XXX.X This the Turning the levels. non-GAAP million our pre-acquisition of operating a were expenses mid-point above in to reflected slightly OpEx, from QX, result guidance. reduction significant

our took business the will in actions benefit QX share. of which estate During XXXX late through certain across complete spend the more and to expenses FX beyond, new we net net our the quarter allowing us bottom a despite the impacts of drive implementing including of and flow basis, business. loss to to the loss detailed to XX.X% fission on quarter, first $X.XX of of we significant drive related due runway with per non-GAAP plan together global begin our a pulling Coriant our that eliminating Both of quarter metrics are the and reduction out QX, costs down and to duplication movements of head line than side during count operating rationalization had of Company, the us guidance footprint efficiencies scale. In drive better on a further negative the initiating will in the real and to a

differentiated provide new and financial Infinera. throughout These benefits we're a significantly combined will will in to us secondly believe growing to ahead, will year industry incrementally to line for initiatives with Looking year the profile tends positive to continue their the down I much good improvements making of budgets. which enable driving customers QX. to the take progress lead the the exit In profitable QX, quarter with as top finalize be capital the our

expectations see XXXX the see spread we represents more quarter impact first revenue seasonal upward orders be $XX we is a continued in million combined This in to recently flat. us our of full deal large a total the order for and call the Based or versus XXXX, tell without $XXX evenly year revenue strong very industry expected our minus year. sequentially their the expect on stated one For a linearization October we plus million orders to To previous predominantly strong remains have are in focused QX in don't all outlook. expect QX put decline with being X% of Implying XXXX of $XXX do we our from two quarters currently the from our to QX, of which quarter into solid QX. of revenue this This Well, perspective, into intend our a being and in actual of had Well, of the expected and for XXXX; opportunities, QX, in revenue in trend we in largest of first we customers million. and an typical line result. earnings XXXX $XXX our customer have QX impact decrease a to we Furthermore, pattern full be the XXXX, the we on XXXX large into QX, impact confidence year, mentioned to beyond us, million, throughout at for $XXX million. to and QX, pipeline outlook. XX% guide before. the this actually that million from first-half the we factoring change shifted $XXX had an and even more our they in of least

QX gross down XX%, sequentially. approximately During expect XXXX, margin we be to of slightly

the revenue the fixed cost new other contracts, the taxes cost plus by fixed structure due counts of approximately actions of million and underlying of $X is eliminate benefits, our reset million payroll bonus, supplier to of improving head to in cost well to additional across a of business While $X is having year offset result the the quarter. and impact as this infrastructure in renegotiate as as lower absorb

balance or expenses, the levels higher increase provide for initiatives actions a On in function the $XXX benefit the cash remainder We restructuring we in close. $XXX QX operating and of fourth and quarter flow purchase million the $XXX and XX expect cash the first cost the due we in QX, step cause for margin fourth quarter million Below expense an our loss the With gross took $XXX and inherited is After and the for the we on to close for line, on and million we minus of the at tax on for cash $X of in impact closed investments about deal in project sheet. million exited operating related million, payables to $X Putting million XX.X% we expect day $XXX business will QX expenses QX through sign and million. the will significantly Coriant, of to year. the allow Xst, decline paying $X.XX.With during value QX. stock expect we million. in of in expect purchase together, of revenue acquisition approximately approximately cash stock taxes the on or million. this expenses to it price million continue paying be we costs. decline bonus, to generating quarter, over of investments near due announced to non-GAAP expect non-GAAP term After in which at plus approximately price making deductions valued between cash tax, of continue In drive purchase respect focus than payroll $X interest previously a year utilize past and sheet. the the the first project non-GAAP to synergies but cash control operating quarter the other quarter. lower year, to by and the us from fourth adjusted course the we we currently cash in expense with and $X to approximately to integration million the price This invest cost consumption the October the we share on will $XXX issuing first reset balance another Even benefits. of ongoing absorb of to shares deal to currently a cash. it of primarily downs all based integration, incremental to $XXX to us gap Coriant, In additional to anticipate due the the of million result increase, and currently QX, to to significant expect per decreases our Though amortization than to minus the million of intangibles, begin cost had $X compensation per XX%, to lower from with net On pay and the loss be rate be $X.XX quarter. some plus paper lower and

the which DSOs allow of begun have the to over our to us also cash process of inventory will down turn our We year. us allow and decrease XX% course our quicker levels plans driving by to developed the have

sufficient to make While intend which transform to forward, the process that our the to right cushion we have confident quarters. in work in we move investments liquidity remain to increase seems have business cash we announce we as future we

going about excited continue of in further experienced across we to company. continue will geographies. for QX fourth revenue about a with profitable markets material X.X innovator forward rate new to multiple end with an which In positive XXXX. the from be the the expectation their to implied Infinera to My to based that end-to-end opportunity the for ample continues For achieve business scale the table in us greater ongoing momentum profitability expected this of stems of and new is combined relation a what run wins hungry customers on portfolio. with and or be XXXX, the a billion expect step-up I quarter view conversations the revenue provides XXXX we we in brings

to them efficient key way. continue drive a and suppliers we approaching to more to profitable partner gross with in make changes support us opportunities For will continue structure in margin, enable cost to bigger an to

licenses. customers via addition and as Instant improves Infinera's always capacity In we've stated margin as linecards add Bandwidth

amount IB time. significant expansion a margin this for a will the opportunity enabled provide deployed last hardware years substantial of over have several we As over

expect the year of through to each the X exit points the move mid-XXs. allowing to quarter we us we XXX improvement As gross basis in with year, margin

actions transformation as a we think In to expenses significant relation we achievable the year first took QX. operating the what forward. We start benefit is significant headcount in below well as our in see of still is reduction this this ultimately in one. Although we're QX XXXX, seeing of going

We to per over expense the our quarter expect restructuring exiting run an and levels year plan approximately to to us allow gradually - continue will down on to course year on the the rate. of million continue the integration take which XXX execute

anticipate we continue should fourth the of the a course the demonstrate the over the this we of update the cash that our our progress of we profitability which significant us year. integration the the achieve traction market look and full of first progress quarter start that the non-GAAP goes allowing are transformation that continuing and XXXX as to We gain drive generation steadily forward call. improve results with in quarter synergies to in and portion you as In We summary, on further With the let's combined company, made as the on. track on year question-and-answer to company. to during

Operator

Please go And Goldman Sachs. question of Rod come Instructions] first ahead. from our Hall will [Operator

Balaji Krishnamurthy

called in Maybe of the Balaji orders. start This of with of the out on Rod. their you customer is behalf terms I’ll large that linearization

you give what that some through to to what is will there gives then QX that rest And the year going just the terms commentary been. impact would came have magnitude business more of this then whether the maybe business on from this a or customer legacy customer. large also us size your detail If could of come of back Coriant And confidence is be any helpful? in the you

Thomas Fallon

I cable the was. with purpose it And America of it QX certainly confident customer, North them. fairly plan I expand from to customer. the grew that their to is the very good belief large linear the a significantly a them their through regard good QX. change Infinera and significantly the networks plan, of very the but was this in we both distribute first so regard was articulated continue spot side, a a all that We bookings to in decided with traditional customer they to that what was front in their feel to half it not purchases more overall customers. it it current an to In from quite every year year. of was were year and yearly the Yes, my from to have very in bookings, also in customers be year new Coriant regard confidence, backlog to They continue identical plan Infinera side capital

in in those We orders QX. in news also but takes don't the were have backlog while of actually rollout will and we to new will A we That’s a away. but revenue QX builds. of long-term new great to good number bad going builds the four received fill grow that newbuilds news, some it it’s news those right

business what and looks from up exactly business the you looked QX from the So the in customers the it's fact in script. in new number out same profile when a And make one we more pull backlog in of number in or and when is won, comes that I QX. significant contract we Brad's across in and opportunities I said look QX back it picture. that had customers. in QX we and the had We of this one what at The October versus won our like. our significant a pipeline significant with, add grew backlog we QX, customer horizon its them the cable we growing we quite point significant include QX saw when We of of slip really that I'm doesn't our the out with profile new talked of opportunities very comfortable will have and

I the more today comment I'm pipeline in QX. when the optimistic So than if anything on made

Brad Feller

in change to Tom about $XX about QX. that the Balaji is address just of question, in the talked million And impact second part of the somewhere neighborhood of your that

Balaji Krishnamurthy

for significant is And could I the that you same that customer? just that QX, clarify about blend talked is

Brad Feller

it’s not. No,

Thomas Fallon

had request That pull we and a we international the had into scheduled customer to made was a for pull QX course. of December did in, they that it a

Balaji Krishnamurthy

on Of maybe in the competitive more will your this the available like just feel seems half XXX but one do about course how take second on and you It of position? that your product Ciena the year longer-term G be announcement. question XXX G what's

Thomas Fallon

our going start talking position. I’m about to

market. Our that to very bring to position comfortable going I XXX we’re am gig

We are pick going to our show lasers. the pick transmitting OFC, at

ICEX We’re sometime going year. fundamental QX as working says our to available DSP we to this bring year our product we will of in I and middle by next that in have DCO end announced of the performance. believe step market it in function the will similar to spectral what the ICE efficiency performance and capability a ICEX today be DSP the to optical of our leading architecture to perform continues when comes industry. to did

I plans XXX market. game. our on poke as on market what to the changing In announced testament one bringing fact and at to to first lining I is think up what in see I poke I feel and regarding really that we're well the to The XXX a go of gigahertz. come and be roughly the at very OFC I us with will encourage Ciena to changing are what’s hard at you their are. we to going to hard going to them have to cadence technology no said we're we market. roughly think comment superb think in regard way we We’re to gig leader comfortable

Operator

of Marshall Stanley. Our next Morgan from Meta Please comes ahead. go question

Meta Marshall

go was purchases overlap Infinera. were the Is past overlap between with those – wanted where just from in Coriant customers. XX% Coriant with portfolio maybe versus there comfortable second there that just ones that the delayed there circle I will in of what out of were TBD? of about where XX% as change question talked the ones were to where have you far then made and you’ve just side up or with and discussion you getting that the And figuring is was where any they all and been I think there they decisions the guys And customers Infinera look customers the you. forward like then those still as as was around maybe weren't from no on is between something kind

Thomas Fallon

first answer second. the David take to part me going Heard let I’m the to ask

to very, time Coriant those long buying the that that and customers have feel very expect you comfortable part slowdown first somebody for to committed traditional want a was to the On are when actually vastly decisions your platforms. you're in you supplier your making they network from

fact for the that X getting I a from anticipated announced bookings who enormous that believe pause I We exceptionally a The David can on the in significant and had said is the of roadmap? until in uncertainty, you by in of QX. a strong close do on back over. created a huge the uncertainty in period October to particular I period customers. to comment spent this was way paused amount the Coriant that back levels resurgence July coming and talking saw didn’t are that customers we time have QX. road created we As

David Heard

it think that related, is I a based I so Yes roadmap. clear think see resurgence you on

X roadmap customers table legacy existing there purchase there the small I from was product announced will I Tier But integration think long-term products reiterate they what the between little side on the we of overlap the released for XX%. differentiation had it Coriant was those when impact one to at the I orders vertical a orders our from going other. and nice the think very roadmap not customers it tell base. once their a you only but transaction from us. very, We one just or releasing that planning forward existing saw to with purchase was given not side forward, see thesis current saw embedded saw was their or

Meta Marshall

first just Coriant where both an one; on you seen Maybe was back were not orders product of you but just a there resurgence competing? overlap, circling in the and for kind overlap customers previously have where

David Heard

clear, I and think, RFPs, pipeline we've seen both of involved portfolios. where is RFQs, we're made what portfolio bringing power RFIs, of we're number we've together in the a the again, because

Thomas Fallon

revenue asking because are are a both, we a of there's dis-synergies customer supplier both. to Now, you're if

Meta Marshall

Yes.

David Heard

Okay.

of it ask customer me even different seeing the You customer Simply should just very small in not Meta, dis-synergies confused. when we they way. that network. much was impact over parts laps. from number had had, Even of typically don't of the overlaps were get there we just We're

are these - we just dis-synergies seeing not So in customers. much some

Thomas Fallon

four Of And from significant had four any significant dis-synergy. any transaction not time seeing think there I were overlap. at that we customers announced the factually we're we those

Operator

Henderson of question next ahead. Alex Needham. go from Our comes Please

Alex Henderson

you're optical stuff what Company away color Could run ICEX these the is through the and telecom getting U.S., get good question, and Europe, space ahead by way of specific seeing shape. the any pretty I core metro schedule. seems very before It in to that talk that terms seeing you the to you that of about for in answer of a congratulations clear of on platform? what those with little segments just out demand - the are penetration you some from hand industry getting overall of around your bit Coriant/integrated off know And in Infinera broad

really hard pull it's off. So to

Thomas Fallon

then give Alex, thanks color comment. or to I'll see and add in what the the in. market for Brad some if Dave you I want on

you as said in seeing a healthy are environment general. We

think I'll areas of new very not substantive we on In was a Coriant side; but business on had good APAC, strong are talk the a seeing APAC. dollars QX, substantive very franchise in opportunity winning a of the about We're couple a one only particularly lot I that classic couple a Now, One in. of will seeing that bring wins not traction was us. Infinera to classic side. we

there's more and that ton in attack. opportunity think go a to APAC I

significant we more hoping substantive of opportunities. announcements that is win size important can now. I'm segment. number an this year. EMEA almost year. we're position this new well We're are We billion we a in It's EMEA, attacking make continue to metro $X.X and our positioned, In It's

As Telefonica, of of to into prepare mentioned types XG the for Vodafone, with they both forward for very we continue as also positioned we be moving the very, more technologies rollouts. cracked legacy more I but well

that. a this IP anything. to pumped We're to disaggregated entering The new world I'm something move our to our into we're think disaggregated about protecting I and are not solutions type So, without to wants market approach up approach really protect. of wonderful. IP

play space. space can want play they offense that to and we that in offense So somebody in

as rest Mexico the in think in and down I LatAm, thought both lot a We a us opportunity leader. of see view they of LatAm.

One subsea. of the strongest areas we see in is

all with a to doors deals Marea. we a continues which putting deal, people to other open only and very consortium first we QX, now a going ICEX Our big win go is on deal for other not technology. as our have capacity in those the couple We I ICPs talk an of to did to in us We substantive inn performance won members about won consortium consortium Marea win. and benchmark but that's up because our think both of leadership

of think center. lot on a commentary that So I there's data

done to interconnect well market. continue strong center a there. be data think We've I

have They RFQs that like to it's but if the now right Groove. of lot opportunities. enterprise. I continue XXX a and think ICP not early I our number to we're equity say frankly a gig We're win quite We see certainly a lot of the opportunities in for space. owned Groove that they in it's Groove a now particularly or non-private going the to something too like by of

good So, I be some across to do opportunities see Alex, the landscape, very candid.

Alex Henderson

slightly stronger same just If weaker quantify of XXXX, do rates optical is that XXXX than that to you XXXX, bit, going XXXX? the could than think a globally little at be you

Brad Feller

Alex. hard It's to say

are we at - X% look anywhere think predictions to X%. forecasts, the I from all the

growing, and not the that that's market X%, my X% going go we're bigger we're that I take think or going how and to it's thinking with to new to whether certainly than do. what our share big is to partly be market but going it's position go

positioned portfolio, technology with well new our do and we to that. I think our are

environment grow. the with in also a share So opportunities. market taking I market on easier We growing on plan to but it's growing think

Thomas Fallon

the it's optical year. say subsea year to with add that kind this I'm in continue to of there comments we we the long-haul size In two because even see is fact see last and market the making of of ground growth Alex, proving traction helpful going to just stronger if and we're that, along subsea. marketplace. the performance lots and very in than I'd the strong growth for

insertion new strategies. new us with insertion are there Now, opportunities helps that

of open insert into One to we're is which able see ICE, as these. open environment technologies with to this you start our

Now, us with footprint in core markets. it those provides the new opportunities expanded, global so

XG, capable, to for base example, The the embedded On XG, the embedded the that's given really sync XG grow to there. Edge, new product leverage haul locations capability there that on had together. for that we the all be a and XXXX latency we scale to never providing have and that front mobile able brings requirements requirements network, portfolio from, and scale, XXX,XXX

an to certainly learned that we the this is behind career it share. I element Well, that take growth to proof So, good now make happen. in important don't embedded that might market about the think over it's feel just ability industry point your but what's is - my base

Operator

question next Craig-Hallum Capital Christian Group. Our Schwab comes ahead. of from go Please

Christian Schwab

I opportunities and for you much to about talk guidance the how a under the and look know uptick significant XXXX we you contract discussed As of and is backlog X the in and can in year, success to Tier you pipeline me up pipeline plus the that that so opportunity $X.X can is qualify that much to ask ICP, let drive direct need and opportunities. how you or expectation? in side in potentially billion if do revenue question that

Brad Feller

being it's have mentioned awarded already the very phase we've into stronger deals news where that we yet XXXX we win first been. opportunities won, business very the the the is is PO's win good backlog QX to have ever further we than Yes, buckets we both contract good. two the opportunities. been see so may where going in business, but incremental being Opportunities sides strong; in And on rate not is are of

forward could So, benefit that number that opportunities have year backlog see the throughout it's substantial on and the in going as provide close we with a contracts actually year good billion things the portion or we may are of news this working is on, well. or already $X.X

Operator

comes question ahead. go from of Chatterjee Our JPMorgan. Samik Please next

Samik Chatterjee

of EMEA wanted there business to your North now looking elaborate of opportunities it's that quite of your on given just to kind in perspective from you of terms growth kind EMEA, and what geographical you you're think portion sizeable you at a be? I ask more opportunities a in in in XXXX outlook and would highlighted but the what America what do seeing

Thomas Fallon

Infinera always strong what there's from always relationships think market. an of We wholesale number a in I installed very that - had we from Coriant. inherited the very, partly presence David opportunities base said, from of coming

infrastructure In raised. of wins, we one but top EMEA that put they anxiety from real growing seeing We continue are do or ICE have a also the other of number and a over that Chinese a actually people's some the of supplier they it's like feel trials. a take number security We're And on issues have in our to supplier opportunities open using particular opportunities being And those there upon. we’re network of well. whether is to transponder with EMEA. dependent that is too are in

that received the think to for is going second one new in is the table of into fair relationships the to old opportunity EMEA applications the cracking real well like transmission that our solutions we’re of The applications. from where SDN the that Coriant Coriant share getting wasn't And from edge the see a we’re brought solutions Transcend to with suite transport. of X winning its come combination Tier Coriant in the I and combination raw us the of combined that the large that the we the market. bringing security accelerated was customers. worried they somebody overall Xs. was partner. that it portfolio trusted it actually order a issues and EMEA so traditional And national opportunity about is with Tier got who into I was QX large picking QX XG lot Also one were from

there So of EMEA. lot think is in opportunity I

Samik Chatterjee

with rate on pricing? comment to mid savings the pricing, quarters Brad repricing of full the XX% Brad getting a that through for up couple second is XQ kind of component a on XXs run kind talked exiting the quickly component And about predicated the of margin year. of follow taking those of gross kind about

Brad Feller

organization It's go realizing to infrastructure process. suppliers as to leaner the over the significant lower going further we've sold. last that component in of as few as capacity Yeah agile mentioned it’s it amount of deployed that gear being that’s a latent prepared also the it cost over in pricing is a the lot forward much year. actually the And drive a the the a my course part remarks well benefits taking out of I things of years combination fixed is allow a of us to benefits our in of we involved

thing that's to a margin be for networks capacity going add to enhancement As customers as nice well? a those

Operator

Our Jim go of Citi. next comes ahead. from Suva Please question

Unidentified Analyst

Tiffney is on Jim. behalf of This

and and You Can eventually the QX. us QX how lower think flow, QX to some for around, for free mentioned and cash in you through should expecting working projections generating flow capital in cash cash consumption we about be give cash color operating quarters XXXX?

Brad Feller

of so of it prepared first deal would after quarter true-up some a the the QX. in QX of costs that historic is that in remarks from side inherited consumption Yes, Coriant said be I the overall XX% we roughly the lot what there's a my had that cash lot of Obviously we deal payables of things.

over to then burn that continue actually the course you'll So rate QX. in in and go of of fourth to for in to see as QX decline somewhere small million we the quarter. QX generating And the year cash million $XX amount $XX you in burning a where should be we’re the

Operator

next [Operator Simon go our from of Please Raymond question Instructions] ahead. come Leopold And will James.

Unidentified Analyst

quick Brad for filling [indiscernible] Simon. XQ? is cash item. for metric disclose free flow This you a your Did housekeeping

Brad Feller

burn. $XX a about million No, it's

really have so expenses expect going don't lot to a been [indiscernible] It’s CapEx of tight. So forward. keeping that model one-time the be

that of very, We’re takes look we investment of business driving and strong. cash out unfortunately but being at do it lot to return the a of costs that very initially the as

Unidentified Analyst

XQ close to And should up as think before XX% the the it be about in XQ that these good to is of you that that? for about XXXX way mentioned expenditure a should way we think

Brad Feller

Yes.

generating right. still cost otherwise underlying the of cash half the getting the you better business as behind we and get and we’re through driven that's The get one-time structure expenses confident a much year we where size is us one-time lot expenses by about So start and again.

Unidentified Analyst

based And portfolio, continue ICEX ICEX. make to Tom, recently traction with good video unveiled and you just ICEX announced then guys your a for your

against of capturing spreading that contemplating? expanded and of high cost third-party end-to-end guess an developed in that IP still something my you’re providers sort the over some tapping benefits point-to-point customer of turnover internally - base. portfolio Do question you that your given is guys for initially still developed on So DSP of by customers - I large obligations efficiencies planning on is

Thomas Fallon

the with of to around a lot value around performance, in vertical committed of around quality, differentiator Having we're that differentiate core and other if be Yes, the also period solutions of more using help to doesn't external a have because lifecycle that, is to excellent payoff vertical with allow technologies capabilities. there third-party, market proposition and resources not cost, that a can think a going the strategy use strategy that to opportunity to believe we cost-effective so both. going our of for we in the market, said but whole see don't a us we are a as technology something payoff, is there's always that integration to of an We our we're bring integration. a do We that complement market. time

Unidentified Analyst

am I I to associated I to the to turnaround verticals should dynamics you of about can thinking generation the years trying for And incurring the a four that and sort that if continuing time you sort of portfolio third-party gross I to while our we of that you're the understand to obligations, larger guys customers. then high the it? did some reason to your before. on model, I that at some the the of DSPs guess speeding have hybrid importance a I bring be guess committed me through years be than guess take more or two you’re how guess next But of same market. headwind still of asking for operating on early I cost also with cyclical sort roadmap could rather understand margins understand why am being relying the I

Thomas Fallon

Well and to dollar DSP down market that allow need the continue the down that, said have our we're vertical bring of technologies to you bring to with per desire and to on differentiate do bring a a we magnificent either ability We a about two year. customers of every generation to end market bit have in year are our Having allow going the network headcount to own. pic function bring technology or cost to going it day, of At a should that think about because one us not integration. every to XX% our XX% customers of cost. to that their to

own gig going do to market, earn a a So where TBD. little but half customers you'll by bringing to in a ourselves a bringing develop We're differentiate, XXX us year to about to and also a technologies experience. from see bringing solve can hold as we're you less Right of that gig from we're than should our technologies only third-party this a capabilities market problem that ourselves will complement not and The only XXX return. once year we in fair quarter half now now we probably now. cadence

That’s actually that's our and not on Infinera as earn based group performance we aware will through So see bringing technology. the return company. I a that as technologies, commercial we’re we’re to that going upon you're technology you’re a XXX believe be vertical market industry us the leader probably good have think it to to a going in cadence the a with that on

Brad Feller

very tell that really the touch of from operating that you I margin investment short, perspective R&D I financial on make because to for about you Yes are of that. side in hard as recover the question. some your to cycles it the an think just would

a much a amortize it. overtime we we margin from related benefits. bit have pay lifecycle, enjoy to overall little for On R&D we perspective the shorter actually a product may And but R&D the that more longer gross avoid that so things and can

operating market them on margin best both for allow So of the those products. based the

Unidentified Analyst

your the or they're so that referred one or was large I we I and come customers to Tier for topic X guess ran, last what this talking commentary EMEA mean have in XG if Tier [indiscernible] a question with X mean and previous as large his wondering about have think not I that Coriant by could and customers to XG we but in Infinera? is have APAC seen conversations has And providers. customers than up planning believe announcements it Tom European recent I stating large I more

Thomas Fallon

that the rest XG around is All around Yes, But in that is people has right. press come certainly and the network. you're conversation concern the up concern the of cascading articulated about through talk but XG, is XG. the XG,

need are the are European first put having fundamentally upon and is time I to sure that making network to internally For what are about as there that externally being a looking they clear with and converse they customers, they do. secure pressure evaluate they them

have now reasons. to network will much they are question, you a think bigger than pressure One, that a gear. are I it's acknowledging security; manufacturing a Chinese have pressure traffic regard XG question going with router it's transport and it's decisions So, a a is customer probably are make question, in is contract they asked, two for significant question, I being government across carry about acknowledging my to real you, them it if that they to

concern challenge regardless them. yes, one we the when it's national forces security thing third got our dependent for for own making is are outside government very this And I to of is, that also adding supplier. security, are creating So the typical forces but that think that's some we customers to sticky economic upon talk too us the comment of network a this I issue

it's time. said Having from when these over that a of manufacturer you shift together, think add for think do that, into directional market will I all move none non-Chinese take opportunities. night. people I This think I these insertion is those a of creating a So opportunity will things

think I real How of plays very very it's politics out, it think I important. know. don't I and it's the

Operator

any This closing remarks. to Fallon, concludes conference like our over turn to I session. Tom the question-and-answer for would back

Thomas Fallon

Have just your to look integration opportunity day. to a and very and keeping have for time updated the you great you like I'd thank our on we today I forward ahead.

Operator

attending concluded. is now for today's conference The Thank presentation. you

may disconnect. You now

Infinera (INFN) 21 Feb 192018 Q4 Earnings call transcript