INFN - Earnings call transcript Q1 2019

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day and welcome to the Infinera fiscal first quarter 2019 financial results conference call. All lines will be in a listen-only mode until the question-and-answer session. [Operator Instructions]. Today's call is being recorded. If anyone has any objections, you may disconnect at this time. to for call Infinera. like Moreau, to now Relations Investor would turn over the Ted I Ted, may you begin.

Ted Moreau

earnings are Thank you section call. today's conference first of quarter CFO Sean. Welcome to A Infinera's our website. copy Investor in the available fiscal XXXX and Relations commentary of

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

Tom Fallon

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

will to Then Brad Joining the the I our me CFO, to Significant and Infinera. outlook today QX overshadowed in financial and QX are by QX the an unique I the QX for of and review highlighting the of Feller COO, results performance detailed our opportunity new remainder provide progress below for will guidance. turn David start over was call with revenue Brad Heard. a and year. was our by that

new the Asia midpoint realize favorable grow, internal achieve pricing expenses While from and to Operating to the execution our benefit gross policies, above range of continued our of enjoy we we as our per share, the began positive revenue expected. product incurred between of million due in quarter did one and were of impacts $X.XX range. $XXX synergy not delta non-GAAP full the transaction This to our expectations margin revenue. represents in million Non-GAAP XX% our guide the in to as our result beat backlog in for quarter one guidance XX% continued the as see $XXX unable progress than network deployment are significant $X.XX our range of was loss non-GAAP ongoing mostly G&A. which the in quarter, specific one-time This loss resulted to cost to some mix. better a $X.XX in our of first achieved

QX subsea. and in strength European with strategic customers. both in In we existing bookings, about saw Tier engagements we international We markets, in particularly U.K. and and opportunity new are to and our are X continuing the with encouraged pipeline the expanding the develop

weaker, demonstrations and product advantage. this year PIC. new key Groove on we their Despite customers, Riding carriers. quarter integrated solution In will The of over Groove from versus in demonstrated lead customers. ranging revenue XXX grew significant QX carrier North our overall of expectation of our we more we the into QX, traditional Groove bookings momentum, to was leading certify integrate Groove the a believe than product optical we encouraged to efficiency, most on vertically operations. in we QX a in performance. results, our a plans. differentiated discuss limited significantly OFC, performance, quarter our DSP by new structure spectral as Our market general. XX and the regard outlook. industry-leading Also solution, very subsea expect XXX bookings leadership segments the our reduced product investing QX spending developing own software particularly fronts, significant on has in largest ICPs we grew showing and to the in leading business cost the were driver our CapEx experienced gig In solution, enter the ICEX a purchases of sequentially highlighted result Further, trial and I and and basis. as announced our ICEX ICPs we are XXX scale to for revenue that new with driving a both cable potential demand integration on and in America, prior that XXX significant this from which availability value. the through At are progress strong XX% merchant revenue the technology year. optical of for unique delivers gig in and XX executing my at strength existing as year-over-year. metrics opportunities, currently solution power Infinera's half invoiced year-over-year new in customers delivers OFC, sequential optical a number created gig impressive subsea This we and gig DSP our our both back design, By of combining optical see performance market network continues

optical in drives field-proven ship that timeframe. XXX for lower unique ICEX track platforms industry advantage. performance gig second furthering will the view as chain supply of the time costs while DSP prove network We SD-FEC as with be our subcarriers position high developed to gig leadership today, our transmission to market And capacity probabilistic our strategically of system of remain gig commercially solution market into internally of adding important XXX the XXX in the our XXXX. other We believe include gig sharing, the and we industry-leading and in the on in XXXX gain for to half Our only innovative optical one the optical currently XXXX. advantage vertical optical in shaping, slated expect XXX supplier We our creating ownership lead volume to will customers.

with Expanding X router scheduled believe the both at with a early [ph] disaggregated XXX architecture technology gig the DAA with customers challenger, for commitments router drive the bringing as positioning wireless in portfolio differentiation and Barcelona. Mobile remains which cost XXX who DRX We deployments for share encompassing optical We Tier in Congress network market into customers World a bit solution with our gig year. DRX open are further from have have through for position XXXX from that our confident we solution supplier to network performance that several as XTM multiple traditional a edge, places to year our position and us our and a market market. places networks solution, offerings earn unique only new asset the per this relentlessly unique announced we edge believe IP DRX Today, trials optical and adoption. of a we eight in disaggregator and Infinera we XG backhaul a

to in track months the complete On great this a and integration remain the on deal integration front, seven we calendar year. have accomplished functional

our million $XXX Specifically, commitment and this XXXX implemented to year. exceed have combined synergies have COGS we measures to are for yield savings plans place of OpEx significantly in expected further that and for aggregated for

supply two optimization. major company our strategy deployment, salesforce.com used with the to system system We integration of unify and completed three and deliver cost have projects a benefiting from agile implementation entire our

We that their consolidation We are Fabrinet have with to expected in be projects of QX to to the completed transition remain and close one Berlin contracted low by year-end. have centers. cost manufacturing to manufacturing center production our on-track specific

operating our number positive XX%, and reducing this of operations year. from QX committed external to logistics reducing by the ongoing and remain achieving also centers fixed cash non-GAAP And we are our We and in cost. both manufacturing significantly cost profitability exposure of roughly finally,

integration risks, always am our pleased our to ability new goals brings the Infinera. in confident to-date remain and I establish challenge achieve and While a with and for substantial committed the progress foundation strong

step savings flow significantly and wins We expect in center supply margins basis will both outlook effect. cost second our P&L chain our to the for and and to data bookings half a OpEx we through recent see ICP scale results cost see with variable in interconnect. as With expanded traditional half. the reflected design be lowered the trials, progress and on offerings, to second We in transition strong new opportunities base This QX these a expand takes with in very based to the expect product bookings. customer a subsea function

year several we this upgrades XXXX. In currently This expect fact, either is one we later the in first We as XXX or of gig a global begin module, and this for our was early certification deployments expect on platform our to certified significant Groove ICP on at gig leading see just this planned QX. a with to shipping based opportunity, platform. XXX based

double by an inventory part see we cable each in the Overall, customer that expect will experiencing position to to QX and following take with ICP, some On expect double segment as quarter-on-quarter. which of to front, we digest, sequential spending bookings highlighted we more our through challenge sequential time works strong last growth year. base aggressive growth digit continue

current subsea we We call. an Infinera encouraged now during X our positive pipeline, as strategy had highlighted of and customers of Having are we larger our addressing that positioning brought new much QX we the consortium the Tier which and outlook opportunities. are bookings together comparably our companies, sized with and earnings two very affirmation view by

scale in finding what the the past. of we deployments, are that and than we complexity experienced longer had these take to larger Given for time can revenue engagements certain

continents. Because in associated the these $X.X we that our expectation our that's QX, billion. of currently of and the will revenue strategy opportunities be strong, for XXXX plan, shipments revenue on these other large deployments, intact. countries upon our lowering and first QX in billion while new we QX $X.X Several from revenue expected portfolio, into networks see our include spread While remaining where bookings the XXXX, of are successful only QX multiple now network QX. see factors half overall part of timing we QX. that a first lead to requested are the expectation deployments of end-to-end below Collectively, opportunities to with realized solution be be of will across bookings of the are to span turn-up Based these very timing some revenue

bookings the to decrease While the to some revenue down degree, are is expected for by issue. significant year more come timing due the

traction Coriant summary, an decision two bought We data networking in company and for near second while center expansion, to technologies intact. carry expect interconnect In significant capability this exit and leading the profitable synergy the original ago we our the this quarters year QX positive and months, the customers trials technology combination market. me that pipeline, growth, and have and year by created of and driven to ICPs year to the profitability and solutions of next our one, most a is converted for applications. and the optical fixed from gives around strong momentum commitment substantial ready increase to deliver to was that the spending, have with confidence cost us general outlook, XXXX and as We to place, cash and position seven remain its and close cut optical commitment one we increased capacity in plans XG company, Tier into innovative term will world. the deep the a backlog in In integrated confident expenses the with resolve infrastructure half our end-to-end benefit bookings portfolio, Xs shareholders. from wave significant and non-GAAP we we momentum the to year of world, momentum right our of operations fiber scale of bringing expected bookings The

over this chose we are first disappointing two our that period, in a in In Looking What back, for are in combined we grow cost over significant revenue are revenue conversion half commitment our the XX% in to to With many second we and outlook plan of cycle will sequential benefit elimination our and we growing, $XXX revenue half which first the the each on the period. Based backlog expecting the million QX we the year, seeing revenue. three over our realizing on that in exceeds for when of half. several XX% first did a average expectations deal backlog quarter. not to QX our to quarters, half benefits path. of revised grow that did as currently was see place first growth reductions per expenses basis us now as operating we longer this plan XXX expect are and planned vastly of and we in we expense points coming first margin expansion fixed quarters booking company down

QX reduction progress Brad outlook. combination on growth, look in these achieving our the will now in to We of expense forward expect return profitability us our expansion QX. the this you walk specifics objectives to of quarters. coming I through reporting and margin and to in

Brad Feller

CFO I new highlights will available for provide our website. In our our with QX recap everyone. million for QX on million, color Investor Thanks detailed the compared which XX% discuss Infinera, some our is is on midpoint $XXX $XXX Today on Tom QX line QX, declined sequentially, XXXX. in of in QX, commentary updated outlook outlook of good our guidance. industry. and the revenue seasonality with revenue our and for approximately Compared results The Relations typical afternoon non-GAAP with share was

timing this yet thus our to entirely the during large our by second can't we QX revenue have expect below quarter. the and driven quarter. for determine included We which in progress opportunity not was did as network it significant expectations, But not deployment Our still in Asia the expected materialize outlook a year. one

and During America North X, strength With and continued added relative have non-GAAP a existing was building in also represent XX.X% in above quarter. XXXX deals Tier and margin new regards while one the in We guidance from XX% XX% XX.X%, American the margins, gross XX% well QX, APAC range with win we of we to of reported customers the customers gross total customer, to and QX revenue saw we new to North QX. backlog.

XXXX on QX we earnings activities margin our we margin are to call, undertaking we those During drive are improvement activities. enhancing conference and outlined several executing

resulting In organization infrastructure remove cost product from significant half taken to our and the we and second the manufacturing the from of strategic in expect supply to the down negotiations have of costs turn benefits Berlin key the inventory our We with half through Fabrinet. manufacturing the chain margin progress Further, actions fixed which second transition price facility we to organizations. the begin continues to flow our year, vendors, realize services alignments make year. full driving will of as through income in statement to

provided processes, discounts Finally, we approval global on pricing us aligned and our allowing proper ensure have tightly control investment. to return

of our the benefits improvement We these deal are approaches seeing products. significant margins, in the already in profitability of driving Coriant the

quarter above the benefits in certain to some the of manufacturing addition to and received related activities, expect we the benefits which realize, one-time to resolutions to reserves. the quality continue from In we favorable

million $X you absorbing levels million were audit leasing standard. to taxes related Non-GAAP QX XXXX to to $XXX.X pre-acquisition operating OpEx million outside support was compensation guidance connection related to the $XXX even expenses after Year. with adoption activities incremental million which services remind however, of expenses in and above we rent higher professional in below to step-up the expense XXXX, a I like $XXX.X had reset as QX of remains start spend along the new that our of the New Turning midpoint OpEx. would benefits our with annual in

a of of to resulted which approximately will the points quarter. of estimated make share. $X.XX a us execute year was on and allow our over guidance a combination had levels midpoint our per loss the we net non-GAAP XX.X% to the which grow operating million XX.X%, operating we on to quarter we basis opportunity time. loss $XXX in The financial to as share guidance. We integration progress our better net of first per with results to was believe than back compared QX drive believe loss above better of We a have exit the synergies, our we continue non-GAAP synergy part as factors as expenses had revenue strong non-GAAP of We in the XXX our loss of which the per plans, significantly $X.XX

Turning to end of the of balance cash, $XXX quarter, $XXX at million down million sheet. the At the from the we end had XXXX. in

Since our the the we did large inventory to additional the quarter, the collections and not inventory higher reduce built buffer related end our transitions. we revenue plan recover begun in was had off the the materialize risk cash bleed some to expectations, manufacturing quarter than customer as later of have to which end execution to of in year. and expected and burn receivables the quarter cash expect at we Our buffer

second outlook the Turning of our for to XXXX. quarter

QX, That in the install, to expected will significantly the we of basis, required QX said, to customer in to revenue. continue We robust begin network and relates expect bookings deployments, on certify sequential wins. receive drive of won during on take orders as new associated significant deals acceptance we receive increase have to bookings the portion multiple the some to quarters a previous recognize quarters and large a up which

deploy a being second deployed guide million. which of plus be Many volume margins. expect wins, of activated are second are with large $XXX gross products, determining for very While revenue the in many we is expansion. the $XX these cable these margin have deployments quarter and be of a capacity on challenging. field the limited our non-GAAP margins. is higher growth much the we revenue complex of dynamic networks phenomenon, business day vertical, future, very This ICEX to XXXX of pressures in with are the of XXXX, said, new positive million, based excited to with footprint of one driving strong In as which of unusually minus us network This softness or our add exact timing demand to capacity about sign tends can future revenue both networks very That quarter as customers. generates it for thus these and an large the along deal continued represent which recognition

these engaged have we absorb QX cost we In revenue addition, lower although certain to fixed required Accordingly, cases resources. transition lower additional our continue temporarily in to will completed be actions in base. have we take efforts infrastructure, fully not and fixed cost incremental reduction on to the

As a XX%, points. non-GAAP result, plus for or currently to expect we gross basis minus QX margin XXX XXXX be

stated a model increase in in back is I we of cost income transformed function supplier earlier, and year, As as fixed step margin basis expect half through cost flow a the levels these the to reductions statement. the variable our

Turning operating to expenses.

progress lowering certain keeping cost estate ahead expense significant XXXX. to implemented our make operating lower year, of of our our us our outlined and business. middle plans drive well Recall throughout continue actions headcount footprint reductions operating We These that continue the will to in in real the we to QX, integration in synergy basis. efficiencies in targeted

spend remain As allows and it and million per million. we more to together, minus QX anticipate plus allow for us $X the or consolidate one business currently run quarter, or pennies. of loss much reduce all plus QX, of to operating bottom which interest the million, will Below minus levels. the a $X couple of ERP loss and of Further, share, our look expenses systems $X.XX million to tax multiple we us line $X system we non-GAAP to net we non-GAAP $XXX further specifically at project track during QX, to a XX% efficiently on line expense a net we of $X of the currently Putting expense operating expect million second to non-GAAP million. $X

significantly be generating our point revenue estimate QX our experienced the to in expect to for fairly low expected we lower the we cash in the consistent burn meet half, QX. margin pre-build in inventory million levels required outlook to and to cash We likely $XXX year range, that of and during anticipate knowing stronger anticipate That at result a we $XXX As those said, cash QX to QX. in second the reduce be will gross burn million cash QX. of in to QX the and

to of continue and the us synergies allow cash we will the drive the working as We to flexibility, course capital business evaluate financing over transform year. alternatives

Looking at the full XXXX. year

we the challenges revenue With billion. demand and our customer expectations referenced $X.X the for verticals, timing above have softness reduced certain to year in

synergy operating the of continue expenses As execute and margin improve we to detailed we over expect to year. our plan, on the gross course

in we drive the synergies, As have our non-GAAP driving confident this in year. been to and generate hard cash ability remain on profitability of we QX

resignation. to Finally, like I perspective would provide some my around

to few have years, young had grow have the and home by sure to am up. driven last them scares children make want I multiple at watch Over I stress, around health

year. over very wish the much With along As they you the be as call and the decision for such, would the that, for made to a cheerleader the to of portion many that a I opportunities support of continue the access new has world. I of for robust the grow operator the to and my deserve. to tremendous more of I miss way. he has Infinera me to I to and difficult company. have customers to Tom end family plan as Infinera shareholder for QX will with CFO. emphasize the truly opportunity thank the in to each like success solutions, very I company provided for my your to portfolio largest them in call. a Infinera colleagues invest Thank want Q&A the turn a determined of health a is the still the this it's I have the much I want and with at believe to that in of I time leave

Operator

[Operator Instructions].

go Please Our Raymond first question with comes from ahead. James. Leopold Simon

Simon Leopold

Thanks.

you you next thank in Brad, your us. of Wish of just First all, time with best for you endeavors. the working to luck spent want

Brad Feller

you. Thank

Simon Leopold

the to over question. Shifting

that announcement see of see coming just recently of and get imagine an an that wanted regarding you the Verizon. are if us the model So I that's I to similar Coriant, of historic I project Tellabs the the that of you with we to? the am that there idea kind to I a and position. business. an through give saw trying that opportunities opportunities made in you to terms assume that you I how idea others know size to imagine in like what could referring

Tom Fallon

are exciting do One, referring what I for we know opportunity to. It's our you reasons. did an pick Coriant. using us up for Suite a Software that it's couple Transcend from

these about able Xs, migrate think are to from phased huge them you to map architectures all world. with several old all old number networks, they networks of Tier If of classically of new phase network, want Transcend of of into program. and large they the the their all services. a It's have And a software, their the circuits, old first

able let Transcend does phase is SDN magnificent job map have and an of to and an as being The manager what a them they orchestrator mapping first capability. their

choice. The couple have an to fold. excellent third and second so found moving be to picked The obviously will those is start One, be will Transcend networks. Transcend hopefully a software that into me, capabilities. new be they actually excitement, the to phase And new circuit phase managing far it our

and success for while. a a them. about into achieve we to this release will the project with opportunity this They probably held quite continue success. press are are grow back achieving until We quarter They they

are to actually them migration migrate. a working with help opportunity professional also services have which hard We to this we

Well, that allowed and why business. came that the for Transcend everybody advantage think of opportunity to us Coriant? it are into earning they I in at This the that an You world this the to architecture. exactly not back seat who had goes an is unique positioned are relationship, they to up their because think a being new Verizon. And team, wants TDM we have It's comment, transition right. and a capability network we our with trust basically well that and had of to old table

Simon Leopold

first a you. Was unpack a then lower And follow-up, expectations. bad you walking revenue? Great. margins away wanted other in or if upside deals, original it hence maybe the a it's to bridge see the the just that? as aspects I to build Or gross reported if versus your for to from you of Thank there matter are could quarter

Brad Feller

It's what we Yes. get mix It's things, of of new a tough in sold. it's QX, to network combination Simon. Obviously the partially deployed.

a mix tends that to than be it better was So and better we expected.

chain nice continues reductions we benefits to one-time that supply did we as have Our doing. team continue of warranty benefited side cost the and drive diligent on are things to everything with some very We be us well.

we you So of will new large variety just continue a those in What the QX. and of is deploy the throughout of see just amount the as The go deals that in majority QX very different year. news good better things. get pause we is of a because

David Heard

Yes.

cost apologize. pause. a to And as we fixed that also a structure a structure. both this taking step Heard, cost company a It David think to move I transformation from is variable I is are a

facility. taking that you our follow Berlin I think for were announced Fabrinet, those who they over of they

fixed we to expect a in over And benefit be year. lifting that transferring to That heavy so overall and half of of is that cost. able we we quarter, of are mode Fabrinet substantial already have this in in get the so the reduction the seen, back to

in it seen we In the flow we time the have though, of we compound the addition, half cost Even products already. was to with the we upside that them back that Coriant will margins thought there reductions said, did as and take material when and associated to standard the takes that acquisition, inventory, the through year.

step and the back a we a will in business good is will about have we back for bit the both a of feeling and QX, of confident the some while which have efforts so we And impacts have we new costs half duplicate year. will in model because integration step are footprint the back

Simon Leopold

taking Great. Thanks for question. the

Tom Fallon

Simon. Thanks

Operator

Hall Our comes go from with Goldman question Sachs. ahead. next Please Rod

Rod Hall

takeover. way referred embedded year. Fabrinet this question. for Is the And Thanks for later guess could so Brad, guys. you quantify Hi it's us any well? had and in start what impact the too off understand the the you cost there the to synergies, as and I David there I impacting that just would could that that Yes. clarify maybe wanted in Berlin be? we to taking I but guess, facility

Brad Feller

Yes.

it's per points impact. basis So quarter few a hundred

So it significant for is us.

Rod Hall

Okay. Great.

XXX guess situation. gig that more XXX materialize take gigs about be? your know a just will I broad XXX any The a later. know, there whole get your this to cycle affects other this you and was I And think on cycle gig probably trying time topic, color I I you thing that. has I wanted is it that circle gig gig until how around I versus the get how talked be for the just And Tom, might but am peaks? XXX to when feeling to will big back just substantial as it? here progressed and on a gig not thinking and to XXX XXX cycle something Just to

Tom Fallon

a of gig market subsea you acceleration with is now, industry, think gig opportunities gig it in reduces of just be the the in that I run and going ICP, space. of gig believe Why? see happening real. going solution. market network still that of cost for lower that's the to XXX I does. Probably XXX XXX a the have carriers and disaggregated have transponders reasons opportunity. XXX to the XXX of you one you a are big transmission XXX in reduced going to solution. one the really is are cost is our to going largest for And in cost, to gig and XXX cost. than had be at not. in XXX I is disaggregated Do to network, the transitions Lower The steal in capacity a ICP. it the that gig? of think we kind great this Right a same we once the particularly gig XXX pent-up gig. like absolutely the look competitors one transponder. have an the we has opportunities thing drop do Well, They to and next the opportunity Groove gig very open lot good going unique And is of to of is Because have open, gig, won being that's it just if areas XXX significant going

think I available XXX certainly half second today. this it's today available people to Nominally year. in volume the of that today, are moving in because gig

great, take lose gig with gap. an today, delays take gig Once new But lowest gig XXX the available. disaggregated the risk and coming, build While opportunity there's technology it's you XXX networks. network, of is don't and when XXX cost have open always to run

XXX a significant in gig. see gig. opportunity a in I I So opportunity see significant XXX

XXX We gig of have XXX being both think a are kind And today I position that the in we and duopoly gig are in with only people a XXX tomorrow. year, next of nice gig.

David Heard

In or are technology we gig year adopt gig, people XXX tends operate delta, a think used when any to cycles. they we two they stop to don't the carried gig have to that getting Remember, think completely that's the XXX cycle. today sell cycles, potential I ICP and I three and are new away XXX managing tends to cycle these big a

world, service XXXX have go network. the in to just five-year to tend a cycles. because like in the to as you not as it into out Tom you year continue technologies mesh see get tend XXX paying will will XXXX, those curve scale of I have maturity you get XXXX. more that gig of Those operations can provider and said, a and we And to gig or similar. see adoption think end think XXX cycle, start of this So three-year I XXXX In

Rod Hall

revenues, Okay. other million dissynergy $X in and there only North And American there. are thing, some one I up about am assuming is there maybe year-over-year

you whether could us to is or Just give of little looks what dissynergy like the there color year-over-year of due kind on short-term any that? underlying low the trajectory revenue increase curious other a and just bit

David Heard

No, a it's question. good

of just as because I ICP in ICP prepared and portion from there. first some in we spend some in half was as comments said, of our softness year and reiterated, no think his Brad picking was What North that wins the have spend mentioned and up of we in the the seen that in you of space. American the is softness that orders are the there some Tom our dissynergy cable seeing, competition design inbound

Tom Fallon

pretty QX, and North in Americas and that, outside growth. America cable general, solid the ICP were In seeing, were good offset by relatively one weak. space being We of

Rod Hall

and too, to Okay I luck. help Best it. the then all the years. over thanks really of support you and Thanks Brad. ending with appreciate for just my

Brad Feller

Rod. Thanks

Operator

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

Samik Chatterjee

just of start Hi. year. the the guide to question. half back Thanks I for the revenue wanted on for off taking the

the of the I over which kind think terms of over $XXX first first kind step in sense. the implying half is you or in of kind a of half improvement a back million function are half, that modest

that an of much And to much on you in booking is, of accelerate half? looking bookings QX, get and trying terms how that of about much of QX that how much of would are is you risk back this of is QX. of is already And in Now in expectation talked in how kind this you what's this kind at kind and How QX? building booked accelerating how QX? much based in bookings in based on the the am for of I terms expectation of accelerating visibility, had bookings

Brad Feller

Yes.

We had it commented we have historically. the increase bookings that had QX both QX. over in what we what So significant expect the we in biggest increase a is is driver and

So that the will second help half.

We are also new have ramping. products that

to great the as Groove. half continue mentioned there as wins Tom So expect well, there new we second think in is to well opportunity in We half. have second gig the XXX that as the

Tom Fallon

Yes.

grew backlog grew in backlog will If an QX but you not remember, again. we We significantly, significantly anticipate bookings again, QX backlog grow of QX. grew backlog we and which exceptionally strong in again

that plans in QX in rollouts and have place on will QX. We be these

until are actually Those uptick the over mentioned in network. win, are ICP you second see hand this specific half revenue that I this deal. in them based And this don't year. subsea get you very the we where of Some significant opportunity on all scheduled later for

revenue. not second to feel opportunities see the to we pretty that comfortable obviously half, half there's growth we the support this cover XX% enough Now backlog up in but second

Samik Chatterjee

the I if you gross lot margins you thinking months about or about of your quickly talking wins, here, have pace confidence new how of you you thinking still terms How kind six exiting kind that year? are the they a of of driving months that clarify, And gross year? new about exiting and the margins are the in seen Okay. in the a bunch of of earlier Are businesses wins three thinking that's are could this the pursuing, half. from we are does kind back announcements about of you new impact does

Brad Feller

expect year the be mid-XXs. No. We still to gross actually in margins the in

be we some As the us get cost of deals. that fixed absorb to out, great allow infrastructure thing. will It new will the a

Samik Chatterjee

Thanks. Okay.

Operator

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

Meta Marshall

Great. Thanks. couple had of just a questions. I

kind of a that will are to of just the sense footprint off, On that products get you take the deployments what timing second it type that just talking those? it little and new X about signed the bit just X might new within a networks? of question get me. products XXXX and Is for then tested to longer XXXX, take are And or are

that it Thanks. the any of Second order? there. Just revision it pushed Asia question, on the is just a out, a customer push Is out? context

Brad Feller

Yes.

was, subsea and broad. in is well. robust So products it's That's that of are first some applications. historic the we where the obviously complex well, you question of subsea XXXX as some large terrestrial big and some but product as use fairly very it, there a doing part is Coriant very with also very deployments we had Meta builds

all things the the different camps. in of that fall So there's

Southeast we remain customers' can't much large The say have It's this and too that will at detail, confident not hard expect. On deal get would exactly will just revenue. deal give in they but the plans how gone the into Asia, to point. happen

David Heard

with tend customer these would that a Coriant larger Xs the and times in at wider the are Yes. of portfolio, of the lot much of much many customer and to us add terms much bookings of that solutions in Tier I base carriers two networks which move slower of a to rollout sales revenue. and pretty a base with to the prediction gets probably a cases and bit of these thus the addition pace

Meta Marshall

Got it. Thanks guys.

Brad Feller

Thanks.

Operator

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

Alex Henderson

that you reported in. Clearly there Thanks. taking here gap are a is the between orders revenues and

do having recognition. that with of Some revenue to

of win But think of a factors. not $X.X the Some you timing variety Is you actual of revenues will that patterns do issue you recognition being hoping a having of billion thought, simply historical I with XXXX? during the are you you in talk to are was orders have business could different you your track basically this from on portion original just what of other and therefore, to recognizing in terms revenue it. a to

Tom Fallon

our of and of both. fill, the my bit these my call, is little think are opportunities out a light the have don't means follow-on as down prepared networks follow-on fast. I probably down part And timing. roll I the from remarks. are original bookings And you they It's Bookings upon based as delayed, significantly slight in in plan. said a combination The revenue happen

we first at off our combining and look of If I look the first the far original you actually the half half and at of QX not QX plan. take are average, as bookings, an

exceptionally We And half second are looking little see down. a the we pipeline good.

experienced, We quite Part what the have not what change is losses. consider in in frankly, of are would cable. I seeing it we

It's different outlook you a time. shared with last got today. specific from customers So I very we a had that that outlook I

customer base. in the new So is part of reduction one outlook that upon that based

Alex Henderson

X.XX, in about As talking at based in March the book-to-bill number? on the the X.X that what here? June for type book-to-bill that we matter, quarter being ratio is look quarter we up, commentary are the and significantly of Or

Brad Feller

Yes.

roughly is is obviously line. a in QX one-to-one. So than QX much higher

Alex Henderson

businesses of magnitude momentum looking lot but there, I think clearly bridge then out at XXXX, pent-up also get out a little and you to to that's able in can are a X.X of Can scale that's you a you out are in large do you on bit at a know that deploys the a you you that of as some expectation later the move terms about, are new as of and is get wavelengths. talk in that Or point? going back too bit And the get of here there's back be we lot to embedded original will a what to to deploying turned far? there's some little XXXX. year these original Okay.

Tom Fallon

I certainly isn't am Alex, be great mean embarrasses bridge a and our down so I for taking me. Well, today today, embarrasses which honest, us, let's this it's it for far. too guide year revenue

business. to I think the opportunity start an building we know I we do. have

winning customers. are We

into I a not huge pent-up to XXXX out am have this pipeline a going go demand. of We point. time-frame at

it think take reasons will be look lots optimistic. to We under to that. of advisement to at There's

deployments markets you our I a market think in about do well, huge from Coming several XXX But support for a have new us and break our metro router lock a in a think do side, feature that to gig at year. to year the XXXX this certainly the after, if play. XXX wants too opening a gig that software to the the Tier router, we to it's X Tellabs this to is sure up edge. got market That's well us. going all am new any early richness heritage eight for really But declare disaggregated trials I is we planned the our current competitors to are It's have the going on committed have with go market, disaggregated DRX, for it for victory.

but today. of that reasons about talk not lots we and there's optimistic, to be certainly to going go are So

Alex Henderson

of are bit One trials for that the product obviously like? little of is more bit a you will revenues that had pulse The the question getting a product timing we up Can you sounds cede than lot attention. around DCI the of later it's what The then look timeline to and talk the the And ramp floor. initially will thought. doing? a amount scaling like about I pulse

David Heard

Groove.

Tom Fallon

the Alex? about you Groove, Are talking

Alex Henderson

I Groove, Yes. misspoke.

Tom Fallon

Yes.

have seen pulse, say that and be I has it. to I Okay. else's Because seen I it market. haven't the not somebody would the in

David Heard

baked into revenue or the not the is for pipeline it. That

Alex Henderson

Okay. I am sorry.

Tom Fallon

right. points in said new that's we big of of The new customers. That's a a Groove, XX of fact, no, okay, couple had really number QX. I customers

of Now also Groove, technology, an large. exceptionally not them well think, technology. I new adopts but substantive were The is customers. of number today's for all that's product designed a next both But

So that gig. to upgrade entire installed base XXX basically can

also They that is particularly creating to we lot are what's interested And They XXX and of excitement. XXX interesting to very familiar. a fact of XXX are Our gig going talked in a gig is the customers. a number gig. roadmap we today have of

very wait. They have a not are are technical We They are in They very reviewed what ICEX interested level. interested. both. does going to at

not am the I going of Now to go into exact number trials.

We have of trials. pipeline a big

it the general. scaling XXX opportunity our am excited particularly in I for gig orders. to about I excited XXX then have the actually received and about gig. We am first Groove

Alex Henderson

Thanks.

Operator

ahead. Our comes next with Jefferies. go question Please George Notter from

George Notter

want I on guys. just my Brad. guess curious luck you, I and sounds we have very you Thanks around I Groove traction The But good the with DCI products best I just much. DCI question, hear comments are Brad. side. am like to echo going Hi was to miss and the Good Hi, I about it on got commentary portfolio. feedback the there. certainly customer on the thinking the heritage wishes.

a somewhere well. running platform CX a think around that a portfolio there's got was Obviously, there have You year. as million X I Transmode $XXX

transition quite certainly. other Groove of kind And of customers keeping I feedback how the the those not But products? managing products as and over the customer they And fold how you a the talk Thanks. looks? million DCI to year, think in from you it then, how can running $XXX about migrate? are just was are you kind

David Heard

Yes. Thanks. is questions. This David. Good

history, XG because And strongest whole seen, Tom XXX,XXX shift of as whole helpful. is card line, have that we a actually last the mentioned, the being past the ex-haul a XG from DRX mentioned, we pipeline, trump product DAA locations DRX from over product very product certainly that strong of DAA. mobile as years actually our seeing in of So very Transmode Tom couple is more tied, large in with bookings, are and towards of the very deployments. and the having Actually Coriant, the

DCI much three cycles, front, easier are where the three-year transitions On it's servers. cycles, out do manage kind of four when they they product they year them mentioned, I like as to pull to

only gig, continue one the CX like of our existing what do existing a is our so shifts we XXX show these roadmaps that's technology. a has have move Every track you And XXX, to a for you do cost isn't new large Groove base really gig to to line. with there And being field been player able show that from customer the time to have would very we technology to to something the the we support XXX to record. our as XXX of from kind and able go to to tend that XXX that chart ensure XXX,

so And us of the quite positive, also been to customer expertise software and of reception brought has that's Coriant. been by because usability the

both We are able to worlds. kind of melt

transition, easier on three-year a much cycle. again, So the

Tom Fallon

remember, gig If or It you CX configuration the XXX is XXX platform. gig. is a fixed

you the year decisions the we to replace So it platform. we generation want one X. Well, of and up intended always made few was we it acquired be with our to it a ended When next it kill call killing next Coriant, generation. however the Groove. to CX was

technology is for CX The better customers CX frankly, pick and the much way. have customers actually along the current we We its slated vastly customers been But the architecture customers, a up allows transition the that than is quite So that. the accept product Groove, expecting. into sell natural Groove this migrations a really the with CX still but still our replacement couple architectural does.

George Notter

I restructuring And sheet. Okay. follow-up your on about costs. then I could, curious balance one the was if cash just

Just restructuring is here until trying of Thanks. the effort kind left how to much figure out done? is

Brad Feller

Yes.

is QX things. George, go. some had have Obviously to further to for. pretty there and support actions be QX we significant some Obviously, transition go. facility So gotten still there The will Berlin

some net year. So the course of us. the it see for over But won't outflow you be cash a will

cash in less positive then QX in and burn see expect So should and in QX. to QX turning you

Tom Fallon

Yes. George. items, Think big about

is Berlin a significant Moving item.

we quickly. very And conversion back an then pays that in So have happening QX. ERP

by to, we are So the as conversions us than the close end part you know, said the I of ERP allow most functionally said, the time for as that and will earlier take I money and year, certainly that. targeting acquisition.

George Notter

you. Thank

Brad Feller

Thanks George.

Operator

To one to please has ensure please yourself a question a limit follow-up. chance everyone we and you that remind to one question, to ask

ahead. question Please comes next go Kvaal Our with Instinet. from Nomura Jeff

Jeff Kvaal

prior some question. talking Yes. wondering, picture about I have going you synergy ahead savings And and what wanted some would Thanks timelines the like you maybe you your the are And cost Or you targets earlier over your will a of feeling for where I I taking ICEX how question follow-up that that for had the of us if point in thought you then number? could than your to terms from your are et Thank of laid a I out. view work you my than expected? that's through how get cadence just you next larger there? means bigger are the to cetera, on the to know faster talk XXX. rivals Tom, you are is, et just about cetera. They am getting ones little had clarification you a you. if timelines. are of

Tom Fallon

is a what the two there competitor the talk I and the unique the of am that is and might not in two about I will But have us say. with fairly us XXXX position XXX we be going in in on what see to only competitors. to gig this our market having would Certainly that's for about Yes. market where excited a we opportunity are be. technology

to general. be over-served in continues Great. industry Our

on it technology served Let's side. less the go and make

our we Second point XXX schedule comfortable feel with on is, very gig.

going support back As we first good, October. I on excited the volume plan doing first the will technology on next said at be we on It's That second And that to to October. of for market But today am about supply. year. we have one optical of XXXX gig have a first timeframe. that's of us, chain is with us OFC, there that ramping and the half The and own us XXX advantage, year. owning time chain our in By integration, start of first still young the things the but is the XXX allow September, there's advantage, well to to is customers an plan vertical think silicon fairly in we not probably probably demos we nascent part probably having And the track. in to I said people bringing supply to lot of opportunity market own volume. our that gig to of optical time technologies volume

really to So after are very a the where And you step function of a bunch it's is. see we that's opportunity these when demand. It's zero going winning, ICPs, quickly.

a our control be is will dependent have that make to market. only who for not play supply ability going think investments chain to destiny and play, of strategic around that suppliers is cost not and value, I to optical my performance the the to that but So belief upon well young the

said, why gig we that's we And we think XXX then showed I at are about PIC our So excited it. OFC. as

today. optics working So

Brad Feller

absorb of your get the still previous timing the and same fourth related profitability for quarter. clarify, second year we That's question. results synergies. in in above achieve significantly to ballpark the to To part Jeff, are our still to to us some allowed address of what's And financial by and revenues the on softness the expectations the

David Heard

and for be margins that things completely some again, I ahead year. to position we gross results happening quarter say in what we very the this Yes. by see QX Ahead full above. happening. of the would have transitory the well ahead us But and

Jeff Kvaal

Thank you.

Operator

from ahead. Bhagavath Bank. with Deutsche go Vijay comes question next Please Our

Vijay Bhagavath

Hi it Yes. Tom, how going? is Brad,

Tom Fallon

Hi.

Brad Feller

Vijay. Hi

Vijay Bhagavath

Yes.

Best of a with luck Hi for also, Tom. very with So question you. everything. you, working good Brad

is I So initiatives fun results and place? question are read. Tom you around excellence no put mean, in my these operational to have any milestones

have Brad. focus where milestones follow-on and go-to-market you can most So the in on products attrition, advantage? any topline And anything bottomline differentiation both you also so portfolio around in changes in competitive on kind that your of a place, you, the for and definitive any then had

Tom Fallon

He and engineering. going am to David runs this. management answer product I the have driving is to he integration Yes.

important. So I he give the probably answer will you feel add crispest I that and can anything

David Heard

fun would macro at I shift the Yes. the the here results level. say, of are well, to not read

driving products end forecasted harder the to and we guys. quarter, are we first faster achieved saying margin standard think driving than you by Coriant on the I integration the what in increasing is, cost the the and EPS better of by originally out,

going we out to bringing about job nice the products actually that I the the yes, we managed think just ICP market out new as forward, we have about, done there. are a together discussed portfolio, just we migration, of seeding are full as

the increase reductions Fabrinet. chain able price our that we has partnership with variable chain back half, get with continue entire our We margins standard And see reduced supply made that see the moved to through we on XX% have been of flow as the and of on an supply excellent material materials. we have

and that topline booking on from are that good we would with bottomline that QX. we recommitted profitability milestones those and still cash think that still committed operating drive improvement to we have flow and be, associated shift of the are So gross margin income I in less revenue

Tom Fallon

grow operational I we Vijay, and want the are it to it, products, can bought add make this. things going new company metrics. to the other We are think around profitable we because am Those three to quite which then a we operationalize business. frankly

But number Coriant new Infinera of and in our operational the share. a ramp XXX use the three, middle is issue Operational best of and gig the the attack It's converged think of the to that and opportunity. working new the platform market Operational to Those deliver half number IP of edge. year next disaggregated this milestone a on. the number insertion. best I year the combines me, of that year. second product are XXX one, So next really this inflection I year am two, three in DRX that things in win gig

Vijay Bhagavath

when benchmark report synergies? or Coriant you card, do Obviously synergies, Brad, you what's Brad. quick revenue out your synergies announced potential the A on you like How for laid some cost the deal. follow-on Perfect.

Brad Feller

Yes.

plans. the So us in baked we some are significantly higher driving, the of Vijay, targets But synergies are, that we revenue that as laid commented, softness term we We the before. to since synergy we synergies we into above out we offset have allowed expecting weren't on that short are revenues. it's the the

Vijay Bhagavath

Thank you.

Brad Feller

a good us gave very That report card.

Operator

Our next Partners. with question go ahead. comes from MKM Please Michael Genovese

Michael Genovese

quarter going I Thanks in was revenue, looked $XX Great. quarter. the million, million this It at very right? much. the report Brad, $XX last ICP CFO to

be, customers? to And what's are but CapEx exposure about Is I the because fairly takeaway seems ICP weakness comments spread the just on am talking your your should DCI, in on the market really So good, we are market wondering that limited. across there forward-looking I quarter. many the think

was? how many you could know If I going than Sort quarter. what in of forward loss? share weakness you think you more And versus accounts positive that sound discuss the

So just want to make year. for DCI the about sure that we good feel

Brad Feller

Yes.

it's Obviously, market. of a you a in that bit that So are of bit see Mike, is, customers. in we different a transition the few softness

So the QX. in caused that's softness

won just That muted ICP. that ramp with. we also that very they I the plans forward have in we have and of overall very to said, an one They the Groove strong. think just is in are portfolio mentioned very a significant very think large the that several large We opportunity I it's interest space. customers ICP product going spending

a we in for why and we and transition while going before a the deal a are feel even of that's So have we forward bit better. currently, been much

Tom Fallon

Yes.

field the light us think trials said, QX areas the as fill think and ICEX And data One the massive number from ICP. in I QX I They And this as fiber. number with much won Brad significant that amount and is compete this have two is in for and center a interconnect, seeing on in can bit was well, happening CapEx a We allow in general customer, in subsea I guys are healthily. transatlantic but in spectral Per We about alternative. our opportunities obviously XXX we had ICP. of a our we not gig. are is I a with industry $X generation one. QX, these next a with build won, looking how per we to best of of Groove is first think for QX. cable, there understood, material maybe that link you talked with efficiency

the now our say have are can't subsea deals supporting that upon But also can't all. the space. we will we I of opportunities. I game say them we We are feel going quoting with win we ICP right to will are performance, any. comfortable win based number a these and I in

subsea to to do be for going I in I more think there think is continue ICP going to is than spend. historic us. So

Michael Genovese

have because I just from feel some free my long be. about of that could follow-up short, here, just it investors wanted so will who I on suppliers have off what terms answer, ZR Awesome. to getting you ask the Great. this given Okay. But a is make incoming I ZR, XXX be to are been questions base in it of it understanding and the pretty time.

your first ZR be the part sort just that And of about it? a all, ICEX of the economics for So you? of of talk Will will and opportunity ZR? have the can you

Tom Fallon

solution. will a ZR not we have Well,

to going a build not are solution. We ZR

I some market. come from that and a building of has it next our overlap year volume our will We have follow-on is in ZR, The talked probably view solutions. perspective about certainly maybe out it portions think,

I compete is a for that to on we and drive Having decisions dollar gig. is kilometer go bit But and from interested simplifies that not solutions going the say that that ZR, less gig with XXX understand they their lot So a have particular want an for of that don't there's than and to one certainly couple and necessarily going number mislead that's per because that are with reaches kilometers. looking perspective somewhat solution an and will is go that, of we I not perspective they level, particularly us component believe XXX are told of need create to a that ICPs think still network a that, said the XXX type can optical of specifically there what up thousand be ability range. people of to of of overlap, to in don't things people the a

optical goes that is platform same a use the technology. and can data that they Metro in center So

So I as would not as market the less look at XXX the kilometers and market.

that am fairly saying, customers my piece across. to I apart in that solution break solutions going I metro by optical to are which number markets, one for they to encouraged And interconnect. one are say, going two for the one center to actually and got data You am and say

you I interesting and probably that around think technology the and going do now will something be from optical ZR Plus that's more us more see of to technology is reach. when a years couple has that's

David Heard

Yes.

in suppliers be significant is to players number, you a on and we is that edge reach like and commodity there investments a performance where are to that with four-year ZR, also are is a we putting with where commodity, four the which, certainly fact to but a like period, place in things in to may metro interoperable built to have markets main And be king. in next ICEX, where technologies. applications those things three are Just at $XXX advance over we going see network. But million-ish number, have edge to the just for of we how short two plan to of be it as to you to be we policy investing think a the dynamic certainly in differentiation a announcing place we where able scale look will there's start

Michael Genovese

Do are a of overall have a compare the that? non-ZR sense clarify, like saying, Do market million. and forecast ZR in that you Just you you market would is $XXX the to have what market be?

David Heard

optical portion take we like in $XXX to kind entire that XXXX And that it's reach The time of of of $XXX Ovum the million when what short just billion and do. $XX their a roughly that guys look number. and about you numbers DCI, We period others at market. million say, is market

will some shorter, Be is or be players, which to a careful, commodity is said, be higher. because reach, number actually not ZR short four will as a of ZR be is standard Plus will in spec and a we more, with three Some a people talk interoperable. interoperable some Tom market. about which

Tom Fallon

that market distances. does million, won I greater parse spans the And says apart that not solution $XXX that optical if an

at it's this point. So uncertain

Brad Feller

Correct.

Michael Genovese

very Thanks much.

Operator

turn comes question remarks. any CEO, Fallon, back now Tim the question-and-answer will next go with Please conference conclude over ahead. from Northland Tom Our would session. Capital to for our Markets. Savageaux closing This I

Tom Fallon

customers, commitment patience. I would like shareholders our their to for their thank for and employees partners the and

forward this with During Have to I this look fulfilling you. exciting opportunity day. transition, a great

Operator

you for now The and conference concluded. presentation attending now you Thank today's has may disconnect.

Infinera (INFN) 9 May 192019 Q1 Earnings call transcript