INFN - Earnings call transcript Q2 2021

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Operator

Good day and thank you for standing by. Welcome to the Infinera Corp Q2 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] I would now like to hand the conference over to your speaker today, Mr. Passi. Amitabh ahead. go Please

Amitabh Passi

section Good conference to today's call. are Investor investor [Zen]. of earnings second fiscal slides Relations the on XXXX A available the afternoon. you, website. Infinera's Welcome quarter and of Thank copy of

revise Today's operations, recorded to measures. call date call include circumstances our available reconciliation Regulation that filed will for of on is we products, will this no we've Pursuant map, not about estimates and plans, that that differ on available our includes the of directly Additionally, these provided furnished undertakes our measures sales, including finally, of of growth, result reflect for performance, plans reports annual quarter, to certain March section Relations update for you statements David on manufacturing of limit as events statements outlook release yourself and some report this market arise statements as may management's all Q&A will as may and filed our our financial and XX-K well Today's earnings and forward-looking which limited Officer, product regarding subsequent technology opportunities, including, statements impact of product from I'll made that but the for website. financial materially the future financial road from most be a strategy, or Actual business after to a being X, is Forms turn Chief are our challenges risks non-GAAP statements of the up today, These are our financial Executive results on XX, time-to-time. G, obligation in a our each risk call to fiscal non-GAAP ended current the projections XXXX, SEC our replay and conference XXXX well year call. to for the uncertainties as results and subject including for constitute of industry-wide of measures forward-looking as in website. to to, be factors, operations, those financial with or statements COVID-XX with Infinera's differ SEC quarter and Please please. reminded cause as we forth as any plenty comparable statements to reminder, this now today over on allow Heard. the time investor the XXXX. year results materially from slides of expectations. December to could third including Investor set to question follow call the that GAAP one And in regarding various the one as ask Infinera that business

David Heard

was a Amitabh. our and afternoon, a and review thanks Thanks, details Overall, outlook four the pivotal second joining to of with cover Good third call today. the Nancy QX and us for quarter. results the following for of then to over financial begin I the turn for the performance reasons. quarter will quarter

of environment optical years. to continues the in growing environment of one value an networks. trend recognition of is opportunities. Bandwidth This replacement pace increasing market the provide we've open the environments healthiest seen is the the in requirements acceleration First, optical the networks, optical unabated, including Huawei competitive we there improving, an towards are and is

X by drive our Investor on Second, by communicated XXth, May expand to reviewed we strategy we growth held and X and X market our Day where share.

transmissions. on Our the following by strategy X focused is founded X X by network and

XXX moving networks to gig. core First,

expanding and expanding coherent the with edge the which rollout to of the of reach moving XXX networks XG are and optics the Next, network edge close creating lastly, the metro gig networks of out compute, optical share volumes. opportunities networks and opportunity potential driving the and to are us. shift with insertion Huawei tremendous gain open market transitions along optical specific These the for future mobile

across of to all fronts these starting early bookings. success pipeline in are and We growing our see signs

market evidenced for as experienced we strong first up the bookings observed double we in the last continuation in are half trends, double-digit Third, of from the A first of year-over-year grew in product digits year. also robust QX, very in and growth the In quarter. XXXX trend quarter. bookings bookings the

operating we Investor confidence to half was QX the we presented temporal Day our meaningfully first the are our with target ratio the quarter give at in and quarterly achieve backlog. from chain book Our above we headwinds May. the us and that Despite disruptions, record ended to business track results supply bill one industry-wide on model

our double-digit operating margins by model the to our a X% reflects in target reminder, in and expectation As growth business starting margins XXXX, revenue XX% mid of gross XXs XXXX.

X Lastly, new we by strategy. by made that progress significant with X support X products our the

ICEX XXX backlog. the the quarter of of realization new commercial we shipment and revenue accelerated addition in in above growth the and our For ramp first customers products gig of with of

to family. gig we XXX are XXXX in Analysts pluggable for Day. May described of reed of XX% We metro of our the address plus dimensioning To growing XX% to XXX product VR announced we Metro ICEX a to as our merchant towards tracking the networks the gig, our in product availability revenue

vertically also ICEX a suite We portables, integrated to CR intention of our offer which plus. unveiled XR includes

the open expect dollar edge this in who standardization XR market XR our we adoption Luman, And the creating edge ahead. the be to and plus with to the BT, compute In pluggable years network, driving of goal point XR forum for margins multipoint members Global industry of XG in our optics. Horizon, June, optics. of initial officially share capabilities of addressable driving acceleration and and with billion gig expanding of share launched we're We Windstream new suite Liberty market with further to the mobile XXX key and in the metro of a to coherence all

membership in forum. and service forum. interested of joining XX first global a significant in the Within forum represents currently number of partners launching a have we CapEx. share the ecosystem And days the of provider global the Current large carriers

operating instance For approximately million total expanded compared XXX by gross within limited end margin points by our cash of the on million basis high was expanded to XXX a results, while and over X% year-over-year These by our operations outlook QX points with the of Revenue our QX supply. our financial margins quarter operating specifics grew basis flow gross basis year-over-year, outlook range, rate by in by supply constrained a $XX QX of margin range. revenue cumulative issues exceeded revenue $XX to million. entirely growth about margin year-over-year, increased $XX and nearly from XXXX.

I additional give on and we supply disclosed we confidence increased insensitive. results Interestingly, importance us customers, continue to to target quarterly are core provide forecasted earlier. details her will are temporary facing are that into We visibility us are chain to to demand achieve and that unique supply opened in believe collaboration in Our have with challenges profile the business our providing that not quarter model, track Nancy to chain our ICEX were constraints in their and doors the their us engagement commentary. greater the portfolio year-over-year in growth by well Metro and both customer in and X by in subsea builds regional amongst X solid perspective, speed a opportunities. and ICT are From Bookings experienced the the basis we were segment in benefiting X year-over-year on Huawei in strategy. increase from our Americas in a customers sequentially upgrades. up EMEA Metro core our high meaningful our an quarter-over-quarter the and regional and doing addition of displacement underscoring

a major GX few On our with QX pipeline effective products. as additional timing good sales half based ICEX and our cable is for fared quarter, seasonality well segment a in Tier and of the and we Asia-Pacific the demand the Metro success performance projects moderated out rolling strength XTM While Overall, start are driving healthy in second QX. OIC, our states were a in their with Metro a broadly solution portfolio network. broad across long North At while GX XXX and X chosen in after double-digit gig product applications, our open subsea. haul open The X platform optical our that including across they to American portfolio. provider have all Metro, major robust optical year's bookings growth for revenue this deployments basis, and deployed Tier GX be grew highlighted industry show across Infinera's service year-over-year continues optical our and

are which and XX% our higher important operationalize another network. XXX high meaningfully portfolio. Metro customer four, sequentially we for our And are this of the wins quarter strength are Line testing a a year-over-year demonstrate on customer transponder our basis. year Additionally, web-scale they our plan than indicator are actively strategic for major solution flexible and gig system and trending sales future broad in bookings These margin gig both solution. of their is ICEX leading XXX the customer GX

expanding critical that and lower of noting While systems we ICEX. related line these to the line worth good ICEX that a our they're were margins customer systems deployments. booked XXX the carriers the over specifically footprint of in to are XX% indicator in adoption of leading It's also QX short-term, gig

our more the XXX we of in secured Investor now reported purchase Day May orders Speaking XX customers, from on which, front, XXth. than six gig we have

initial continuing is systems we those QX Cables, albeit In ICEX, subsea Telecom, unannounced globally, is as we're both Demand Our Celsius deploying well Seaborn publicly we in as and and terrestrial UCNET, initial Tier ramping from success a that across and and trend that announced QX, as with includes PCCW, customer at other and modest such X TPG customers. the production revenue ICP customers levels. growing applications. recognize

the qualifications, of I we And across are field for multi product in and XXXX, focused revenue optics, gig XXXX. we our been tremendous a original half in the for customer earlier, strong, line is geographies the experiencing. Overall, our open and of the in And in amongst XX% view the and activity strength portfolio. customers, our opportunity XXX is conducted we're demand customers that by ICEX partners. ecosystem XR specifications. in encouraged represent interest increased to strong as systems for demos by evidenced base optical broad remains in optics. seeing growing forum has appointments As surpassing customer growth trials mentioned remain I'm XR open technology Customer We are performance and ICEX cycle leading seeing reinforced year and over suppliers our XX% interest in that half and we long which on of the are demand XR and lastly, the to first the of first quarter trial XX industry

near-term demand impacting to well bodes strength are the for the indicators challenges real entire supply base, near-term, paths our challenge the industry. underlying future a are our This networking healthy demand target our While in is customer and the across are business but our model. including

supply our with a partners and the customers keeping issues. In closing to closely address variants, our employees safe. COVID-XX working are to many chain regions around in on world with We supply we put short-term those spikes facing priority continue

humbling incredibly the we frankly, dedicated inspiring hand We call for in quite and provide business lives. professional are additional team as the to have our their Nancy towards our Their their in quarter and making will the and now I and me on our outlook our quarter, details can't reflected towards commitment serving I over pose an target target and financial the to personally. model. quarter enough the thank our really model. customers to formidable tireless this challenges And business to progress is progress resilience, third pandemic and personal continues to achievements them

Nancy Erba

Good provide non-GAAP David. QX. everyone. our covering My results outlook comments I will then QX and Thanks on for begin results. our reflect by afternoon,

against of to to financial performance website reference, reconciliation second quarter Investor the with The environment For a supply slides commentary. your challenging including winning non-GAAP am posted assist Relations details, backdrop of our performed Overall, with Company new well and our GAAP I have new XXXX. our ramping with we products customers. pleased while my in to the

above one double-digit in with quarter covered ended book-to-bill David looking continuing back. the year-over-year. QX QX the product the strength and saw bookings ratio with we in record for As with We robots the meaningfully quarter,

strategy. XX.X% the extended shortages, times $XX came X component the course outlook on Our the margin XX.X% was into for gross million was primary of about potential elevated total and QX believe $XX range, impact Coming to first outlook range. believe is our our challenge $XX staying impact now cumulative the by to range revenue the our million of account, of in million range a industry-wide $XXX the of of And the two the high revenue that in X right in XX%. wide XX quarter, into now worse. revenue we chain of million the of our million. of outlook, came operating quarter while $XX in outlook to industry we the now end half at QX above our higher in margin end quarterly quarter, actual outlook supply navigating gross is by our impact midpoint million contemplated the the gross primarily Taking costs within lead that to of margin factors. while impact to that high above in X.X% X shortages. was and the of from to due our margin XX% Relative

with gross and of the shifted service basis margin outlook structure, and was basis in QX; second year-over-year which a in was in line coming more by mind related of profitability the our end some unexpected were in higher First, range. also product Operating above million costs mix services approximately towards margin, basis outlook was benefited to up margin of basis, operating better our quarter end as high absorbing reflected margin the as profit points higher temporal XXX operating due lower $XXX the in over product million out into margin. with anticipated cost improvements which than supply X.X% points points, systems expenses the this The while $X.X the expanded from year-over-year. we favorable in deployment year-over-year of gross Keep quarter. and margin. operating improvements quarter On of and higher XXX a approximately our chain in XXX

per are as spend we The integrated representing a $X.XX portfolio. X $X.XX vertically Even share, in by X in EPS share to prioritize by was QX R&D continue loss year-over-year. X per result a improvement of

Moving cash quarter items, cash and in on to with $XXX the we million restricted the ended cash. balance flow and sheet

position flow Our from and $XX cash operations benefited resulted CapEx from cash free in flow. of million ending positive cash $X million after of

At inventory transport quarter, had our our drawn credit we manufacturers and the model. contract more completed a end the During of the as variable to facility. we zero of million we continue the $XXX with quarter, business one against drive efficient

XXX supply. points our on of along model Furthermore, by gross operating points expanded constrained business, operating cash basis million, achieve entirely with $XX the on we we year pandemic with million have focus tough revenue half As half improved last to I'm progress first by half our XXXX, well to double-digit over The of the of execution first flow I margin while $XXX pleased of and our Comparing in XXXX. a a and by bookings the results global approximately almost and cash generating XXX in the our made macroeconomic half margin operating against industry navigating reflect backdrop, the the while for flow supply grew grew us and XXXX range by wide financial respectively, the and challenges. basis sets on chain the first percentage XXXX. X%, first target momentum XXXX in of in business we our

we the the XXXX, Looking continuation backlog challenges in industry intensity and related of QX. quarter to the of to third time, and mindful continue pressures supply their we encouraged exiting are ahead same demand, wide unexpected ongoing are QX. the by record our healthy in supply At of

wider to range for for gig we expect the $XXX It to ICEX environment. well demand be is This in to and the robust, us million. XXXX. related, due products growth that is XXX remains $XXX important reiterate but QX, to customer For current sets especially XX% X% revenue up demand forecasting our in of chain the to million are entirely range we not supply

on given in for the the QX our drive these from portfolio demand these including bookings basis timing As and expect we systems, XXX to line line revenue initially the to our bookings XXX we margin earlier, gross gross system impact momentum we be impact points estimate We deployments, strong had increased QX. now margin. modest is But deployments. and in to increased of to planned across mentioned for

than basis chain pressure class time supply we freight, longer lead costs In from and margin mitigate see into expedite fees normal capacity. associated higher requires to related to expect and addition, three to gross points component XXX XXX constrained gap] factors with of operating QX optical platform, margins vertical focused an into minus expressed points. strategy optical high We X% basis XXX our and [audio performance engines these account, on recoverable. Taking entry negative coherent to be integration or plus and with

the operations, for capital working our products. During to of provisioning the new support rollout to quarter from cash prudently and we use expect inventory

Finally, please on diluted should million we XXX be in that quarter basis XXX non-GAAP share In event million QX. profitable shares. assume shares count basic approximately the for are the a a share count of

look we grow based slightly shared demand ahead it our of our on of the projected our gross full confidence the on further and To market full operating to approximately expand growing the growth previously non-GAAP basis expectations. compared As revenues year to XXXX, be income and us profitable in XXX backlog X% environment, the year. and gives to market profile, a level to of to year margins X% ahead 'XX by fiscal points XXX for

Our progress our by path in the position in for operating margin and mid-XXs, X% business gross double-digit growth should on put XXXX a and of achieving increased us XXXX. model growth, to margin revenue XX% in XXXX target well as

to want the support. and navigate partners to Before like turning employees, echo [Zen] our times as for now shareholders I'd continued the call opportunistic our over questions. challenging, but to also open appreciation collectively David's line for we for these their Q&A, I sincere customers and to

Operator

question Marchetti the comes of Stifel. of [Operator John first Your line Instructions] from

John Marchetti

XXX being some to there. given mentioned XXX to out wanted guides XQ. Nancy, that quick of the question the I do wider constraints range, a The for Just on you

that to million you to relative a that $XX guidance come that think set still saw more took. to sense shortfalls that to there how with get to is to Is million Just on in QX? hit try the you there incorporated that reconcile $XX you trying guidance? Just level of that

Nancy Erba

Yes, it's shortages. been an with certainly unusual the supply time

how So we're I seeing and and what to clarify about thinking it. try want we're

basis, short and the a revenue that view. about parts basis to points XXX causing we're about XXX about half, And to now the XXX impact in that that parts we're in it are to we this million. purchasing $XX points represents are right first QX, QX. of for margin the said But So impact. on of as we give think basis X% think But quarterly trying it a That's was that term situation short we've the on been it in. $XX basis, that million

So $XX million, a right revenue in the achieving you about not can now, of think that it because quarter like we're supply.

million look similar will wouldn't my and million in we and $XX to think revenue question. that it's at $XX really I next XX That the QX, achieve another the achieved three about is million haven't That's know growth. So that covered backlog by in strong quarter. range. I bookings or the all would a quarters first This

So we're to QX in as into see of come quarters then supply and the supply about waterfall really thinking up. we future online. that the into as XXXX, going to QX the back loosens this is And start first half

John Marchetti

half and get expecting those then should that constraints and you late this into QX the sort that the just just year supply first quick them and 'XX? of year, a you come ease in as of then QX worst certainly Maybe about into is follow-up given QX QX. this for Are then

Nancy Erba

probably the what a we absolutely yes. had that, But Based been because we've seen I'm bit going longer than to year. on today, little into coming hold it's

Operator

Simon of line the of Raymond from James. Leopold comes question Next

Simon Leopold

the the I seeking outlook traction. point. think out more check gig we just quarter just closer update getting in this I on wanted when to you'll beginning update now the you seems year. that And could want products becoming on recognizing we're if split in know in I But with material that? later of it you start fourth and meaningful an to this into hyperscalers gaining to revenue, priorities for getting the have XXX expected the XXXX. left we I believe to see called, year impression deployment

David Heard

we what Sure, had about. talked let me kind of clarify

I in we were last think was shipping we mentioned products what a had commercial quarter. our in

revenues in And material QX, first six with We Analysts second our had expect so do have our building additional May XX% in our comments we coming XXth. and revenues quarter. we added more Day product of to consistent in XXXX. to revenues on customers. XX% We've QX Pretty in made that

we've in side, laid positive systems than bargained the for we more out the On XX% line year.

product since the has and So very talked. last the we for is strong demand foundationally grown

So those to rollouts are on we XX% revenue. that and of product do to XX% path expect

of is good spec, spec It's as and subsea Yes. climb haul Metro ask ICP? of it for Is performance for the long we to commercially for going we our the away Yes. it and across ahead scale core the You're our which spectrum, product me And continues applications. both CSP? shareholders news is of what a customers the to original technology.

Simon Leopold

for Thanks detail. that

quick a Just follow-up.

in the the Huawei investment patient talked need opportunities. past You've community swap for regarding the type about

in Just at to the and progress of expense? one you that your terms you consider thinking would could if see Huawei update deals like

David Heard

no, he's think on But have would XXth. never to you'll long be of takes and that don't long-term. demanded a or revenue think think we such I expectations competitors. or Yes, lot even of rip it's, and I'm hear is investment go install, how replacements community these industry do ever ahead what May humor. again, expect it engineer sorry, I trying I from outs the to realistic And RFP, bad patient, do then I because then I furnish to are think an our recognize projects all and in overlays

May 'XX even are world. increase seeing an the around in all opportunities We in these since locations

the gave wins X.XX. material contributing to to that be and expect X% to rate would we as And Day, in see have XX% even see those Analyst QX I think to able of growth last RFPs what said awarded in to in RFP, our I we QX well we year, beyond contribution in seen increase that So and been an and we have both in if contracts. as XXXX

of chain that Huawei So Nancy contemplated confidence plus XX give XX orders more go X% the supply bookings as rate have we she's covered XX% prior, million million we in to into those that XXXX. said constraints in to even growth as us

Operator

is question Henderson from Needham. Next Alex of

Alex Henderson

you revenues the hoping could little product product bit about I 'XX. from a for XX% mean talk average come coming XX% it talk from the seems an about new you to revenues in year. was of I full when as

So, say in should we that to mechanics half of of say the thinking the average ramp that? then way would that that XX% half to the going back XX% Is think the first about right XX to to XX?

David Heard

in half customers of just filling I plans. up mentioned, those more by the and It's going original a give answer where and deploying winning right a a more I contracts good wind more than these will as weighting get lot other onboarding question you're back is you're and systems you heavier ahead of more that specific trend Typically, a of the nature to we're meaning. and our elements, about XX%

half. as more expect it weighted XX%, would market continues heavier a average in opportunity, I So on XX% second that be the but basis, the to weighted unfold, to to

Alex Henderson

primary those difficult And demand. the the into within line the area that going That parts factor and line of if that case. are in being to that's realization the system the system the is it's slowdown achieve, elements the Is a gating that, are to and are deployment. predominantly

wouldn't I more mechanics? gig think way to the to that right that seem there's related. as be then card, ramps the about XXX a relation up So the which Is to line direct

David Heard

which to deployments that mentioned, for integration. margins we've you're but X% and seen with Nancy on depicted, guy shortage which XXX nothing QX, our had own a good our I be the margin right, parts vertical transponders hit more so along a is with less but nail point. shortages, head. as up volume good can can shipments, that We've pressure with alone. increase QX, QX. on fan it's systems, tray you gig a and but the seen in in online Yes, on on microcontroller delayed the from And now right left QX and the Meaning hold puts

But So, shift them again, again, deployment you to revenue of yours of in gives as the systems, both that QX us timing line as give well for that that margin. long-term, original QX XX% to system line increase the towards product the by question XX% those confidence more the gig. XXX in

Alex Henderson

clarify can thing just see one before floor. last we I the

and you in to those million that? think said XX substantially said I more was XX your to expected XQ the $XX said million XX then million one million And it was than million, point, quarter. quarter. in $XX You you impact per in

impact, didn't ship in So XQ for that in the in right? XQ you're potentially XQ, have XX that that specking it's sequentially? maybe a cumulative would million million to impact pay it million So XX XX it, sliding net of

Nancy Erba

in half. So to flies the were QX the first in XX the for XX, to is we looking ended QX. state about XX cumulative We originally said it up that closer being

quarter. it at million right look going to is way about simplest and a QX. the And XX we're now think I into So

about XX the in into think million that I guidance. QX

David Heard

temporal we revenue XXX that into points On of in in rolled of look causing points get basis growth XXX And the ultimately impact what basis if margin waterfall get as of year part will at the suppression. this you shortage XXX, X% having is XXXX. gross

Alex Henderson

say million in exiting. Just XX XX be it cumulative million impact when the clear, QX to the then would you plus be XX another

David Heard

got You it.

Nancy Erba

exactly. You it, got

Operator

Next the line of Genovese from Michael question comes WestPark of Capital.

Michael Genovese

basis or we given should we be go that talking got assuming safe constraints too now, growing feel and we supply about won't the much the year, in to of are next of next guidance. constraints, But to like that were an year level it's demand going gone good into going next right X% away ordered of we the same for be to because XXXX, we year. single supply similar, But seems about you they're something be and it to XX% from that digits, assumption? right we're be, right low where of sort going So, sort assuming a now,

David Heard

does think January in I put quite you the from between this, XX to weeks, delta at when weeks the as forecasting. we when QX, whole a bit provisioned lead is and has it it when in time that goes they're getting QX look you customers, to December, dealing up We'd to one, the elements out lead in. those, for and hole their puts do And were XX of times for a end math two with expanded to QX. have looking this gotten been even in positive of for orders which a things lot get their closer a to terms our QX, a

of demand a that of in least to be that we're able QX, terms time lead of terms that forecasting, by and in lot QX math, again, to at will have we hit hit by cover we able time. expecting So the we been

a with Although and inventory see when manufacturers. being in, estimating our And which and next industry. half what and fighting that's forward back year, with yield in impact expecting Most QX even are putting It's we what piece that relatively in outlook, QX, of time it additional too but new some keel we're QX capacity QX get and off online. come in the moderation the people orders as the the clear. to soon planning tell, keep we'll our automotive roll across things some lead of in there'll big business we've and our elements QX contract then but commitments is, in moderated hey, through through be that second

Michael Genovese

that type gig is been wavelength in haul question actually subsea seen in the haul or good been started, haul. haul where XXX in long talking And native Second on perspective we've it my having are XXX ICEX and those XXX hearing demand about, customers already much distances. how you've long is, real the think sort coming I and some long that, deploying gig subsea. long subsea wavelengths? inflection what's I We for really of question pure for guess performance, markets Has is gig and were

David Heard

Let comment just performance. of clarify performance our me make the on we XXX It's It's the at performance g. portfolio. ICEX not the

or in carry of base. how distance? seen you network, how has we yields When dollar, capacity you long performance look better there. a means, our we we've at to that double-digit a for can fiber? a been benefits XXX out, the So or the performance head, at you per And we signal head specification So we've many economics when what gig over again, client ahead well So looked signal? that a carry as over XXX which XXX gig put can subsea been to carry gig that gigs can out signal same

So just gig. XXX it's an not

Michael Genovese

And the then gig was XXX XX months? of the to production for just on the deployment question timing X of market

David Heard

Yes.

on it's what XXX it's into to as again, are I we some And think, date again, orders, asking relevant. gig, percent. a that our purchase probably people materially operators XXX forward, based our of you of we'll better you're try profile. relevant not deployments we now we that you now. distance, more get number I ICEX give announced, at who, to that the have with, at XXXX, XXX what deploying, statistics just you gig, just percent gig, don't But as try are give operating go what to for will the

Operator

of Hall the from Sachs. of comes Goldman question line Next Rod

Bala Reddy

Rod. for a on I have Reddy question. is clarification and This Bala then

talking XX to it could the that color revenue give you much of was some XXX you're how related gig? maybe of us So million on shortfall about,

David Heard

Zero.

Nancy Erba

none. Yes,

David Heard

Zero.

Bala Reddy

same lines. the along And

So think do thinking have few fluctuate the is there gig milestone small products then large you're so still that at you year? on rather XXX about contribution revenue could could But stage. understand about relatively I or some as be projects by of XXX the contribution. how the And you revenue this contribution. gig end this least a

Nancy Erba

product what the, is will revenue said our for come the XX% by of ICEX Well, XXXX, from we XX% to product.

that So, we've the XX% ramp represent next saying this to first year. we revenue and year half recognized in of product shipping begin XX% of been to back as revenue in the our will are QX

David Heard

on quarter. And year. earlier, XX% asked is that Alex as average full every of XX% to the For

Now, it QX across to your means be through across will which ICPs, revenue answer deployment, gradually for QX, growing the carriers. you and year, as total question? as recognition go QX to across QX that to exchange Does CSPs regions, cycles from probably

Bala Reddy

percentage Could clarification. this quick could some It contribution gig on think mean, been that asked give year? maybe does. have the I revenue XXX could color you has do but earlier, you, I a what finish you But us

David Heard

year? This

Bala Reddy

year This be next could year also helpful. even in fact, or

David Heard

full this the in expect as So of our the ICEX year on year. for our total the to of and year XX% next product we we year year. XX% XXX let end By today Analyst would the revenue me for again average be mentioned product Day XXth May try XXXX. gig

Bala Reddy

I'm sorry. Maybe of meant QX David. in do like I I But you see didn't clarify XX%... there, enough the up year maybe ranging to

David Heard

level provided Yes, that we yet. haven't granularity of

the you give will more that a that good slope. can't positive to QX. from It'll a we of again, just closer going through indication good it yet. try that, should QX is get We tell XX% be pretty think ramp. you that So a to XX% give I we'll to ramp, be what you as

that. about Sorry

Bala Reddy

if I can just visibility. I quick follow-up a on had

end year? about equipment towards or say have larger talk that customers visibility. of some mostly are maybe year, some increased you even this giving the the that that you you on do through So Is into next transparency

David Heard

Yes.

architectural that we're when X by out So of X X, are changes. strategy laying by these

of that network, core with deals, multi this with doing plans. those to are When these obviously are When redimensioning, plan. quarters quarter which So to go you're multi generation multi technology, in eight you're ICEX Huawei the the people again, plans. gig, replacement you're those going the networks, takes are quarter XXX and XXX dealing metro subsea gig

these of into and VR And XXX the next our XR architectural are at supply for again, going placing the we've to chain, our So all ability multiyear that to plus multipoint, gig the you on. way and if are, through go as year, impact as our well point own look demand. gone pluggable shifts then

the part for is planning, get to said it's that's think look, just lot necessity it a actually in all healthy. of stuff tighter so industry and in together our And I has

the lemons. about situation, what making we're given doing the supply lemonade short-term So talk chain that's from In impact.

Operator

Next question Partners. MKM comes from of line Fahad the Najam of

Fahad Najam

that are dynamic of component? higher a in points on? components I materials? for and want two it you're the one or a time XX the Is very XX QX. on margin what bit highest more And cumulative meat than component having small portion gross are get getting it hold bill times hard revenue your components the the one of to that Is million, experiencing a more data quality intact understand and million the and shortage

David Heard

we No, tried as having be if way mean industry well as really this a you the good of a the the to the buy the it's the of issues tires, to recognizing in But know, overall it's earlier, X% And revenue. it's have with. does. no drive go if can't best car depict only daily don't off rest terms said question. lot. because car, as components answer there's it, But meetings the I on same in chain as our that the we're you you supply And Nancy of

components So attenuating is the X% of revenue.

ahead in, revenue revenue as Now attenuating growth. the points could apart that. in fact be the revenue Nancy of attenuating and coming are will as XXX coming X% What be of in to bookings the said pushed. basis it's of That growth,

our of we how can which is be determine XXXX going whether or to it's front whether if will that half fall As expectation. in much QX of into any, the

them that. I bookings XX The XX in that lead earlier, the It's weeks many is, as are news turned be to or ahead weeks good coming parts. X into not parts, the cases. well So And said or weeks. huge on in weeks times those of used of a many portion of XX

you have we're you out of net going quarters. to two moves what three get XX dealing And a XX that's something with. by It's to for an it So where order if move to something revenue weeks. that

it's guidance put again, what our XX of range. on the or bookings and far, in and so the actual revenue million quarter based normally midpoint demand, results, would we been QX a on to towards provided So, we've the in have

million XX QX, you QX, QX, quarter each So could have to. added

Fahad Najam

have most would have QX, cumulative by if resumed everything you in says… likely, the you million first missed probably That that XX the So QX. half

David Heard

in this, not QX, everything do prior correct daily we expect on just to do resumed open up Everything to a once. mentioned, all basis. which I your point. Because at I as And

QX than percent guidance, results look you at midpoint If $XX of it again, impact versus a QX, a million the was number. to less

$X XX to we versus expected QX. maybe be would that in So you're talking about million have

Again, QX. guidance been If the our coming have Make by you for look spillover effect we're providing at would midpoint in. million the that $XX of up sense? without

Fahad Najam

flow XX late. Assuming of in different how I begin concept revenue initial are first I'm the Make an impact? No, in real hours? outlook got be my those that but this shipping going next to that you now that to in paying cost? XX this your the obviously when in you've them? second normalize example? by you're the half across taking it through weeks? components components time year can of And were access? even in easily get But margin still gross Are not system though long for fair even which recognize assume into your experiencing would market is and a costs coming you year, that the your you are you for you that Are this seeing up So board increased XXXX? sense. are half for is. understand revenue web, like years in things question, in We that to more And assuming extended you're XX gross impact Wouldn't orders if the

Nancy Erba

we QX basis on increased that within think cost whether freight. margin the about So about the impact points gross from of if XX.X% or be XXX had of it expediting components, We you reported. fees

All QX that look of supply XXX the came literally our hours a it XXX XX actions but as really basis chain to about day, driving to points. estimate be we at

that's it's level soon to QX QX. As would normal seen we've to the that and we in start of expected more I be abate, impact to again, But ranges. would what too on to shortages the But back QX. tell expect see go

Fahad Najam

pass increased a costs, you your Last demand side to Do problem. have question. customer you says, any intend on clearly don't

et prices jack cetera? compensate you to up charges, are to the higher planning So freight for

David Heard

our clients remembering future, about, We the strategy provide our again, long know, going the on And suppliers but you call, to Partnership that we engineer earnings we is we're pricing us these value the strategy that. is point, do. talk this our way to point. then environments, term treat the thing. with At in our probably designs what an your competitively, who treat I understand in not remember wrong ones And way. us right a for and

Operator

line comes JPMorgan. the question Chatterjee Samik from of Next of

Samik Chatterjee

wrong, start the inventory on just you question inventory think don't modestly are as headwinds levels. go demand and you I'm levels? all I into levels now and maybe thoughts up higher supply with and your buy any not next rather If the margins? how those about levels these move inventory But with situation? you around have? comfortable And increase what from mean wanted you Would to inventory on or components going Or at that increase does you prices year quarter-over-quarter.

David Heard

ASAP. But products, XXX our ship operations any get we've the in. a out insertions whether increase lots would around and good for put demand comes be additional Well, our increased, demand to that we've system seeing a Metro to and gig, provisioned ICEX because of it's demand itself both is the wide Huawei meet turn assembled question. out customer the inventory or team really able it's or or demand we're look, Now XX% to

said points I we didn't basis in QX, parts So, we as was of on To we XXX yes, relatively given point costs, and the views. have it better that of we quickly think expect have. that'll demand Nancy X% your said, in turn again,

XXX basis So we've again, points. into we identified as QX, that XXX to we went see now. to And that

impact, I commitments cumulative we've best Our see on both margins, going impact and think it. we customer goal to the be on closer to basis supply you there's pretty as secure like know, out we transparently been marketplace. QX, we continue quarter the quarter a by to can and been, as impact incremental get in any letting revenue if And meet our to is to have as the

Samik Chatterjee

that impact U.S. most like of really here either had basis from is you came looked growth on geographic least on can it's you year-over-year. bookings, Because review give how Americas engine some down at the the at each revenue color other? I on flat a quarterly customers whereas the the me up or by reason and were I and progressing other united look Following more ask

the how bookings? up different the is showing in that it that or picture is with bookings book So a

David Heard

and in quarter-over-quarter bookings I both of a think are Yes, picture no, bit up a being there's year-over-year, it's a different Other Metro. the for bookings. Americas different subsea it's

mentioned, As you Pacific really is about Asia timing.

system bookings expect we concentration, so well, quarter-over-quarter revenue year-over-year Tier X up the existing at. good gotten on once well. our and we're the be bookings. very been bookings and and and to carriers solidly line, up have where bookings hop a basis, quite Tier both about we we as and we've again, ton In to quarter-over-quarter revenue connecting look a haven't able the much again, the Tier line ICEX we revenue the in inner bookings Again EMEA, other and line one U.S., solid in lot outlined X service system, up. wallet of goals customer the other share is Analysts ICP as exchange wallet And quarter-over-quarter of segments, our lot of carriers was on just up are the were a year-over-year providers, a so bookings had by down, of share we Again, that In XX or the Day. both May systems saw

Operator

is from Jefferies. Notter question Next George of

George Notter

And that your here. had are parse me clear concerns benefiting earnings I you think question. squeezing you pretty hate I is are for belabor it's to orders, with from you, do purchase of lot chain I I'm if the in this what I guess through with commentary. longer guess given season, kind dated customers go I a that to placing trying but guys Thanks there. companies another orders, supply looking, I'm out

sort Is double-digit with have you versus organic will, parse you You customers if book-to-bill, better for there earlier in than past? way to said any placing demand, orders. meaningfully they orders of the that simply

David Heard

the well tell get don't with in Yes. the they line we are I guess you budgets line what layout is typically I planning to systems, like for have. things would people orders advance, systems

a were teams to that above communicated at CapEx meaningfully that particular trending the And beginning had our at we way they've so know for it of we we're the our and plans. looking is George budgets look that and base year, customer the they our sales

our are meeting, results continues For and that QX and above in QX. QX meaningfully

forecasts the will they their full above to far, budgets be for And expected what that the be so for they year. year, say within meaningfully

I the be forward So don't this people is trending I of points normal demand. higher envelope We're than to started for know the double-digit year. budget many versus when the bookings do within bringing expected we is year. in things the we What

Nancy Erba

placed the I to fact just orders revenue Those I of XX that that recognize another million example, QX is and we to And characterize the million have revenue. think QX. wouldn't XX from are as shipped there we,

were were customers in by those time our wanted that So ordered period. that

the need future just sure keep that make that you terms in think as I into numbers in going bookings of the So you out well. to higher perspective

George Notter

Got it.

David Heard

We to know, for things. many people where believe aren't systems, some they're in insert onboard orders seeing We people first. see to a with to race you don't in technology. that order with we the to and see who on placing optical as horse technology It's that comes tougher, for that be, people

George Notter

significantly. is you're Said the average differently, Is isn't us in bookings dates I that telling guess delivery changing weighted that accurate? what your

David Heard

have first our in Weighted average, gone half bookings. would lead say customers the think finished think which and the times, giving heavier time I our up of in are us industry more terms lead I

I'd a budgets than spaces. that like years news of when still in half. bookings think been good we second the total being if the I first few tracking over a rate. are we've year us last half heavy, that So just the the above booking Do back And The see half look in things bit good of little I you the finite. this we forecast, I believe the which is I the then with look the for year, year, say, I saw dip year, second see at given pretty at last from told heavier for

Operator

comes of Jim of Citi. question Next from the Suva line

Jim Suva

you're so noticed get for we're the the going By uncertainty, right range if guidance revenues, even that left. just of the days? is. to for unclear, X% the parts don't sure, but less which next already My there's first like, know makes you the into sense in question you shortages month of the one well, XX quarters, increase I given days XX than hearts past

David Heard

at So that days we X% the date, that's we know XX a is the said, parts. the across world that this we've XX Infinera days out, where the as you'll out that's industry as where of in that may unique not timing. not commitment dependable find time. We terms mentioned. What the somebody's ship where not happening it's just best of are, happens in supply shortages And affect dynamic, is

week And the of that the so why the the can quarter, can the day happen quarter, day, that's that we're and quarter. happen the happen day it can on last of every XXxX, first of that last

XX% and and X% important mindful continuing midpoint And to that strategy but margin, executing and execute line range, so above being be well and on growth. achievement bottom really guidance to X wider collect just a the execution as bookings really, then we're X our that X of to gross to by those by as

Jim Suva

reason or Okay. two this your the is, quarter. feel they for follow-up bit line orders a is ahead into a a position peers how asked you'd a the my of switch your it's between not Because components Do multi all can't. what the competitors? not But easily. quarters, below? races, about the for Infinera Then feel is can't for chain of kind you know multi people bit supply double with of I one mentioned your you little wondering That's in horse relative one or your of is supply kind bit a quarter little my, chain, with placing quarter order I'm that and to I

David Heard

Don't based are that the by X X That's based decisions by forget people technology. on strategy a question. who's got good making X that on

basis. I our balance What is, good of placed the XXXX supply through a the sheet the capacities leveraging delivers and looking there in and are handful certain. with we've can't and are are news price guess this I their performance. I at on chain So less is field tell daily participants that can technology How working the orders you qualifying our be out competitors

Operator

is question of from Jeff Research. Kvaal Next Wolfe

Jeff Kvaal

guess, My I there, do question quarter. it's I the came because been of thought applied worse the the little quarter would of over your think up is, that for zone and would target midpoint have it's a guidance and that you course side you have this

super. through us you that, then be I could follow-up? if that And have talk a would So

Nancy Erba

have think supply be continue been said, I challenges, the as intense, to we they intense.

are part our that get We as every close changing sure in we making are our outlets that single execution we increases day, possible. providing to driving vendors can on as to supply on

within far QX, As come the as talked about still shifting the into below certain We are and live did QX. we guidance. systems range in that

continues, the as the demand as And though, with and closely that tightly robust We growth also double-digit operating great are saw this We're really And we as margins now on to we that we internally, be here right in in XXX execution to as we today. range news, that really continues as range. margin, well bookings. generated the come about trying even the of can. above is focused manage sit

Jim Suva

be can I effort. appreciate your It awesome.

David Heard

and at why quarter mentioned, results. I Nancy we absolutely, available is total not look one what's from know additional the available, QX, just view opportunity XX million QX XX. very is, the June mean, and thing, QX and I'd the have the If look and times have is I million there's I the those able could again, to wider at realistic what it an do just should what's been And know to that We're $XX $XX in our we the to we which range. in are. million pull that guess way Look, lead plus, we

QX bottom. has goes weeks But think XX a dynamic to of comes that the we're I, XX when intensified to we're and or right I world the, in now. we living QX to math, kind it XX in expect be QX XX. very cognizant by So

to these better. earlier numbers we and of feel George's expect we mindful rates. do But overall the bookings of So are year. what's get portion The well incremental bookings But some pre-ordering of what's roll it are keep ahead. we'll for next guys into QX QX, and they growth expect good year, to are you to try for we growth And year. ahead to question, this well our do over industry industry see And that our we cumulative. within people with rates the the because that

Jim Suva

million down that of inclusive or follow-up, XX was that my XXXX an is is be plus rate, that XX% or we million the from guess million which put the I year should to growth XX to thinking XX XX X% about next million?

Nancy Erba

be but It to us lot more inclusive, giving a than should XX%. X% it's confidence that

David Heard

as Do of get early, we do. off a that closer that think little about but It's giving I million. our the into roll Yes, XXXX? you we But XX to expect as give a more results you what Based see color. us great, the from on we It in to QX confidence. try we'll much supply more bit for and QX, does give chain.

Amitabh Passi

one take last let's question. Operator,

Operator

from It's Meta Morgan with Marshall Stanley.

Dave Nwokonko

have seeing sort other. focus Nwokonko on far customers one This spectrum And wireless of any you as for is implementations? as carrier customers, question those Dave I Meta Marshall. Are pause advanced My first was.

David Heard

first your question. No to

Dave Nwokonko

sorry below customer then respect question, in the And Thanks. the your some XX% point you customer for slipped second would XX% second a quarter with half? during the XX% to having have

Nancy Erba

but to see end Potentially, an year out. mean, that we so don't how I put to usually the plays

David Heard

asked is winds. scenes running concentration, open I've with grabbing actually that's new Yes, we in and planning I Company. the share, about never look of for, I first when you the customer think But we what mean, are more have is some having XX% the for more months do we the the need at year, year. about lighting we're wallet half and And the first which one systems six optical customer of

Dave Nwokonko

you. Thank

David Heard

years. robust a we optical that many are Look, it. one Yes, entering for many, I seen no, haven't appreciate I we think cycle,

X, by by Our we're to based strategy X results achieving clear business are feel and you half the model year of and business that first QX. the and comfortable a in model on the have even X of committed more and

battles. portfolio Our us fight product and as confident, short-term the give we that results

today's deal both just the And that they again variants as from challenges locked team they impacts through humbled world is team on my me temporal the global of environment. members working in different together COVID. execution every in these as of chain with do unbelievable issues, to well Our supply around day, are

support be your in for be So, your I thank and you so patience safe. ongoing covenants questions and and of well your

Operator

would call at time. back no concludes questions are to today's further conference There Heard. Thank Please like I this you turn This now David the to participating. for sir. go ahead, call.

may disconnect. now You

Infinera (INFN) 4 Aug 212021 Q2 Earnings call transcript