INFN - Earnings call transcript Q3 2021

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

Operator

Ladies and gentlemen, thank you for standing by, and welcome to Infinera's Third Quarter Fiscal Year 2021 Earnings Call. [Operator Instructions] Amitabh Passi, you may begin your conference.

Amitabh Passi

Thank you, Josh. Good afternoon, everyone. Welcome to Infinera's Third Quarter Fiscal 2021 Conference Call. earnings section slides of today's the available of Relations Investor the copy and are investor on A website.

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

David Heard

QX performance Thanks, over the the of for turn well Margins performance last in approximately and double outlook us of details a quarter. to up year, grew market market. services ICEX, QX quarter of the with range XXX margin quarter extraordinary basis year-over-year exceeding quarter to higher fourth elaborate momentum, quarter Bookings which benefited marked and Amitabh. review outlook revenue the backlog and We gross to shift will These of the midpoint environment healthy I revenue the and grown a strong our then costs the the above non-GAAP of of offset deployment Revenue chain in non-GAAP of high book-to-bill the constraints. product and with X% supply year-over-year. of will Good digit operating of Nancy cover the revenue systems again. and ramp approximately in with associated both ended I line our the afternoon, thanks and reflective benefits WDM same were has due over end margin outlook on results our begin with ratio Compared third timing shortly. backlog to QX with the current supply the points optical joining of today. X of quarter demand the by the call ahead for another and from XX%. a systems well bookings rate total above growth the record of once range. remained

backlog tough these revenue profitability delivered in and visibility backdrop us and challenging against deliver growth both provides global greater pandemic record us navigating supply Our and a macroeconomic results improved We chain XXXX. positions well the to environment.

dynamics XXXX, associated control on So XXX basis XXX points. integration chain. have chain XXX vertical points and of margins focus margin our of that constrained by to operating to estimate XXX to in by by growth we dynamics points, basis supply importance basis XXX the the reinforced our XXX and the our gross supply have revenue far These

the Our the plan annual the towards is out well target when beginning business at and our against we year of laid longer-term measured progressing goals model.

plus a we drive the revenue drivers For above fueling the operating be against of and points our basis on market, track to per including markets. XG full basis. displacements, continued at especially of Huawei XX% of international and XXX massive XXX open growth compute, with Furthermore, competitive edge embracing profitable year, along the be year architectures, networks, robust, margins by mobile to remain optical rollout non-GAAP the of expand the the demand on business to in traffic XXXX, unabated growth acceleration gross

growth service Investor market us and share. we launched well software drive that Day, and combined Our XxXxX to positions expand offerings, with our our at strategy

X core organized XxXxX XXX-gig of coherent key stated, the XxXxX X and is focused XG and The gig, To edge our The focused on reflective the our into the one modules. network on to on beyond. metro As optics of founded moving systems, have optical strategy expanding company and we optical services reflective to moving coherent previously networks X of of transitions. X groups, the XXX compute. networks X reflective business recently of edge mobile rollout seize out to other the we opportunities, the with network market

In of who the addition, industry Burns, previously bringing by solutions networking appointed Technologies the as Manager and leadership General team our Coherent Optical was led Dell on experienced we Group. veterans. enhanced business Tom Modules

While Product as Group. Optical Ron of Johnson, who served the was as General unit, Optical Head Management Cisco's appointed of Manager the of business Systems Transport the

formerly as and Tom and of growth agenda. Group at possesses on also to drive corporate This and pluggables Azmina for to to high-volume addition experience Strategy formerly Esmacher, In our of coherent at of Lumentum and optical production leaders Head Somani, group to the Russ Nokia Corporate to strategy. we engineering head the drive execute and the Ron, talent Development our brought modules growth

the let's on of customers. growth driven We expansions Now EMEA, Americas new smaller a us, the From a year-over-year APAC of in and for board had typically were a and basis APAC, the footprint had due of From timing while and projects of the a certain in declined ICP quarter-over-quarter. to region perspective, cable XXXX, largely due from pull-in our into delivered across projects. onboarding down details to to we bookings EMEA, covering year-over-year generations we spanning Metro, quarter our customer the the Across We in from ICPs, additional our subsea benefited regional multiple first and subsea, with and applications ICEX quarter long-haul bookings of certain timing record wins. half and new perspective, a stable segment our demand Global the from ICPs with strong wins, though products. metro was rollouts, Tier a applications, new turn revenue and competitive of and record year-over-year Xs, customers. strength regions, growth primarily quarter. revenue

and be to platform, the all had very our as started metro double first of these existing compact product are converting GX pipeline in optical The basis, deployed while to bookings We haul another year-over-year customers subsea. to seeing Huawei growth and applications, open robust displacement ones. XXX APAC grow broadly good have and wins. across for of On a added some growing modular platform XTM continued grew we and portfolio. especially and half it with metro, quarter GX revenue continued strong After scaling in product digits bookings a the were and opportunities, long across EMEA new a year-over-year

ICEX ramping. the revenue On front, is

orders Saudi Tier Telecom both GÉANT, pipeline and growing, have are Our customers. backlog subsea Sparkle, We've additional we and and terrestrial have globally customers Telstra customers. deploying with across secured XX enterprise recently TI and and from now and networks. secured We're product wins Xs, ICPs several with ICEX customer unannounced with announced wins

quarter and future Our recent a wins our system leading shipments indicator were represent to year-over-year again Line belief remained up XX% revenue high-margin on XXXX. to remains sales, track that in a bookings, of reinforce the are of basis. in our transponder healthy XX% which product on ICEX we and

in to and margins are these of short While expanding lower line good ICEX the of are a the adoption predictor term, carry they technology. our footprint systems customer critical

On to by benefit was higher margins XXX of the which below our side, by the gross line chain out provided supply a as deployments came approximately points, costs. revenue some slightly our our expectations QX. in into systems largely This in quarter pushed basis offset

is our over members delivering chain, are point-to-point we optics business leverage our market -- DSP point-to-point activities accelerate. X By to and proving as prospects providers XR our interest increasing impact packaging business advancing in core facilities, semiconductor manufacturers capabilities, in-house offering as technical security up XR and supply technology XXXX. while and to a concerns point-to-multipoint capabilities its accretion continues from industry are to pluggables and Trials pluggables. forum as have have in control billion-plus optics U.S.-based alleviating as margin model. globally. greater Interest and global and our and the about deliver is believe excited remain in equipment $X creating XXXX to XR of case point-to-multipoint coherent the leading best-in-class and and addressable Open the Forum positioned pluggables, as network industry-leading now adoption us position a of setting integration We it proof-of-concept well fab, increasing. of the with Finally, revenue solution. service longer-term competencies unique and We supply in for the leadership leveraging our out beginning we has well we to well Enrollment the design are of

we wins. projections against are the laid the ICEX groundwork financial global year. we customer our shared As securing delivering We've out our integrated at ramping remain important on we laser-focused portfolio, vertically refreshed of XXXX, for and beginning the the pluggables, close

Looking ahead our trends. continued demand to of we healthy another QX, business quarter with see momentum in

chain reflects the to revenue Nancy expectations formidable our professional supply progress will market and their the for business profitability. are outlook on gross support likely the growth, details during partners to to XXXX QX our about our expectations provide above and expand us. model. the revenue a the am opportunities of I I are Nancy towards now and deliver excited for us to XX% certainly how I'd the and assembled, unprecedented their our in gives a we've our and personal year reiterate grow employees, quarters, the the the reaffirms While ahead our team to our in details recent our additional target provide target operating along of outlook Nancy? that pose like of additional fourth outlook QX model, quarter in track X% XXXX. business continued remain market and financial technology are with more quarter, customers to on that call in margins challenges the challenges to I'd which conclusion, times. us for In These lives. and like confidence innovations industry-wide right few prior over turn results, mid-XXs commentary. double-digit with to thank will her to margin resilience The we operating

Nancy Erba

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

performed performance customers I For posted Relations a we business pleased details, new my of our our including new third our while slides to commentary. well with non-GAAP have your website in XXXX. the Once in and winning with company reference, am GAAP products the ramping Investor Overall, reconciliation again, environment. quarter to to financial with assist tough

David first As up the bookings year-over-year, XXXX. quarter, covered, of continuing in the the double-digit were saw in strength half robust we

backlog. QX $XX million, that than positive QX we industry-wide Our to by gross at on of was costs revenue the to into with quarter, by cumulative midpoint our was XXX delay to the The gross up market of up capitalize the has primarily a year-over-year end opportunities our will and XxXxX year-over-year. quarter. XXX outlook, over to high on loss to equating of quarter, ICEX, shortages operating benefit million believe our quarter, we our course QX an by expanded largely basis was points, target and basis of our approximately basis, per against R&D of revenue coming did gross margin the business to Through range the higher expectations the model. coming above the investments we was revenue, $X.X offsetting XXX QX also and to $X.XX share. of services these the growth the margin which X.X% XX our points, and Relative was QX. a in at million, On couple sales X% the quarters, $XXX execute was to the staying been high while successfully outlook line supply shortages in XX the expectations higher deployment next us. navigating of least margin QX, primary the to in as contributing in was of margin revenue year-over-year in with basis to increased XX% of revenue impact approximately to Operating supply into the $XX due from delivering our of from on resulting XXX the by above strategy profit operating while ahead chain of range be constraining QX above our million, least growth chain-related of in supply QX in our XX%. ramp outlook. factors, EPS supply certain challenge a drive systems we outlook points the constrained of our absorbed, margin our XXX the from basis, Relative the points in offset record to end basis XX% midpoint XXXX impact quarter shortages. higher in basis came 'XX, gross margin On points to our higher in of chain partially of estimate

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

approximately working we by a a cash quarter, the ended free we and increased balance used operations quarter inventory $XX $XX the as and credit we facility. in After quarter investments, was negative from During of with on X cash capital million. million, the million flow CapEx $XX our

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

revenue on are year-over-year be revenue X% range the to approximately the $XXX range. approximately in at XXXX are million in the QX. well midpoint $XX for representing projected QX, key For of of and up we $XXX optical in of million, beyond. to and Embedded growth strong, to portfolio, securing is a comparable setting remains supply-related forecasting with our level we we impact outlook the million wins our open experienced demand us Customer basis

the margins a by previous ICEX gross we in over forecasting the or partially gross drivers of QX. the continued pressures, around points. expand of track to supply deployments minus basis of in to points, on QX plus points basis are chain-related these offset near-term margin greater an elevated XXX margins in points to 'XX low-margin QX year. basis to level Despite from system revenue. by higher-margin from The to approximate of comparable influencing range costs fiscal We the XXX XXX include contribution basis push line from XXX our headwind XX%, primary The XXX impact out gross be remain

platforms, to expenses and plan as to optical remains the million coherent are planning with for vertical align we strategy. million higher back in be $XXX engines, R&D $XXX of optical range invest on operating the our and our focus open R&D, in commissions integration Within year for on sales XxXxX pluggables. of We bookings to QX record-breaking high-performance

margin We QX XXX points. minus basis operating plus X%, to or expect be

new line, the and Below another utilize we expense to operations products. to the about the million provision interest million from income to During for $X operating and of quarter, working $X rollout for taxes. our expect net support assume cash we capital for inventory,

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

have expectations. outlook we delivering previously our on performance QX, As stated, year-to-date in shared our based we remain our confident and previously for

to FY a to to to XXX for year. level points plan we revenues our ahead on the margin expand market slightly approximately full basis by continue of operating XXXX, to and 'XX compared to XXX For be income the grow gross projected non-GAAP growth profitable

global made pandemic portfolio and our XxXxX integrated We much team's strategy execution is team, right progress be and It company. deliver long-term business and remain I putting a the to a vertically the to and have model. chain, supporting processes year-to-date. in place Despite encouraged able of optical on navigating great product to be a by a time resilience supply the constrained difficulties

progress open Our support. David's business for XXXX us path their for like and well to target for us the keep in like on for model XXXX. should to appreciation and our Josh, increased questions. line would XXXX continued positions achieving I partners I'd shareholders our customers, employees, up growth echo in in now to a

Operator

question [Operator from Sachs. Instructions] And comes Goldman Rod Hall your with first

Unidentified Analyst

This behalf on Rod. RK of on job Nice results. is the

check your like the your ramping to see quarter? And than So sounds is revenue commentary, how XXX-gig faster in based I much ICEX expectations. on you wanted did it

So if about the driving what's and confirm that's talk case could you that?

David Heard

No, question. thanks. the Appreciate

in us of year target revenue, our with confidence revenues revenues ICEX that that, let's going ICEX say combined for pre-discussed And bookings of the not next XX% revenue. give great So breaking product XX% single out it's to digit product of our forward. the XXX-gig being while our we're terms particularly high

Unidentified Analyst

for ahead Okay. And is little of expectation bit Appreciate it. your QX? that a

David Heard

I feeling side we're helping I Again, it's both] seeing the well from confidence, on good. think of the bookings as on [not the we're order what think as revenue us shipment side, build on intake. side an

Unidentified Analyst

lastly, constraints And risk as may revenue Okay. supply targets the I check, 'XX be is to impacted? continue, what these wanted

David Heard

margin be started in deliver and kind line now. as right quarter-to-quarter we line really the year, we would I quantifying million, the QX. imputed And the Nancy and we're risk think those Well, of both revenue what at risks seen, way you've into out finding gross early in going We've of $XX those. and as thought a to QX we're QX, QX said, that and

So far probably as next points growth basis It's gross that margin, points call been to really the to this too year, well basis ball for year. the XXX has it's as to XXX early XXX attenuated XXX. XXX of and

So give continue as quarter-by-quarter we'll you on as to a have clarity much we basis.

Operator

Alex of with Company. question next Needham & Henderson from line comes Your the

Alex Henderson

Yes.

So X% to get comment I last the for just to wanted second. about back a that

with put $XX to comment the Just that million. into context of

be saying you're of headwind in $XX So X% $XX And recent most million. would quarter the million. of it's revenue's around XXXX headwind a

adding are the from cumulatively assuming So headwinds then prior that you each it's... of the quarters

David Heard

got You things it the year full a for we look shipped basis. have would it. we that year at when It's on full

Alex Henderson

backlog? Or that were lost? is those So -- that going is business into

David Heard

plans seeing backlog, backlog we No, and deployments planned industry we're grow to but and That's for be -- based rollout. the record there's continue continue that to know on others backlog, keep of that are growing in record part we real I saying real

Alex Henderson

Within products? experiencing, any open or constraints supply what differential the sourced say, ICEX more the is between versus sourced on integrated are the for you developing you're were that products vertically broadly constraints products there that

David Heard

come packets fab. I merchants Yes, certainly our market certainly move capability, and -- things of chipsets less we packet in that have you're our see own for our semiconductor, impact own -- that to seeing swing an think the around network, more indium where packaging fab, phosphide in for own the the we industry in

metal, merchant that things integration. is pull in the that of So sources, bent of vertical power more profound the field processors in on the are it our the kind

Alex Henderson

is move risk your has you product and to does of imply then as diminished? that your more the vertically ICEX, more that which more integrated, chain supply So to

David Heard

wouldn't Yes. I say diminished.

out a think has you're supply because I modular some becomes chassis at we're microprocessors, things less chain market. point putting in it still into seeing that fans the in shortage other that and compact on time, things

Alex Henderson

Right.

Okay. Great.

to that in you're here what haven't 'XX, as I understand we the make addressed the and that? growth your mechanics of if you I you've I into sure So correct in talked rate just 'XX could rate -- saying in go about growth Am comments. but really in the 'XX,

David Heard

that. You are absolutely in correct

Day at we’re to continue I chain said going years that We’ve to our our current get expected think to over at. where see quantify supply do and XX% the as around we what in Analyst that year, but and we’re QX of to as we hands the supply is get we chain backlog into what environment. development but environment X% the grow report the both of ‘XX, our further out we’ll ‘XX for lay the that on we and results that based

Operator

Your Capital. next WestPark the Genovese question Michael line from with of comes

Michael Genovese

Yes. I question about OpEx. with a to start want

You've think any should think ICEX? investment of OpEx and you've revenue, quarter. since is, question should sort scaling cutting that per for it Or same in about we the cost the we there quarter. Should direction next my with I back the million it above OpEx not is about guess being invested number -- given revenue? or on we moving Is but of pulling when $XXX average us -- number? with that year we think the fourth in

Nancy Erba

driving and forward we We'll on think said, give color mean you the more our and we're environment. our right? pulled year 'XX, the to 'XX, increases as to But we be where absolutely compare if we're strategy going in that about are have in plans going 'XX, to that this then is 'XX technologies, that bonus, compare in to results. the investments be that had QX return into David key mean you where for I merit, part we're we going obviously COVID 'XX -- back, was 'XX. that right, against are 'XX year, able during this continuing of for I to and our planning our with right, Yes. in salary in

investments you more we a increase we forward, expectation to bit the us that But as As it the revenue continue can 'XX. would as increase focus the have expect would color. little we look to same in as would at expect. our give you OpEx We'll does year-to-year, not R&D rate growth be

Michael Genovese

ask Okay. interesting Great. the want then And commentary. I about to ICP vertical, good and results there

that I more about spread guess, you that So North multiple America? technology. talked is out? mostly is then all And that Or you generations talked over -- in being of

on So you just can more give us over can there? on going color you -- what's talk

David Heard

Yes, it’s great.

think form. others either they’re some you those there, deployments traffic part the And where or way, behalf for as internationally web at as some at having of that’s we’re both all look and of Mike, in now they’re look on traffic out covering I we with decision largest their routes scalers we’re scalers there virtually long-haul subsea the them well covering of carrying or U.S., carry shape routes. web when and but, the going in when their

hitting gig. We XXX both are

well traditional the ICPs. XXX-gig quite going technologies with are XXX-gig hitting as as We’re well technologies that

new products revenue being for Very, platform. And year. very of more to So us very XX% using it XX% product of the the is across next strong very, the gives again, strong Again, what intake. revenues. the modular confidence order in the compact ICEX portfolio support

Operator

of Simon with from Raymond Leopold line comes question the next Your James.

Simon Leopold

on maybe think to I topic. up want this I ICP follow

appreciate I disclosures. Specifically, vertical the

kind that. mid-teens trend adoption And the low rec see you've So shipped jump thanks you year imagine that some I be of We this XXXX. new on coming products in of and quarter revenue of some to XX%. that that half for product prior a off of saw might first

that's the trying get money particular spending the one got of guess budget I'm out all a outlook it's we've So capital XXXX. in where by think just we struggling is And its XX% is and hyperscaler setup of what the what's I to better as normalized level understanding what that part with I'm growing to figure trying and goes. about

so... And

David Heard

we Everybody is at of growing growing pie. rate. at piece is a want that that Everybody rate, that

news with the have exposure, is offering, the we more if look more we're So the we scalers relevant at I now. web think of to these many X way years back good how were time relevant ago with I

more And in we're CapEx think web we're we've So on. with new got scalers. the exposure increasing ones particular, are well that their most, -- to the those of I positioned the technology

In of CSPs predict. mix you, terms tell year going what's between with ICPs our terms to state strong a steady in nice of see ICPs portfolio. on a I we in growth harder the to will are refreshed and be XXXX the based

Simon Leopold

to level? is quarter, this was rate just And sort clarify, the run of anomalous? Or new this this

David Heard

fifth-generation XXX-gig to market. world Well, XXX, buy XXX, that and this of technologies they’re onboarding again, continues because service the how technologies, was – again, the XXX the fact they continue to to

I see in that we’ll saw and think how in an revenue uptick it we orders, both normalizes.

for average a are. often than the I how than lumpy faster lumpy to X-quarter us year, be up up I think over trend expect be you write the and market they how growing But know are. they would guys overall We next period to [RF]. line

Operator

line Meta Marshall Your of question Stanley. from comes with next Morgan the

Meta Marshall

if really displacement? where is finding mixing that line to And a and success? I commentary most they kind of adopting trying sense just accelerating wanted a just to Just transponders it to around systems systems? and some you're your of trying lines of are get open transponders the little differentiation dive was Huawei into line -- the get bit. of Is sense of of a get and is there? where the sense a displacement mixing the time And

David Heard

good a It's Thank you. question.

You XX% in should to the customer think is people remove close about as market metro plus the the is. that in as that as Huawei as replacement to try that

they go that gig rid takes No One, long X to want at do. gig to to doubt, once. shift it's XXX and Two, kind a open time piece they big period people of of a accelerate so metro. And in want of dynamics a for XXX systems line their networks the get helping of Huawei. re-dimension because to is

to And that, a them to routes, to easier in it think, we systems, at that ahead trend which is I easier. opportunity pipeline. pipeline there does begin in pretty is to the And we trend make And with, and it for business for skis. it line out and on it want of us accelerate. too were what seeing It beginning so just in long-haul to lot said are do. makes get didn't seen. seeing with business subsea Certainly, XXXX. be and that continues year, routes we've we that to We're the that's people more the is planned the our than that helpful deployment award seeing We open of consistent open the

wins for we of expected the those are said the Meta? to back Analyst Was Day wins. we year. growth was And in our XXXX. here we We May see baked have beginning And towards helpful, something... there half pattern into our that as Or that

Meta Marshall

I No, helpful. that. Yes. that’s appreciate

Operator

from George Jefferies. with comes Notter question next line Your of the

George Notter

that sales? high Was Was the a that that to I product guys clarify, you think was Or prospective number? exactly terms call, on year? I said single that digits What as in earlier guess wanted QX? I the percentage ICEX. for is of exiting of

David Heard

Yes.

color Sorry, around let give a little you me that.

QX that going product QX to very XX%. And if So ahead intake revenues, that into asked, rate supportive continue forecast our well exit guidance. continue single so the in bookings single in grow. that as and to for your revenue, And XX% We've average And of grow QX. to our into QX far digit many imputed to XX% double digits XXXX and have of accelerate it's XX% got you're to will in of of that are that. high in to product have QX grow we'll for will our digits

George Notter

Great.

then now? And be a I'm this on Okay. quarter said that you you the of of sort guess And the product What I sales. think trying just XX% trajectory... is integrated follow-up understand of mix sales quarter? around as vertically product would just do last have to that, I

David Heard

XX%, mid-XXs. XX%. about It's Yes.

George Notter

does that imply margins, then vertically year-end what when out of And Great. curiosity? talk mid-XXs of mix Okay. you at being product gross XXXX integrated to

Nancy Erba

is margin gross for Mid-XXs XXXX.

David Heard

yes. year, Full

Nancy Erba

in For integrated the range vertically full for year. And products. . the that XX% is

George Notter

see to Got there. progress Great it, okay. the

Operator

from the Suva next Citibank. of Jim Your question with comes line

Jim Suva

much some works. people It shifts chain opposed and already move to simply be and if ICEX it X company integration, vertical you're fabs these up, they why all running shift to Or out and and hey, to that's product seems waiting would crank be then not supply or more as from running and to can just convince can't stuff and you convince now keep faster, or chain doing X issues so given pump maybe you to are days just you just your ICEX a get Thank the with more you could more more how for not supply you up that's delivery customers issues? compel up? like XX/X or happy you

David Heard

into build, you that control, in not a When if is at packet we number it that a chain, build require be only a it’s of are news you’re semiconductor on supply – that and line on for that processing car X over out There again, build going to transponder compact a it to not you you it Yes. network. of good that shortages that are but us look, are we like dependent products put Jim, system the is boxes go there’s it’s you within it deploy chassis, a The drive our metro transponders modular it’s tires, merchant and just a the overall able piece platforms. of around. kind is the

that So through just simply that a you themselves that full could had were edge isn’t by a all the do ICEX if we metro less the from merchant. we network of you bunch But it run way core. the if fully than have transponders of subsea

Operator

Your question next line Chatterjee of comes the with from JPMorgan. Samik

Samik Chatterjee

I actually ones. X quick have just

points to supply year the refer this XXX growth You because XXX, constraints. headwind the on basis of

QX, into on that get evolving or Just to I the case to as recoup long-term X% think, based deliver is is some as then headwinds case follow-up. just we model trying headwinds given the into how limit to up here comes is QX, wondering get you you the Or there And a just best you deliver to XX%. of think try and can the back if supply of just next start I'm as the to to trying best some situation is you next that year? year? limiting upside have pent some supply as and demand

David Heard

of -- we'll news in mentioned stronger we a full we to supply is What sure as earnings again we and position the The trying got through QX, make then to again you. as certainly backlog with to what to good question. on the chain of our of the I transparency couple backlog, see mentioned had our then view next the X% situation, quarter chain and at that into kind confident Yes. a news that until as that make the of much abatement results year with this as supply in another XXXX. can about It's starting XXXX. revenue, for provide as as give we Good attenuation good the We're it a is supply us more we as couple X earlier, see you that well chain we're based taking we get builds on that it months the -- confidence. our much But XX% chain again, quarters does and circumstances. do of we detail supply time deferred for of go is the

Samik Chatterjee

your CapEx of investing but the Simon see one from numbers the I here ICPs strong of my to the back as ICPs that I pool similar they’re and clearly had investors think as number it optical a when increase certain outside TCI in looked XX% center, in well it them or because you’ve the rear architectural past investment a the similar the decisions. systems but or in layer hypothetically translating of at just like inside in going is follow question different growth things up it is and often their what I’m we asked the that’s big this we experience is, in a For more to by CapEx think

David Heard

and ICPs in one next total CapEx we’re numbers growing, portion but we percentage all our about XX%, that a those they capability you traffic major positioned the the There’s is who when control forecast to growing and inside think faster, the the two scalars TSPs know more centers. ICPs they’re And are here’s have data are are are optical service big the huge XXs I of they’re with web right, system, order those in see teens year. communication good connect that now is producers typically news points, you they seeing growing the of to those spend, that for when which the data and growing and center compared

in had We’re order we that QX contemplated guidance. in seeing that and what in our QX rates in we the book

portfolio. opportunity exposure So refresh more now, given great we a have more and customers

Operator

next line Your MKM question Partners, Fahad of open. the from with line Najam comes your is

Fahad Najam

on you my any environment, out first Thank you your what related you for plans I through the two pricing to cost walk you're seeing have do have customers? discounting to pass questions question, have marketplace? and on your there environment. And favorable the to a taking probably can in that, you assume pricing us increased I

David Heard

Yes.

treating strategy is going have we a more it more I because pricing in have We some our want I earnings suppliers, don't being that address. long public price on that that will think partners are have to this. you on like in to tell for us maybe What our I this gives through flexibility costs. are integration passing the customers in vertical memories. go poorly performance a that's not I to the call. some customers, products, some I'm times really question all period, know I extraordinary excellent

model fact and Infinera accommodate us. to want look highly I a continue And from X those at deliver customer and as so a our as things the long-term to logo for short-term that well and think quarterly is years to now business the job results to trade of off

environment pertains I've last to pricing competitive our the no since in change quarter pricing it As call. seen our environment, last the over earnings

Fahad Najam

And your then wanted ICP it. I revisit vertical. to Appreciate

of to multi-generation feeling back your mentioned to you in seeing essentially Whitebox developed the component think the Whitebox that you yourselves some kind To of to to forced or are being extent are shortages. have buying brunt you? I Are solutions component having you from go that solutions of like you. shortages for beginning who their your what some and vendors being open offset customers -- order of opportunity customers see ICP own

David Heard

in we’re And major this one to of new Look, say anybody our this we again, want of developing help for infrastructure to trying That of supply I manage of generations gamut position are scalers, But behalf to of any is very that's a on multiple again, do this better environment. in God dangerous spenders. a and customers. living, buying to so don't kind speak go they entire the path down. much out technology. that a of web across to

XXX-gig having be some So as the their great XXX, – still portion as are connecting they XXX, services must issues well services. at the of

Operator

from Needham comes Company. & question Alex with next Your Henderson

Alex Henderson

-- the actually on but bit versus view XXX how little and question Acacia do Obviously, a talk it it's cycle XXX-gig positioned. on we'd you X.X? Does the about that from the thinking you it's that? see I last a well the announcement Or to you get How about this you thought think future is And as cycle? the caller, real XXX change out X.X gig? the and less into your threat could terabit well XXX-gig you're well. product curve

could Acacia stock you pretty was So your there because good wobble about just talk that some in it. announced when

David Heard

all other tend on Yes. to product our We with keep toes announcements. each

folks really our compared to a ZR+ I'd we is XXX gig -- where it and X we is to DSP x it think where remember on gig. I it where and at when hit announcement. XXXZR was hit that remind announced XXX the and market look

that base. So customer bandwidth by of lot per X.X we a a a way, the little our use that's And if have with out ploy I solution terabit marketing DSP here.

is expected. to in we terabit It was R&D. actually this believe And anticipated. about expected So That X.X earlier announcement out be later we was than that And caller be going a to we always that an June. there was asked long cycle.

point-to-point pluggables after Our the and and wave. X lot vertical like help roll job into would integration is a everybody the ICEX, we've of with more for wave point-to-multipoint X then R&D spending metro, generation, terabit into to just off X.X-terabit R&D. or which X.X rolled to our next We a a be don't

X.X on have design So a summarize, a solution cycle we very think engagements our to XXX-gig think And the to the market based we -- long today. the tera cycle that onboarding, we and that's well. with going as XX% from CSPs ICPs we're go yes, just get the to ahead... of spend, the with the see that can are Did results as you be

Alex Henderson

the got Yes. I point.

associated costs chain pressures, wanted to I costs So go there's there's different and are also price that Clearly, also X into of there that the timing basis XXX with things and individual into issues. supply but delays associated and inflation logistics these play of sort point parts, expedite shipping the with from categories it. hit costs in and

for much to and much how that as and is ameliorate can the parse bent portion more quarter, parts logistics? which that significantly cost quickly as season third other semiconductors holiday capacity really and that in how into the some than, and between impact But metal fourth that of adds soft of is we're -- things is we harder you Given kind quarters. seasonally say, amplifies are the opportunity the there go the

David Heard

of service those fees hands parts people lot all We'll Well, fees, priority when as there granular networking of since and basis on out again, of and I've XXX the possible. you of complex But are trying in Yes. to been -- XX% cargo simpler predict number carry out didn't or by up across when exist quantify that heard your of title those not, start network. this first, dealer are the believe to prep consider that too see the categories look, it XX% of geometries down. year, what the do, -- that costs a the take that we've stuff parts the you fees, charging we increases, hard the the stacked kinds the points tax think to to that as still expedite cover parts broker L.A., get I few waves are the into to go some are containers for they of cost expedite overall so Certainly, really fees. stuff we've it's more the effect. about -- all costs that of

And see go on of both the we those into going through we QX when XXXX update we'll our point. an view what It's categories. so excellent results,

Alex Henderson

quarter first was that March issues. of question I But off of that, XXX-gig secondary 'XX. decline think historically, driven I there into into you described would off product, the those less you've the And go the don't which that So had know the steep you of actually as quarter. quite a thought which rolls even much is very to a too by ramp maybe sequentially based steep be the flat and quarter-to-quarter-to-quarter want

So backlog, quarter? question an my be XQ should we expecting actually backlog is that be of in lack seasonality given to the up given implied the and

David Heard

I do call, to engagement do can't encouraged QX. certainly So this QX earnings the it. demand dive QX We're with early results by Alex. the no, and the call backlog, the the chain this and too it. into client is I base. supply too environment, But early. just It's can't In

Alex Henderson

At least right. right? it's logically better than All normal,

David Heard

have with have supply tires. you of drive but back those the you backlog, car to to a bigger can’t Again, X

Operator

remarks. There are for currently I'll no turn any further David back closing questions the Heard at time. call this to

David Heard

do appreciate the an thoughtful we’re in. It’s I questions. unusual environment

the focused this our QX to consensus. guided we can ahead out we give and midpoint in trying We’ve as laid line of year. on We keep heads are at to through We and range. of to as period with generally beginning transparency of the much guidance guide what down delivered our the QX you

XXXX the without the shareholders We the basis laid grow out that that targets when by supply we global than unbelievable to this the We work and our We employees, round-the-clock meet the of and teamwork we impacts faster environment. customers despite and expand on our that we’d XXX that expect them. XXX the said and the communicate would said global to the we those suppliers, not help dedication phone loyalty our market. with We of to year. margins of entered pandemic could and do just points,

again stay Please These safe. take appreciate times. yourselves, are for unprecedented thoughtful the really Thanks of So do and it. questions. care

Operator

concludes call. you participation. Thank This conference for today's your

disconnect. now may You

Infinera (INFN) 5 Nov 212021 Q3 Earnings call transcript