INFN - Earnings call transcript Q4 2021

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Operator

Good afternoon. Welcome to today’s conference call and thank you for standing by. My name is Brent and I’ll be your conference operator today. At this time, I would like to welcome everyone to the Infinera Corporation Q4 2021 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. there a remarks, session. speakers’ the will question-and-answer be After [Operator you. Instructions] Thank the to Investor to like would call Relations. now of I President turn over Vice Amitabh Passi, Sir, please go ahead.

Amitabh Passi

fiscal Welcome operator, earnings today’s of slides the Infinera’s good the you, on investor call. afternoon. available Relations Thank fourth copy and and quarter Investor XXXX are of website. conference A to section

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

David Heard

and revenue half and On the benefited primarily a higher of ICEX new a the will and in chain mix year-over-year strong the range, services us end dynamics were our thanks to of quarter. record customer install our were margin a verticals EMEA Americas to high high of by due quarter the Gross to the up driven regions. today. geographies. provide year-over-year profoundly XX% exceeded and outlook review services grew sales networks. begin and and over of a a of the call Nancy the for both and from midpoint major mix set higher gross On and to for turn professional us. margins afternoon, from Amitabh. details details line Thanks, quarter and system lower the performance. Bookings financial in was of another Good and joining commentary. and then across from million supply balanced strong Nancy $XXX demand non-GAAP of nicely a momentum results by our grew from additional bookings in costs, while elevated our slightly margins second continued cover customers were of margins company adoption basis, ICEX operating the revenue products partially Non-GAAP offset for these the basis, year the I of with quarter the QX will above full X% outlook.

product backlog up was XXX% Our year-over-year.

Our and us as greater as objectives provides record enter positions to demand our growth profitability New visibility backlog XXXX. execute and the we well Year for

and which global planned goals we ongoing that impact now an Our in great accomplishments Despite the to like XXXX, able key and up XXXX, headwinds, strong was our wrap QX chain pandemic I executed strategic performance were year we way highlight. a financial increased of a supply navigate to five disruptions. to and these including

X to by First, we of the supply expanded points against We to chain operating from improved XXX XXX despite flow impacts. absorbing major despite basis grew and margins our margins we XXX our positive basis XXX increased And to gross basis at We costs. of faster XXX X revenue and operations. percentage than milestones. point cash of the goal, points generated chain delivered financial absorbing market, end points supply high

X secured Huawei business. customer new the commercial Second, displacement footprint we one we drove Tier success and as design wins new across

diverse amongst we very Hatif Telstra, Sparkle, Media, including Telxius, awards Italia with Telecom Telecom, awards. the - of Virgin a Telefonica, year, and set other global Libya, Globe During announced customers, many

grown worldwide. and gig of we and American successes were North Tier Commercialization at CSPs Overall, major win customer a provider. a – XXXX. grew at in our by ICPs XXXX reach and XX% record Our and And record XXX-gig metro XX% another CAGR over a bookings X with at revenue a at in and XXXX. XXX bookings service included ICPs XXX-gig had major stringent by characterized ICP a growth since in overall market and ICP revenue subsea, requirements, have year capacity we

year exited XXXX. revenue healthy ramp product XX% QX. high-single Third, and design securing product product a ICEX and platforms, revenue line market products. in grew the the portfolio low in with modular wins as to customers, XXX-gig expanded to QX, to over percentage compact systems gaining revenue and ICEX digits XX up metro on in of from are track our GX We pipeline product share our a revenue we our ICEX We XX% teens to with of from

by integration Global. June, pluggables addressable our a in enable metro system our the Forum Verizon, This market including grew portfolio. XXXX increase high-margin Open coherent Windstream our by line Lumen, was expand of and indicator suite metro a bookings addition, platforms transponder and bookings, BT, integrated leading vertically an And we driven members, with from GX launched In in sales grew XTM to the we Liberty In from of margins XX% have our primarily future XR over deployments. the in billion levels unveiled in by Fourth, by vertical portfolio, higher ICEX year. XXX%. initial

One Investor partners our represents other we that additional new and of last optical couple This announce CapEx on Day announce of we weeks organization. at major organized given a company XX% on lastly, focused next impressive June, forum. and we the the coherent pipeline in as XxXxX have our our systems of both interested especially laid in the groups by joining to carriers into spend. members we the forum great the out modules business with telecom strategy and in the of optical strong groups. supported and OFC Fifth, is plan members to start, This two we list Over forum. execute global services ahead other a only May, collectively of the

by team We and Dell, our also bolstered from the growth strategy. to veterans scale Cisco, industry Nokia Lumentum the bringing of in executive execution accelerate and leadership

on Looking business fueling the to XXXX, our industry in robust. goal to established foundation ahead we build the trends XXXX, our remain is

supply of chain and have the begin on us throughout integration, control to to some anticipated strategic year. enabling greater our we have XXXX, expect second supply as these importance the with However, environment chain dynamics focus year over remains relief the reinforced the vertical in persist our supply supply of half challenging These challenges we the chain.

On in drivers out the play XXXX. continuing we to four demand side, see

global service deep bandwidth of environment driven healthy by fiber architectures. be First, CapEx the provider and will demands, proliferation XG

XXX-gig. multi-year $X analyst be providers by XXXX, cycle to growing XX% found survey substantiating Second, ACG the XXX-gig a deploy almost demand XXXX. A tremendous based solutions further billion robust of by long a on recent the plan the XXX-gig of service XXX-gig to expected cycle is industry for forecast that conducted end by Research to

XXXX to to and growth in and achieve Huawei basis points to competitive growing per drivers an drive And to metro of of gross bolstered track of the XXX-gig wins in opportunities operating providers we’re XXXX Tier This our our grow our to margin year displace opportunities up us. our team, XXXX. XXXX. our the edge pipeline the networks X cash ahead service network. are in of confidence opportunities margins increased about revenue investing double-digit and X% expansion level insertion access XXX and give in our the position target These basis backlog, win. strengthened new coherent coupled services XX% and points excited competitive I’m with lastly, and us on the to market XXX right and and model management to as size Third, business and portfolio, infrastructure. transition demand assumes model that We’ve XXX-gig fourth of

our he for more where will Directors. us In Kambiz come. in to for service from portfolio our to – to the vertically would contributions drive Hooshmand every suite, fact, embedded Infinera portfolio X.X near-term look introduction own for Board like manage our value of announcements know mine over ICEX OFC San we hear about and board joining optical our XXth, members faster to we effective Today, have their performance this set resigned be set pluggables. from day automation friends of Xth planned today work Separately, Fallon, Roop open be also and you’ll with and engine, to shareholders. in to that years March of an integrate years. – Diego to to I I our a the Board exciting with Welcome integrated high his of Lakkaraju they networks performance forward continue as open open company will enhancements multi announce for to we ways Roop. have for will Tom terabit vendor thank year’s transponders the I the who

our director tenure. will average changes, Following lower a reflect diverse be and Board these smaller, more

extend tough macroeconomic today, of to while products, the to Nancy? support drive As like customers. flow first support to over also now I shareholders my team’s improve details I bookings, and in thanks The quarter delivering Nancy hand would want during team’s progress a industry-leading the close I environment our and cover financial customers, am been to continued call revenue I unwavering towards I margins year. a of personally new challenging to how and their the humbling. our quarter, proud target navigating breaking have partners, commitment our Infinera model. the will winning resilience for outlook, and record cash and and business reiterate

Nancy Erba

provide year for will reflect planning comments begin as by outlook. results year Good fiscal and results QX outlook assumptions XXXX. XXXX, non-GAAP covering and Thanks, for I the of our our QX then full everyone. as David. My our well afternoon, our

international Operating the global for driven million the of delivered substantial tough to of the this which million, to was outlook revenue, another including put on to a non-GAAP basis higher XxXxX Operating range. and margin constrain our higher am – mix supply with our higher environment our pleased our in ramp costs a X% of of professional at from quarter an XXXX, were of execute approximately the growth good remain our just than XXX with backlog. we challenges, in basis, was $X.XX investor was margin company margin reconciliation of the regions. business of the EPS a while pandemic We our of was to GAAP greater higher and of outlook $XXX million an product of to ICEX relations your from elevated in up revenue came on year impact from our growth control system. benefited our quarter second navigating XX% our revenue range, of revenue margin posted XXX bookings QX to XX% from from mix XX% X.X%, on course and gross quarter achieved and that installation XXXX. my to and of model exited the website, both services in For $XXX delivered. and and due and sales share. services a transitory higher relative line derived ago to end customers points operating to our we in our and in a XX%, lower midpoint expense XXX-gig on pressure a our fourth accelerated year we record above resulting above year details, quarter growth sequential the the the $XXX EMEA with our higher continued have and performance benefiting bookings profit from revenue XX% revenue. impact and the was commissions strength half increase The to and was our margin range, very a just in gross primarily chain outlook expenses assist commentary. resulting a of midpoint quarter, QX and margins. quarter, with financial Operating by $XX.X Despite in margin, strong year-over-year slides upside chain ICEX, higher of solutions QX a to year-over-year in points we the which gross basis top-line Americas to compared performance projects. reference, the strong I due offset target year. in from slightly supply million to high and and the deliver in up by QX of no the the contributed volumes logistics revenue costs lower equating and primarily customer increase We strategy of XX.X% revenue with of in these

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

million on quarter, During year-over-year we down the of generated $X.X basis. from cash a operations

bonuses, R&D our investments was working sales strategic million. and quarter cash negative credit balance we facility. As capital, we the with ended commissions, $X.X in Free including in quarter investments accelerated And a in a inventory. paid made higher on flow restored the zero

our commentary, his notable wins, with XXXX was design As product talent a year business introductions, strong us new model, David mentioned acquisition. and customer in year fiscal for progress across

impacted year-over-year strong positive which cash above XXX points the year-over-year challenging basis. a We year to billion to basis from delivered For up We up year a exited bookings growth on percentage of points of these XXX operations. for gross backlog XX.X% five points The XXXX, expansion four revenue margin results operating our we margins and about the environment, full additional we year-over-year end record $X.XX basis chain we points We our points had as XXX% supply and points And basis flow basis. basis. of And XXX product year a delivered basis. margin by point X.X% top-line basis points up percentage of on gross And a expanded a market growth. X% the to basis points and goal. a a XXX at expanded projected full XXX year with constrained absorbed up generated basis XXX year-over-year basis the margin high to on by supply on XXX costs. our

optimism our chain At combined demand what challenges continued time, experienced are Looking have and drivers business. for more give first intense order us the the our of with intake, even These and same few quarter XXXX. XXXX, we the than encouraged the ahead supply to real are in by drivers we the fueling backlog past quarters.

constrained revenue of this are to supply. Taking a in have difficult by of QX into these by to over seasonality approximately entirely representing inventory environment at three QX through half half capacity. million midpoint be we year, past years. slightly the X.X% in some to the least range $XXX forecasting expect factors million supply remain better experienced additional we the Sequentially at revenue we We first the growth bring is and of year-over-year range the followed second than the $XXX up the for forecast basis account, the on the relief as add

points QX quarter which margin the year, is of being We of gross higher are we influencing ICEX we by mix this XXX the the costs of our gross of to inventory to as the in component basis forecasting accretive ICEX XXX revenue, gross higher costs the to growth is first the continued and a factors be range approximately bear capacity for primary higher additional year-over-year the and offset company’s basis costs, plan burden slightly XX% minus and points Compared or That down plus of outlook include impact through as chain in from supply logistic a margin. margin last basis. on year.

are for the million. We range expenses to million in operating $XXX of to QX be $XXX planning

increase As of platforms, integration, vertical of we driving R&D, expansion. software investments take both organization margin investing and top-line growth areas market advantage our opportunity R&D and and ahead critical sales pluggable to to the us. metro we in in are Within

the points X.X% on margin to or operating midpoint. a basis XXX be plus minus QX basis approximately expect We flat at year-over-year

the During cash expect we quarter, use from to operations.

assume Below match for backlog. we operating net about income, million As $X million expense $X our interest taxes. we for the inventory with and

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

target typical well than by this expand in seasonal and Infinera basis the continued team partners, intend to XX% basis first to to we customers, basis margin X% the to grow Furthermore, make and to in points QX second to XXX the by gross model a XXXX, year a shareholders greater the points expect by revenue today half. support. and be year to we margin XXX revenue Looking full by points operating of David’s like toward half as business your and are of continued margin our for plan XXX cadence basis with to margin revenue expand points. thanks XXX the and ahead close seasonal and I echoing to and our business year uptick progress in would to to assuming our

tremendous the financial look years putting We these to forward profile few company now team shareholder customer in progress open the launching to additional do, Brent, we delivering line to know in and I’d place, of ahead. right securing pasts We years products enhancing have more key wins. for by in work questions. we the have the like made value and new the

Operator

Your Instructions] comes [Operator B question David from first with Kang Riley.

line is Your open.

David Heard

Dave. Hey

David Kang

question first a good you. Thank to than Yes, if just from XXX-gig customers XX% just about customer you my to I you. still driven targeting of you’re talk Is be maybe and afternoon. or, concentration. on that couple broader went is that? can wondering know, Thank XX% by XX% more guess I’m going to you XX%. customers

David Heard

broader. No, it’s

racked design customer we XXX-gig, of customers when I at, I think wins last think use now And little bunch we’re win we bit to more we quarter. to don’t up could quarter. comes this XX% look continuing ICEX, in concentration, it a obviously you both a when any but have

CSPs their ICPs So lumpier products little initial a with customer CSPs when bit across both into ICPs being taken they really networks. are in little longer wins bit of with larger and terms new deployment roll footprint, a the

David Kang

for to Got follow-up years. XXX-gig, is it. on XX% And my XX% the

it’s higher exit will going fourth I’m XX%. I So, be what rate be quarter, just in than the to much assuming wondering,

David Heard

of weighted kind a basis. Yes. on right be average That’d

teens, you’ll for than build that finishing better. mentioned an to XX%, about think over the be we entitlements that quarter become same QX quarter which rate in which of, quarter margins what as is finishing is single-digits over even in out, we as early in see you exactly if high why with should both terms greater in said our exit So, continues much the what we that us QX build had

we year. So our throughout stronger the get go margins even as

Amitabh Passi

Thanks, Dave.

Operator

[Operator Instructions] Alex question Your line with the from Needham. comes of next Henderson

open. is line Your

Alex Henderson

supply actually Great. about still Thank talk you very, then very little hoping if industry getting in cost chain heard obviously raises this pricing some bit up much. was before, I pricing. There’s that’s the could a I of and of help, pushing a wondering but happened players and follow-up. are any lot know industry-wide environment. you I pricing I we’ve you’re was have a never

David Heard

help strategy. in industry. Yes That’s we’re complete go our to and I going through never look, Right. don’t pricing this think

is are now, that a there’s of bandwidth. right Our looking to view customers bunch deploy

of give heavily We’re to per optical by Moore’s working trying value getting in that and price Law them price the bit.

kind some that structure a We to You’ll which through go new we impact OFC, and to we’re per impact But of without, some R&D annually. market be on to a of very temporary see we’re cautious more. kind lowest the same help want we’re list new, and of our again, drive very base our bit cleanup from the at continue the environment, now, of this getting supply announcements increases. will careful trying price on to in that even be taker cost our

seeing We industry. the in are it

while continue margin to take to to to commitments. We’re going be keeping share our opportunistic

Alex Henderson

Yes.

isn’t this all? Did – and what are really you the quantify are follow-up, you seeing, what yes, is question you price actually by – question height the doing are the So can you competitors the and seeing? at you your

David Heard

able take and We’re we’re are to drive to some from is, hearing that by our with costs of we’re provide solutions and customers infrastructure trying seeing, share with again, now newer approached increases. architecture seeing in And to platforms. telecom are them price an our that some lower environment to they we response companies open be – being

yes, all this is, think I of go ahead.

Alex Henderson

that relative the clarity was I But to base. think on is earlier on XXX%. dollar said I the value what backlog up follow-up the the the a question question, you the So is backlog, have guess don’t a of wanted I backlog I

XXX% what, don’t right. a of I what So, know

characterization give the So backlog looks of what dollar us can like? a you

Nancy Erba

starting the backlog per not disclose the And above and from you’ll Hi, you meaningfully QX year as go our as for Alex to we’re going great with that gives we’re said, but was confidence it that I can share backlog the the into book-to-bill to coverage year with this number us se, year. projecting we our to revenue to more that And quarter. see David growth and even we’re grow start XXXX. the year, for quarter quarter in through one,

that pleased able really to the hit high as QX we were in our revenue of end we go We’re – and into our well outlook for positioned range very feel XXXX.

Alex Henderson

Thank right. you. All

David Heard

Alex. Thanks

Operator

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

line open. is Your

Simon Leopold

Great, thanks.

Sorry. Joined late.

that I’m hopefully and been and I have December, projects had are that of to quarter? Could might terms Quarter this you So where was new how the of good quantify reported in have of you acceptance on might not revenue year. during you some that shipped course the contributed rehashing. in on the recognition imagine products

David Heard

the intervals with than acceptance across midpoint footprint has just that a you in and the in been flow from acceptance of execution the, provided criteria overachievement heavier tell expected no the was bookings change team actually from actually It shipments that match There getting time. the the better we to nice the team. to just would we outlook, I wasn’t execution on out supply during that the better our or the acceptance. Yes, actually

Simon Leopold

a of with your in got this terms bit. of you’re of not for in architecture, you’ve part issues supply what seeing helpful. terms That’s all a pick the down reason the just And is follow-up component components. drill like build question I then that And little to with, and on different and peers maybe your wanted

Thank what double you. seeing you So as you’re maybe on constraints could currently? click

David Heard

think And this had I Nancy we’re Yes, in live environment XXXX. look, think all her mentioned what question. it’s is, a good supply chain comments for I to going with

final for kind as of back beginning this of stuff more little is bit acute chain lot under the more commitments chain seeing call place supply a getting half well in packet with we’re that becoming back Simon for that to our from being optical reliable a the more back architectures. that our put switch we’ve are quarter. wave cost I commitments supply What see we’re a the think folks little Maybe control. the extracted. are the of as we processors providing are have from bit it we is Obviously is half

microcontroller’s, around, the packet processors, it processors fabrics space. network in switch and really So out as them is think of

of be in bigger to with them those obviously So to comparison but But some challenging team than mindful we’ve might QX. we been well competitors, have. our constraints the that, in executed we’re too,

Simon Leopold

Thank taking you for the questions. Appreciated. very much

Operator

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

Your line is open.

David Heard

Hey, Alex,

Alex Henderson

get to expecting wasn’t I that. back in

I on I’m, So got my headset here.

We have a second.

David Heard

that having, grow. No the and the of that Hey, we’re as can up way disclose we’re back continue build Alex, is to to your you seeing last one we gauge, there that question, worries. just kind of kind put K out have RPOs

our even half is the profound. first half and pretty for for the coverage overall So, first

at of what also that this outside for orders We orders and looking that. for plus quarter, in, are when one we’re orders measure coming see we

normalized we more So, go. view we kind of have bookings a of as

So, of getting far we’re ahead too our skis. not

Alex Henderson

duration way a misleading people smart of is that’s relative or to the doing – it backlogs. of lot Yes,

David Heard

Right.

Alex Henderson

to therefore address, build component out have you measure the different not particularly ICEX to from that impact your other I exposure that in of your in that issue some perspective per Does your wanted slightly as the becomes short moment related that production it a reducing business. of or ago, a you the portion as constrained, se. element, the elements to is is just processors sit areas the directly around are, that platform supply described it XXX-gig a an and increasing or

David Heard

does as kind to you. Good from it for on newer Yes. to say I’d platforms One people. quicker question. transition happen going legacy People three tidbits follow platforms. are implicitly of

described, might is we had only not stuff geometries, more is the people of merchant customers in off you integration, many based to coming go age on other we for something the we’ll own can see much the packet and when perspective And some we push like are own sensitive from the we fresher had moving that do that we When our run now a Alex? that and forward we – QX, are dependence entitlement still we and will that from helpful. and haven’t you’re see processing we lifeing used yes, and That’s platform solution and while commercial get helpful. help into So into go consider. two, they end fab have in that on they a right, as things move will volume might in we QX want our of integration. legacy aware bump nice Number of our older just platforms. And QX, we huge Did can’t to that parts, a will less profile packaging, out entitlement thirdly, going ICEX. have the of the environments, a which dependent, fans chain Nancy suppliers but see, when the push to supply vertical QX to microprocesors

Alex Henderson

what exactly was looking Absolutely, I for.

and of seen as in including raised that products a your primary in behavior DSP across On most the by as much they’ve supplier of you we’re XX% side, out understanding prices the price February a their X. hike effective change sense have pricing XX% that of

parties? any changes pricing third seen we some that supply the you’ve that, in gone DSP have So

David Heard

Yes.

think I that through we the on have, more little a as PPV. and talked absolutely pressure Nancy bit

piece given look what what what packaging, of the material bill is As in material. the we do when itself the bill do it’s it, but a it’s of we the we in we at the not fab, huge – year, a DSP is the do of piece the we good of ended for news

you’ll are again, little the out we’ve per what efficient over that. that bit hear last again year get a to dollar more in worked more to OFC bits countervail on And more So about platform. the of ways

Amitabh Passi

Hey, actually people There thanks, you. in Alex. Apologies. Alex. is several the queue, Thank

Alex Henderson

Thank you.

Operator

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

Your line is open.

Meta Marshall

in jump Alex’s before I’ll third turn.

second those or of basis forward supply we the you’re from chain to we of growth as is Thanks. throughout uplift the that X margin of of mindful the and Nancy, dynamics ICEX in year, question, a kind Are project of how piece the any the lead much to just point is would the customer be that for calling should cost chain how to XXXX. from XXX any outlook saw supply with or there question, just much So of greater uplift XXXX, mitigating XXX of for becoming lead gross categories? like kind then that that kind that getting categories portfolio. just back of Tier rates costs between And a based you maybe the maybe expecting of look growth some to different

Nancy Erba

Yes. Meta. problem, No Sure.

margin the in sure of see I’m through for of As we very, the trend from impacting you’ll like remaining, we the on doing up may we those the in some and having really continued the margin. year, and math, the be terms we’re margin half, do you’re ICEX how [Technical in at that – our integration look still where see just are in at the we really gross relief stepping QX gross basis with vertical it’s very and I mentioned tight am to going year pressures ramp margin quarter-over-quarter. see the XXX it’s back but half first exit as to for supply the planning the points I half up, XXX we company. Difficulty] of kind continued But second the of to it overall and the looking improvement

David Heard

I’d to continue open we on from the strong customer line environment. system this uptake piece, category say ICPs in see the then And

that and CSPs We’re now seeing worldwide.

year. had are of we And number last – continue this Tier we wins year So we those. already a design X with

which we in very, strong to in X that be so category continued as ICPs Europe. very relief strength And to those you Asia. ramping exit And see we’re in talking the presence well ramp some that you’re quarter, Tier about our looking should business as the we expect as in up

Meta Marshall

Great. Thanks.

Amitabh Passi

Thanks, Meta. Operator?

Operator

next Sachs. Your Goldman with comes question line of Rod Hall from

Your line is open.

Bala Reddy

digits mix. Congrats in the start thanks taking environment. Bala guys, to year It’s on and for XXX-gig by mix. I about especially XX% ending for want teens off XX%, question. good that my last full been is This it results now single Hey ICEX year with indicates this Rod. way, and high in David, be quarter. low XX%, would the was which It probably QX

orders even XX% visibility in or this have a wins, They of mentioned just you either for wondering backlog of have pipeline. ICEX the what’s So existing form XX%, mix. customer the I but new follow-up.

David Heard

quite mean, – but backlog existing a all of Yes, bit of backlog, for the quite pipeline but I a of we bit Excellent. product. above, have the

haven’t and that, design deployed that And wins for. have yet we have we We opportunity. reached the orders pipeline a growing of

And backlog of and to of of hit confidence back substantial we it would where But global number, nice mix ICPs. CSPs the backing up well and So mix. terms couple revenue. quarters of nice hitting it’s in a as XX% of between a a its to nice that now XX% as revenue said a in percentage it’s it’s again mix a

pretty we So there. feel solid

Bala Reddy

XX again the Very in XXX-gig, competition good. for mentioned you wins year. customer And

Just of major head you them wondering were head what against to U.S. against how went those many your that competitor.

David Heard

of architecture go we’re of there, of supply wins, how Yes. keeping environment, in the very score an best many into are scenario. customers Look, single our open not those few transponder public but a

best all look competitive for, they’re the cost solution, And per they the So lowest again, bit. environments.

Some people via be gig. XXX to provide trying may that

be providing single wave tend to via may X.X terabit We wave XXX-gig. platform. it XXX-gig to Some a just in a it provide

So, it’s a mix.

Bala Reddy

it. Got

Amitabh Passi

Thanks, Bala.

Bala Reddy

so Thanks much.

Operator

comes question Citigroup. line with next Jim from of Suva Your

is line Your open.

Jim Suva

margins environment little of gross bit question. Could of operating I just one little have because lot kind expect margins? through? inflationary which And or was focused increases to lower I R&D a operating Thank we’re margins talk some a something? would Can or to to for about assume salary the so. the Should the focus and discussion rightfully adjust take margin on progresses, we or just do you. gross one inflation similar we was year bit flow operating through on it you. margins, or Thank seeing a as for A us we flow level need some payroll you

Nancy Erba

So question, great right.

we the Certainly, planning But step environment I is point my as to XXX as in inflationary up comments, operating for to everyone in on mentioned in expense XXX this to managing improvement expecting we through there. are growth But market are further investing those will sales for we XXXX some go basis income. year, need year-over-year We a step see certain after expenses year carefully our in investments really as the do up terms did there. we that marketing you profile. as a and in fiscal of

or metro pluggables did Xx through really in up to software, be operating to of addition in and mentioned, to to can want percentage expect the you X we because the fiscal to In line. flow year to ongoing what see as terms bottom But and we and margin. R&D I that integration XXXX XXXX go able vertical

Jim Suva

Thank you so much.

Operator

Your next line Corporate Tim question of comes Savageaux – Markets. from with Northland Capital

is open. line Your

Your question… next

Tim Savageaux

Am I still there?

Amitabh Passi

hear you. We Yes.

Tim Savageaux

go Okay, want to great. Got to to here. – be quick on draw I back the

Nancy Erba

it again. forget Alex,

David Heard

We’re having ahead. some challenges. technically Go

Tim Savageaux

those full bit. I given go a to here assume I given but don’t try or year little digits the underneath dynamics you’ve and mix you’ve if mid and know said want for to what I’m a about half, to XXX-gig in XXXX, back get mid-single And second contribution we’re the high. the maybe

so is looks as the you’re how XXX-gig fourfold, XXXX, I could And the as you’re pretty increase I older certainly cannibalizing of grow overall XXXX. some stuff. fold. In in to is And like incremental obviously, the at dramatic total business mean a question you looking much X.X guess business? the

in kind at bringing from would when that dynamic do overall net current more these with generations maybe out do previous or growth So you you transitioning customers you of new dynamics of see? customers – and XXX-gig look what

David Heard

question. good a it’s Yes,

product we hitting again, overall, XXX-gig So that XX%. pretty see ICEX line XX% to confidently the

of of from some more off hopefully As into technologies, our for growth that moving us, ours rate. generations, or kind whether our you portion overall competitors people older the they’re we’ve as baked previous people is that said, roll

older go that cycle. as product which single-digit typically the you include fall offs, X% So through of does lines kind to XX% any happens in

the longer to and taking higher just into a onboard So pickup with environment. with bit again, their CSPs ICPs

that the X% includes So offset. to XX%

Tim Savageaux

some sort look do you issues look as relative are grow that’s to is talking of growth sustainable double-digit, is the above think double-digit and I to that trend up long a well, of overall about market. it’s we kind Infinera’s a low those I you supply catch mean, for competitors kind your supply to netting. that’s true Yes, area. at being an of this saying… this I that most way for growth you’re for normalize XXXX? and And Or mean, Or in I and this guess of year? of as guys looking growth into here need maybe

David Heard

question. good Yes,

Tim Savageaux

a accelerated baseline market Of growth bit? of kind market changed growth or

David Heard

and mean, and and Analyst our calls accelerated were suggested I the probably people May might look came in said grow in many we X% going XX% want we after we go Day that. to to the in system a we we on back it’s, Yes, April, of down market the And saw dynamics growth. were Right. on XXX% little open our And calm a line going system year-over-year. to of open what with grew the line bit. based bookings, that which growth XXX-gig to

says market. do analyst today to don’t just buy than growth X% we the say grow going for to X.X% faster we’re it. I year. the The So, this believe market

like more X%. grow probably will market the think I

Now, I think there are in winners and market. losers the

portion to billion outside a that the the China It’s annually. that’s going $X like of substantial So Huawei certainly are opportunity, are lose share infrastructure of people there market.

maybe But to So, numbers. wait and them, that view, real well they’ll on in I move expect year. we above change I X% up to maybe last that. I’ll the of we market and do X.X% I X% for to analyst their expect expect to to back – still May expect, set from grow

into that expected XXXX. We to continue

heads as So, keep measure about XXXX XX% very and in we growth rate to and our stocking that for I shareholders. are the our do the down we what X% execute, that thing we our as in good later we don’t think period and think for And carefully. continuance, right bookings people customers and long a feel

Amitabh Pass

you, Thank Tim.

Tim Savageaux

Thanks Okay. very much.

Operator

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

open. is line Your

George Notter

vertically mixture was of guess question, my QX. products much. Hi in I the very guys. wondering integrated was Thanks what I

bigger think I you gave us past, for know number you in piece, us the guys I’d the love what ICEX is number overall. given certainly, that to the but have

Nancy Erba

Yes. Give second. me one

it pulling now. up We’re right

David Heard

it Yes, George the in in close was mid-XXs, to quarter.

George Notter

coming is in close ICEX DTN-X sounds the missing it I of, like growth at here heritage the mid-XXs that serves, so I Okay. am Got the product. also it. memory right expense in you And read were Is QX, the presume something? if or to

David Heard

No.

a So number. on also lower remember it’s

QX what that. QX see to didn’t We So, on I precipitous from think decline is new we’re seeing opportunities. a

– XX% the want base. then and in was XX% in mid-XX%, we on QX, obviously in So which XX% a revenue were I in the say higher to QX it or

So, no, I wouldn’t conclusion. drawn make that as a for

George Notter

Got it.

Okay.

a it’s of new and So then… customers mix

David Heard

Correct.

George Notter

the you been then And are of and XTM, about guys but when quarters. vertically is you a guess, portfolio, come say will I I products into source I a in marketplace, not redesign Existing. wanted you XTM that for guys redesign to a help metro’s looking juice do recent vertically you about it That those didn’t mix? know of sense have to here. ask also I guys the for integrated you much know growth product. kind guys integrated

David Heard

we do. Yes,

was Overall our metro So our grew year of about Day, Analyst talked record one with about when a bookings. we XX%, great I – did XTM bookings. product overall believe bookings, had XX% the great we year and

available margin of As forum as to that improve we well XXX-gigs products XXXX, to multipoint to our little we profile. can used products. DD start be be into in, will in have XR provide as our phasing pluggable newer those significantly on will CFPXs Plus, and bit That the CFPX OFC own ZR our well as is hear point first and able growing. get which older about our that a as XXXX, And of you’ll half should pluggables

George Notter

good. very Very Thank you it. much. Got

David Heard

George. Thanks,

Operator

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

Your is line open.

Samik Chatterjee

for Have questions. Thanks a my Hi. couple taking Yes. here.

expecting recently exceed are look months, their most or strong rates broader line some in demand growth you’re we date the when optical itself, are that that in first revenue one pent-up rate for long-term talked guidance mean, And guiding have to the with that I presented XX that’s season, starting one. Day. given you’re seeing. just but across a the over during earning growth that’s next guidance to at just till more know with XXXX. X% we most long-term Analyst growth of XX% the a this I in your So companies

your growth follow-up that. that. And get around to to So have just growth I a but ahead. with your long-term good I rates. go wanted Please number, still thoughts more mean, a why not upside is this

David Heard

the No, empathetic a your shortage aren’t others miss also this and we industry comment. number, I chain when to in But you supply you have that, very are happy. appreciate guys,

So shareholders. ignore our

back we’ve at job as think and with QX, QX good the last grew I grew done So, year X%. QX half you a saw with XX%. and at

just supply we’re chain as very we go. very, of our provide right We’re tune in our Again, with get not range you trying want to skis. and ahead environment we the to

how that we That’s to get to entirely by too some see to a the of see picture bit continue starting X% of of we As which a inventory. met, on early to it’s expect XXXX. activity based to might to supply, but in going of tell XX% Nancy been base supply said, that. was to through are constrained the some constrained little We clearer we in was be our provisioned the half light capacities as outlook give back just among

good. to So X% pretty is XX%

that always to like came Our the intention in QX. is high range of the at end we beat

Samik Chatterjee

Huawei already we some the should creep to a revenues did contribution have from that you How mean, much of it aspect XXXX? in starting XXXX. that How yes, in is in I displacement XXXX? Follow-up, support of magnitude in

David Heard

chart of really actually. had that had kind think our we indicative and an we we Yes, it did when Day, hasn’t I Analyst a view changed bar

the to that that gave back our we’d as into really rate. hold see when XXXX. we we got from XX% way taste, it, I design all nice see scaling, appetizer we nice was that it a XXXX, set really and and thought see along. in And May did take to revenues RFPs would in we you a So, wins X% think but contemplate growth beginning We we we

Samik Chatterjee

Thank you. my Okay. Thanks questions. for taking

David Heard

No, thank you.

Operator

question Your next Riley. Instructions] from [Operator David Kang comes B with

open. is line Your

David Kang

Was what said missed approximately as $XX it was I impact. have impact? fourth on you you Nancy, impact the margin – but again. before? Well, quarter, what revenue about Thanks talked it, about million, may

Nancy Erba

that Yes. In range.

of our constraint did on revenue still we have So, in QX supply. because

David Kang

five points expect, or X% that next to points for of shifted is, be it’s adding all last X% nearly that, supply my to year. follow-up of from Should top we five four or you’re you like quarter? by was four on said And So the about impact more it. Got XXXX. to X%

get that’s know, like you that? growth year, like you’re, this how So something to you XX%

David Heard

expect We future. we’re chain hits, as the backlog lead supply backlogs environment off out the is the we’ll new building backlog are that be times the backlog and extended bleed – to for going in time to going and to and continue lead older

X% – don’t – if supply So chain now great. that, attenuates and not to that. our to But overachieve can all call be along environment it’s growth we that’d we’re was the think prudent the XX% right we view

David Kang

Got Thank it. you.

Amitabh Passi

Thanks, Dave.

Operator

now to Mr. There this over are at to questions David no time. Heard. call turn would further the back like I

David Heard

continues the build financial position robust, future for our the Infinera. opportunity strategic ramped the thoughtful Appreciate customers feel in We year both questions. our achieved engagement, nicely, and to Appreciate today. was here XXXX great the our financial good as Demand for targets new build our momentum Thanks. We goals. sit to a we about and was products, and targets. continue with our and

our couldn’t shareholders. and loyal the team, suppliers, do again, that customers, extended global our we without So, our Infinera

you thank safe. And We So Be all. well. XXXX. look to forward be a bright

Amitabh Passi

you. Thank

Operator

call. participation. your today’s This thank gentlemen, and you Ladies concludes for conference

now disconnect. You may

Infinera (INFN) 17 Feb 222021 Q4 Earnings call transcript