INFN - Earnings call transcript Q2 2022

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Operator

Good day. My name is Savannah and I will be your conference operator today. At this time, I would like to welcome everyone to the Infinera Corporation Q2 2022 Earnings Call. Today’s call is being recorded. All lines have been placed on mute to prevent any background noise. remarks, be speakers’ [Operator question-and-answer the Instructions]. after there a will session And you. Thank now the And Passi. to I like would turn conference Amitabh to Please go ahead.

Amitabh Passi

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

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

David Heard

going for to today. for the call Nancy Good financial Amitabh. the afternoon, to financial and a cover us thanks the review our begin performance. to Well, results and over thanks turn quarter, joining of our I will details of I'm financial with then

and recognized demand associated for the where midpoint in resulting book higher bookings range to with delays revenue of quarters. supply service and of is margin remain in basis, only services beating QX due The should total year The Global up revenue the customer coming chain near be our revenue double range, the these the timing our in over operating strong deployments, revenue year issue results digit of to this in declined percentage environment with our with company approximately over margin range challenging products supply year XX%, the a our new over strong XXX% above with with growth midpoint with range one. gross again. ones. and quarter product revenue year expanded were record customers grew delays of a backlog revenue with at We to encouraging Bookings grow of growing both costs. bill set over second upper due product an was the outlook non-GAAP growth in we and XX% end is especially year On the a XX% existing good while in X.X%. year with news related another non-GAAP growth ICPs backlog

shortages, all obligations, China, delivered our QX results decommits, a in backlog resulted chain in and continued shutdowns supply related of remaining non-cancelable measure costs grew higher which component challenges, performance sequentially several successfully both Our of deferred are revenue, million by our in for and including COVID quarter. our $XXX which components facing We logistics. despite

remain basis Taken larger and approximately supply margin a gross points believe We chain of shipments drivers last the improvements some of difficult the demand portion together, half occurring do three in we XXX business QX. healthy. factors in chain temporarily the which with expect XXXX. impacted skewed some much impact relief environment quarter fueling these had expect in our weeks quarter. And for our the second the time, in by the in our are of was Overall, we the worst shipping linearity, its to year at supply while additional

optical traction of demonstrate backlog strength portfolio. booking Our record our open market and the

Specifically, design integration, industry very of customers, We lead ICEX future in share and new for bookings new believe drive wins added solid within leading, secured times leveraging ICEX the gains. to deals resulting we QX, high our are are quarter. which new degree the we win in given systems business, vertical

percentage the and to Through are a ramped product will to track certifying revenue we drive XXXX. future are as deployment which in XX% of is of global grow growth tier networks, leading XX% for ICEX of one teens providers their with to to revenue accretion. on product ICEX ICEX We and high several and half year, first the margin US service in the

Next, well, group the our year solutions performed we platforms. year revenue over as and both GX for bookings metro and XTM

currently sales up we samples starting for our pluggables expanding sets growth margin vertically metro future them customer revenue metro and first platforms. coherent our footprint expansion available our platforms well we us our effect, for into and range Our of in finally, double we And our a into once over set with To we that integrate line XXXX. now existing systems deployment are integrating high pluggable in The line have indicator growth bookings up digit precious and strength in as growth year-over-year. ones. past continued two leading and good continued customers percentage saw with years margin both new revenue the systems open future grow win in we the of transponder remains

the our we have highlights quarter. to group, subsystems the business Turning following for

XXXX. previously in leading First, and financial available samples and the of of to on see we on first capable for point and multipoint to performing supporting XR track specifications point-to-point samples applications. we're as I stated, These their gig beginning our industry against have both impact half our XXX technical pluggables, are well time

own This to our percentage platforms. our pluggable content the important modules a metro high is integrating This metro is XXX into material first systems for Second, these business, systems. of gig we're our merchant of components ability integrated time vertically meaningful competitiveness. metro solutions the future from the which in and should to our instead buying margin we've improved produce market, expansion global had result

and market switches, as dollar Third, additional servers a planning while external such addressable ones to opportunities. in we're to of certify the our platforms trials pluggables us, us XXX well, with as for pluggables tier We've growth gig beginning in will giving This our second equipment go-to-market wireless multi-billion routers, open up leading half are and accelerate for year. to with work RAN. programs margin and our revenue this expansion partnered manufacturers new

products we're XXX as expanding of pluggable coherent pluggable develop our both Next, XXX gig we solutions. and gig line

at our industry out We and While we're upcoming to we great in customer are our received roadmap pluggables development, update our an of days from customers an feedback event. building provide pipeline. on plan early we've

to membership in open gain which traction. accelerate to XR adoption the continues market Lastly, established networks architectures of forum, multipoint was to point XR the and

service of forum. During the new providers members the joined as several quarter,

pipeline member, which forum are is in in players major respective significant and market importantly, as their a on network the growing, segments who a of signed is equipment manufacturers, QX, More milestone. Dell technology

year, In to almost on expect chain impact be great balanced supply by and the gross points These and Our time. global for portfolio’s displacement saw from XXXX. we growing on in our we chain we twice on chain the shape XXX customers. basis over are our diversity to the XXXX, over total business, we're insertion temporary supply full margins competitive our supply which impact estimate attenuate seeing opportunities opportunities the for need impacts from the

last We with by XX% and to supplier our products in steps sitting XXXX. supply declining chain start to we higher cost next -- substituting not in potentially you shared chain to earnings terms, mitigate still, time, over XX% expect We're parts. XXXX dissipate call, the our including adjusting several costs to we're and on these reducing taking as higher costs year, commercial precious easing

and XXXX wins, intact the fundamentally continue to of the thesis in back and we design of the expect to of backlog see performance benefit improve ramp investment we Our from financial our revenue. production remains ICEX to as conversion our half

both QX to with planning the and revenue are X% sequential of year-over-year, recognition. We in product service QX the XX% revenue growth growth offsetting timing of for revenue

with or $X the going expectations QX. details planning shortly. approaching of Nancy exit will to additional our are We provide XXXX. also on the size the gives XX% us of The hitting higher rest for which margins greater in our confidence is year backlog, into billion, gross year

the term macroeconomic short is opportunity war, difficult is a the While factors environment supply the are uncertainty, pandemic, play, a team a healthy chain Infinera and there at and plan. including underlying executing several global market

of to customers, in Nancy? these and Nancy ones, winning are opportunities ICEX shareholders the Infinera customers and thanks the our the outlook one also full details to another. team and products call for to now and the for create expanding at like advantage thank and product hand to of ramping market to existing to to quarter. with intend support. over I'd for our the I'd revenue XX% financial partners, ahead to XX% disruptions launching Infinera XXXX for to customers, our their dedication plugable quarter suppliers to and of for like the cover or extend of to will continued I our third support our new your take schedule. investors. We continued We

Nancy Erba

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

assist to our on details reconciliation financial our I we relations Web with with reference including through commentary. with site, Overall, your my our pleased results slides For financial investor QX. to GAAP am posted have non-GAP

As outlook of the up David, the to-date. with you the book-to-bill quarter gross was non-GAAP one heard midpoint from our upper revenue and was range of as range, non-GAAP the in supply strong outlook above range, double-digit the chain range, the highest end at of backlog. ratio the midpoint near percentage in Demand our a absorbed impact quarter and the margin the margin beat we remains record bookings in operating

Our customers our is seek refresh opportunities, our strategy supplier well working is diversity. especially insertion and creating portfolio as

half. of $XXX with was the Services basis. of quarter-over-quarter was a up year-over-year the quarter million quarter. XX% basis, which and X% still a to on Turning -- down is On a of the deployment, first in up product being revenue project on revenue customer revenue, XX% financial year-over-year QX details by in timing X.X% impacted up the the

our domestic revenue the across to services within the QX. a on to regions our and generally and customers, level XXXX. view a and consistent rest we year catch-up dynamic into expect from year-over-year XX% business revenue derived of as growth continued Geographically, basis of We through saw the with all temporary revenue

elevated QX a tightly was quarter this outlook and During while spending million, to range the the Operating quarter our basis delivered our of the margin from points quarter, $X.XX the chain XX% gross near X.X% per long million our range. as one operating impact XXX the were in $X.X we of than of in end million the greater approximately of was of term absorbing customer profit maintaining margin was supply to outlook of high our of contributed an projects. costs. We midpoint to in below The revenue. our $XXX margin resulting range. investments of at outlook $XXX EPS XX.X% $XXX.X million of manage share. while quarter in Operating expenses loss equating

We linearity our items. was ended and balance, Moving quarter of quarter. balance the than quarter to cash down is the from of on quarter. atypical with late changes by greater restricted primary occurred in in a for normal last use as cash the in sheet million temporary and The the cash capital shipments the in flow $XXX impacted portion working cash

As than improved see a in QX our result, and in QX. collections expectations cash QX but were expect lower to collections we

the addition, in to used our cash increase drive of to cash as expect half in $XX we growth. we quarter, million In convert opportunistically inventory to the further we ramp ICEX by and which the year back

capital couple our required of navigate and our the term financial $XXX prior capacity. This June for a temporary supply will with to facility of growth, Additionally, improved new last ABL to because us years, working short able expanded we end while over replace at challenges. of new be with were terms better efficient our of drive at position the to capital an allowing million facility one if source

Looking third ahead quarter to of ‘XX. the

on encouraged through half bookings the this QX ICEX second albeit the to expect some supply while still range revenue to and over X% $XXX million, over will over afternoon, this the above ‘XX period. are year to representing midpoint down ramp product We we revenue into of in revenue be growth in at approximately factors of continue have on challenges the we Taking at the record moderating year of growth a we the year QX. to a our the account, with ‘XX, range year time, into expect backlog. and be discussed as or these $XXX basis momentum, of same basis XX% X% services by million At

percentage of margin quarter in or is on from our higher is to gross approximately costs integration basis from of driver the absorb we quarter logistics QX margins ongoing in sequentially XX% expect a margin to continue mix improved The ramp QX. in Embedded a supply range primary that of basis. the freight. over gross outlook vertical impact points to plus be of basis of ICEX XXX will in and tied assumption higher XXX materials, points, gross the We components, our chain minus up

basis for expectations million inventory. we with year assume the current million and Below taxes. expense we the year. of the beginning operating line at from midpoint income range. as begins consistent consensus We to are to year and at million the forecasting QX prioritize QX with invest the as be up $XXX or million X% minus of operating points, to operating quarter plan in in continue in expenses even to plus in we we continue expected in capital to the be the working and R&D $X a We to range normalize, as sales operations cash net line, margin on interest $X investments $XXX comments resulting XXX made both over is the basis of in generate The to generally for

for count and Finally, a diluted share a million shares. basic of XXX XXX approximately shares million share fully count QX anticipating we of are

we ahead, the from are normal revenue to have QX, QX and QX up or XX%. mid further seasonal QX, approximately a for uplift with percentage Looking sequentially planning gross range in above at margin in teens currently to

on and on and developments, $XX ’XX. of We committed ’XX. be XXXX call, in to ’XX the numerous out the revenue beyond. driving our ‘XX X% to challenges with XX% growth Despite revenue we remain and services approximately from for expansion revenue the in push expect million from Consistent to growth year an margin ongoing QX range to in again external rate earnings to in expect basis in over we year product commentary annual last

driving customer record continue XX% next in range pleased of are team’s remaining open X% of now in we operating to consensus customers the $X for team expect and for these in year, with today, XXXX. like are percentage your for our to toward with results, to our development. work quarter. while of ago we QX. at to with to am as are XXXX the technology proxy we bookings operational the line current In for plan to what on Through grown wins from Based have thanks who first like tirelessly to would a delivering Furthermore, support. costs I'd We or half closing, and generation and year I growth twice I up and demand, the QX line through proud higher. gross Infinera we exit obligations, margin approaching a XX% shareholders up the performance partners, echo be approximately of we see very our year David's backlog, execution, the $XXX are environment supply billion, Savannah, in digit chain almost million and double we our questions. product are generally absorbing continued in the dynamic level that to the experienced and margin what

Operator

Rod [Operator come question Sachs. Hall with Goldman Instructions] our first from And will

Rod Hall

Thank you where billion for move for and we a throughout and here X of total as you quantifying follow up. And thanks taking -- my I'm this XXXX? backlog then to question, the have backlog. trend into wondering expect backlog the year from

David Heard

So growth chain begin revenue strong will consistent environment. we growth in will We're continues digit the as this grow. continue should grew comments backlog half that despite XX% It be we support continuing see quarter we to to with double double noted down. quarter, what continues when that the it the year, last is, think that is X% supply back believe product year to match rate. our entered the to demand, every the with our easing some comments good as to drain I supply one, consistent ease we But XXXX, certainly and of news in of see

And nice side, as very, high in rates. so the because on very that attach when puts certain the follow is to you the future us service position, get that a warranty commitment and product and revenue rates

Rod Hall

then And year and of what high gives high And quarter at on also you range confidence revenue, I product mix XX% product? believe total XX% to teens this quarter. ICEX total into to teens last the the of end

David Heard

Yes, facts. deployment

deployments into and clicked bookings installed, through out going of certification be to revenue, some on. being those shipped backlog, going So indeed are

to the XX%. on very the So just in comfortable based of business we're our front, XX% facts with

Operator

Henderson Our next Alex with come from question will Needham.

Alex Henderson

just I the other total backlog just backlog which was what be X comment, reporting? What comparable on clarify what for to wanted product, to that was backlog. billion the is people would are

Nancy Erba

giving that, grew, aren't out billion and split that a as I actually to basis, is $X our that product clarify revenue. which backlog RPO, and a backlog just that said, over We the represents non-cancelable referring on again. XXX% year-over-year But deferred we're David our to want

So backlog. we seeing are very good product

Alex Henderson

quarter first if So the of transaction that second quarter. out just talk you the the into could slipped about

you of got apparently that country I think year? to timeframe do clarified into in? for still that is of XX How massive most second back we [Multiple in deployment, fairly which the Have have do now XX Speakers] wins won during has of expect had or half it that you landfall that the and that quarter a a [subsea] you the countries -- May terrestrial project. the we revenue that [terrestrial] was that project, the what's slope

David Heard

ICEX it'll push hit likely we quarter we’ll that that QX. we asked, in year second the out we removed that XX% shipment, had wins new as to getting the that half and we XX% on through are was we the the for are the be to year. as the back committed having QX said from of the to prior and it And we -- confident between go are done back us making are confident that of question year, deployments half to So

Alex Henderson

terrestrial other The the piece was opportunities of that of…

David Heard

vertical think compared our chain of same quite we fact compared looking are the ICEX customers maybe diversity. integration now. opportunities I time, seeing because to -- are that are terrestrial for to same on those Look, for low supply At times others right our based the lead

chain taught in position that that's has years us. two our better and last everybody to needs whole up this to try taker, as equalize think for market the to a share, opportunity somebody as take supply I opening

makes continue see which in see important upside to that growth I'm XXXX. but us. for that terrestrial very So now, our as particular healthy better to quarter we sales customer's wins. because subsea, commenting increase, continue mean, does going as me much growing are to year super particular right million, seeing forward, rate very, to I RPOs backlog pipeline you're much opportunistic and in not And starting about attach our remain grow. at our well is confident more trajectory the feel those $XXX on about we

Operator

Rosenblatt Our next Michael from Securities. with come Genovese question will

Michael Genovese

First XXX to for are and X% about 'XX starting question, it line XXX of a of at a with next there in could Or year? with still are looking And sounds guidance margin little operating 'XX. total still lower gross points margin bit like we margin? operating and basis grow we is the say XX% are reason base, since with we gross operating margin margins revenue

Nancy Erba

digit growth what on still at quarter, we and off halfway to still in today, off we 'XX and tough income. and But XX% base chain the a view based we that it anticipated. just are originally expansion, is target ‘XX operating XX% expecting supply lower have we that, 'XX So 'XX will that based But through model, X% of still exit has a range are of on leave which that. albeit our I'll at today come business at see we double in our margin than the had margins

Michael Genovese

revolver XX talk the And with year that year situation? was back and sheet, for And balance more the loaded you what took next I more? that a it back quarter, million receivables understand reason and But flow end forth. into and to happened that that and and me cash make about bit about half the little that the so the me just is a comfortable

David Heard

better is we in we think, shape. much I reason out look, we're financial changed got -- the ABL the

up in the of terms terms both as as So both well we set in the rate, terms, capacity. interest of better fees, had

So time. this And looking of backlog capacity, is and sitting big to an it the growth in expand in we're front of as well over pipeline big a increased us as ability us. and a at front

had our working the for So and first hard exited some putting been inventory, we quarter, purchase add the team's ability commitments as the in. really in quarters we time and multiple those really to

So for we in were actually be and significant. the month beginning to half able of in able the we last execute to And to the same linearity was yes, the amount back add time, XXXX. the at quarter shipped the the -- of it

to we we so out fact working capital for And going create better to cash we there. was operations because we these and to help relief a changed and The growth our to QX, given were and flexible that thing an in in numbers that and adequately is good positioned feel the business future to drive we get model. use us cost QX from target terms. expect low And ABL

Operator

from Simon Our come next James. with will Leopold Raymond question

Simon Leopold

growth to factoring you of a did that other about EMEA slower your moves currencies. you certainly how Asia and I little talk dollar wanted the not to the business? your outlook a slowing Pacific, had How or if it quarter? see foreign in from you bit are big in exchange into and little affect affecting in we've are how and bit your region So sequential could rates

Nancy Erba

basis. Very impact, an million, I on overall minimal than think less $X right

transacted in on natural are expenses are have that limited and the contracts OpEx. Euro some from hedge Europe in in we exposure a Our

meaningful not did a to this have exposure So quarter. FX we

Simon Leopold

customers euros? are are goods you And thinking in about pay the dollars for impact outlook, that when the they to expensive now more how budget in your

Nancy Erba

don't on forecast we're watching based of to a the -- half accordingly through and it back well. the as meaningful But trends we the be I we're impact the mean, planning expect year.

David Heard

A on drawn of big down they're backlogs. that is portion still

the pipeline pick material I in we haven't far reason up the like equation. that nuances any seen that. the is mentioned carefully shift any But so --we're watching demand So to

Operator

Meta come Stanley. with Morgan question next Our will Marshall from

Meta Marshall

little then second the kind none is what's kind kind giving kind kind if make maybe that I is of on just availability from that the have or One, And up. just confidence. improving overhang improving giving me. maybe of you second just part guys that the more of into confidence of for is mix any that questions of couple gross conditions you kind of half largely just of background picking of a of ramp in most on the and about the half some also want you what ICEX to A supply margin seems of it second as sure chain the from in But bit half.

David Heard

saw as want the a impact be to triple field, let's lot therefore, be supply material that top the don't I chain think everybody pandemic about shutdown. see to crystal that, between -- the that, was bottom, more chain and witching costs, just of anywhere it’s anybody just in or I because to than CMs, you through Mata, way semiconductor had when over. I the I going It peak transportation chain think has the talk all are clear. a think the supply is environment near the talk whether all you the I through way that call it a And costs, us. kind the supply QX to China think of us expected. folks

We million some get in it it to place up electronics some to but last it's sign, tend doesn't a consumer with terms have of we the the resistors, over pretty in because us components should of the think be ability shared quick damn banter in. that it sign, the I put that years, parts just up turn inventory telling we've a phones again, raw freeing have haven't with effect we two the capacitor, that has we lot seen a good Obviously, hearing economy, before. the the whether build, the or planning in some to of products and inventory in That once you telling pre-bring set. $XX be match cell crosshatch are does a are free the and world you’re seeing through materials. Overall,

seeing in but above to big So margin point impact financial of that $XX supply our be to we little still ‘XX, yet, in But we it perspective, that was impact. results will be XXX of XXX that roughly a that's extra a are improve, It'll To put number yet, year supply on basis chain, gross than basis QX. the million points QX, Meta, margin lighter that points we’ll bit in might every absorbed had lighten be we up. in improve chain closer costs. pretty roughly, metric. This in QX, XX,

back to expect down, it to XX% year, but as attenuate down, XX% that way expect not to in I be zero. all Next zero, I said, to ’XX, we the

think I prudent right that's planning now.

Operator

our And from Suva Instructions] come question [Operator with Jim will next Citigroup.

Jim Suva

Your ever, was… it. what end quarter, end and I'm back get you comments the the just that than get visibility into loaded? Was kind didn't that's warehouses around it of big [Multiple arguably a back But time more the the backlog with parts why of such kind it just Speakers] I or so curious in shipments loaded was

David Heard

quarter. a shut half Shanghai, for the CMs hard in. time were having down digestion we getting

deployed finished in be out the our able unlike to lot then production our own period, CMs and smoking to seen to of customer. were to and before. our rack around And to lines at shipped, on had we've get that last things a internals the stacked and so And clock, both turn the get

linearity. normal said I why that's So

Jim Suva

cadence then the to June kind in linearity so since the of quarter of is outlook growth, was lockdowns end? the normal And back the tight given revenue quarter or the then release just towards the started to actually spigot for in that better it

David Heard

would it's Jim, tell you. beginning nothing's I to but in normal this period normalize,

thus on And normalize linearity. cycles, collection between based We capital do of so QX to that just working it to we the balance payment and kind math. expect terms, rebalance QX don't and expect dramatic

Nancy Erba

But I if would that have we're to that, also add the opportunity in it. we doing to bring inventory,

So the in better half. can turn and the it faster we the in back for us get

Operator

George Notter question Our come with next will Jefferies. from

George Notter

about I price that as point possibility there is forward rating did of at pricing talk a going guys I there increases. something guess, well? was QX, know, and one you that in some Was

David Heard

institutions. obviously, we work make actions. that, or commercial cost customers at earnings I price with parts well probably I mentioned reductions on is as our think of and four competitive public their on I've our terms, But this don't as three calls

George Notter

or I it Is that So is were type price I can that fair [Multiple Speakers] improvements to of were just RPOs backlog by that want know -- say -- the not we the affected guess, any increase? to organic… say

David Heard

fair substitutions all through. a of But it's say, going to that in cost impacted drive reductions to that. be It's our might impacted to continue portion of ability we part by by the are not

George Notter

diluted fully share And just you then number. me the missed could I Nancy, remind the count?

Nancy Erba

because convertibles includes XXX for standard. that the new with the accounting QX,

Operator

Alex we do Henderson have a follow from And Needham. with up

Alex Henderson

going of a you forward are XX the I and last prices was this from pretty the around be increase price would hoping Obviously, you is a chain. net that? saying how could that as just clarify of against good the million absorption and this years standard two OEMs year is the supply accounting or the attenuation are XX and year, the XX saying cost But post large $XX million by year number. part feather that commentary parts on inflation the would over parts, to you XX

David Heard

We we we that possible. keep drive forward can as extraordinary -- view we that it as business like pretty out soon heck of as our so everything we the track orders track,

not typically extra a captured cost the is basis. of of part as from million So of beginning year transportation our great $XX basis. at beyond of And The XX standard of it. in XX can $XX portion cost that you the that planned in XX was TPV, OCOGS, our the was million extraordinary costs standard costs track extraordinary

together, you are making. And that's again XX% I margin. a in be assumption go next to good to always those think XX%, that's and sense? we all to costs Did in down that's cost track when conservative expect our of Alex, into by put what So cost going we we standard go is reoccurring our basis and C, that A, B make year, standard when that we Part the

Alex Henderson

does. It

be to XX% Just XX% the is clear, wanted on $XX million… to

David Heard

XX% peak. the year off to of XX% XX. No, a is is This

XX% standard extra cost, cost from XX% above and standard So XX% extra it in went of above XXXX…

Alex Henderson

increase And of net XX…

David Heard

we decrease a the and net of we The to year expect of year year, increase increase, next didn't XX Correct. XX%. XX net to expect off net XX% where conservatively it and over

Alex Henderson

cost the side to other but got prices, hearing back but standard was that obviously about. abnormal slightly then which different Speakers] it going periods in which the underpinning it costs, increases that assume be and question, pricing. you're does you into on that had And bunch similar of into forward, an mean, bucket, element increase that expediting you're must pricing. higher whole it the fundamental of that in parts of now that of of I suppliers the offset are benefits it's talking a increases future components the accounting. So that by go I the Because was you against of a But your [Multiple standard add therefore, yes, that they plan coin it'll would turn cost the to their price be that for from your to increase price structure you've absorbing there standard

David Heard

If that's tried standard Alex. a it where business. see, we and wrong. normal don't our of of why into put it that's did, me goes product, I we get mean, cost a No, course price we have to increase

job took Optics, that. we of we Moore's But so and is costs. time people of normal those advantage that remember Law the will and always to Some of standard cost normal that period things our with offset at track reduction all this

then our try we with on annual up just XX%, go an to we ad like that negotiate volume. down cost So that do if we suppliers a well negotiate goes and basis to through chip get

year, extraordinary it's standard XX% XX%, to those those going XX% are below, to then cost. the next on meaning be and XX% whatever top So of the

Operator

turn questions, call closing David [Operator I’ll Instructions] with back Heard over And for to further remarks. no

David Heard

appreciate and be backdrop tough engagement. tough environment. revenue the in last do we what at supply chain and Overall, but XX%, our a macroeconomic double look view year of grow I to X% that will questions did current I the a -- will we product year is the growing

and for promises from building new employees of gone are to on our of billion a ICEX to are are to open the PowerPoint, qualification The We up revenue, shareholders, track $X our pipeline to to products, that have ahead and we customers, opportunity. pluggables have scaling XX% schedule. made metro and to to XX% winds a our

samples pluggable We have out new gig today. there XXX

gig our XXX We will pluggables. about be further gig and XXX talking coherent

the talked been despite points billion the They supply have XXX if absorbing to further board the these Nancy We basis wins ICPs the attenuated up solid of with Margins and across strong X would've about. RPO effect chain. leverage year backlog will with for huge be you in CSPs. us We've revenue. operating up up built that that take of

further are where well overall, we bring So in customers really opportunities in We've here puts that feel shape. opportunity planning. balance an supply as scale partnership Huawei, architecture both business the got forward. are environment saying, competitive We to enhanced great been as appreciate us open our terms do customers displacement got really we've of of developments good of new good vendors on that chain and our in our by about for going really an with

patience our supplier something shareholders that will had, of be it'll forever, that think I dedication our partnerships we've of employees. certainly, the all the and our us change

we And got. you very all much. great thank a day. Have So that's

Amitabh Passi

everyone. Thanks operator. Thank you,

Operator

participation, now conference. And that your you may Thank and conclude you for will today's disconnect.

Infinera (INFN) 29 Jul 222022 Q2 Earnings call transcript