Earnings call transcript Q4 2022

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Operator

Good day, everyone, and welcome to the Infinera Corporation Q4 2022 Earnings Conference Call. After today's prepared remarks, we will take your questions. [Operator Instructions]

I would like to hand things over to Mr. Amitabh Passi, Head of Investor Relations. sir. ahead, go Please

Amitabh Passi

on Thank Quarter good call. of earnings are of Lisa. the section to website. A everyone. Infinera's today's available slides investor Fourth fiscal and Investor you, you, Relations afternoon, of and Welcome copy the Thank XXXX conference

is and this our available from will for call Additionally, be replay website. being recorded

of opportunities our the statements, to increase subsystems and and expansion; adoption limited the future. products to not increase market potential Today's include coherent and projections ICEX integration; in market but drive capacity Infinera's model architecture; customers; optical profitability; call competition, business engines; estimates related trends, ability vertical new including, expectations to to ramp growth; will and strategy, open our our for improve market that constitute as Infinera competitiveness and forward-looking Infinera shifting regarding statements the

supply regarding in existing ability projected demand, higher to drivers customers of industry full-year also outlook macroeconomic operating margin Infinera's for systems and to the of future financial Expectations margin, of and environment, first wide force, the and challenges products our year-over-year direct expenses sales quarter margin, gross XXXX. chain revenue, sell and line operating our investments

factors, ended Infinera's on on Infinera February to those this uncertainties events the and risks XXXX, risk in forth XX, statements to current XX, may Form Report any its to SEC or statements revise XXXX, forward-looking our XX-K XXXX, circumstances set December as today the subsequent and These update subject are well of differ for SEC that be Form or results all time-to-time. call. Quarterly Annual year Report could materially after date to filed obligation X, the undertakes of quarter SEC XXXX, with for November as Actual XX-Q reflect may including the Please furnished from and result reports differ on statements that various a of as filed reminded no cause or ended results filed to expectations. management's with as from materially as XX, as that made the with are the arise September on

these includes operations, cash each of a call we to reconciliation are financial Regulation for discussed items, from GAAP flow conference non-GAAP have revenue, measures, provided and which basis. sheet on balance Today's Pursuant except G, non-GAAP a of available release measures is in most and financial quarter, comparable slides this measures financial Relations Investor for to the our our the GAAP earnings investor each section of website. directly which on

will yourself Q&A plenty And ask today, question you for follow-up and we please. a allow finally, of we time reminder, so limit as to one one

Chief With the call Officer, will our to turn that, Executive Heard. over I David

David Heard

will will Good cover call I Thanks, to fourth for for afternoon, the quarter the and results with details the and a our turn and Amitabh. of joining Nancy the review then begin thanks I full-year. our to over of today. us performance for financial

Our and performance fourth revenue on to consensus was profit on remarkably record and operating many beat fronts. performance enabling us contributed strong, expectations to quarter

a year-over-year points gross year-over-year. XX.X%, on We high to year-over-year of margins on reported basis. expanded a million, of $XXX up basis. up and a also XX% delivered points XXX Company XX% of and margins $XXX XXX the million, product we revenue XX.X%, achieved Specifically, up up operating basis we We record revenue for year-over-year basis

stable, marked basis while at Demand Relative margins a XXXX, quarter to over impacted healthy in range, high the in operating outlook finish margin grew XX% to quarter product quarter, our the a higher revenue The book-to-bill supply XXX XX%. was end great X% within the above of gross our than revenue outlook objective gross more adversely million came XX%, to with expectations we and which ratio consistent growth range. by was absorbing coming a revenue margin gross of by annual margin $XX points. stated the that fourth even in with our year chain above with company while We into X%. of our costs kept also

margin performance We up revenue by X.X%, XXX ahead Tier XXX on software of of time We full-year, leading X to doubled of power stated basis to ramped industry's operating industry to ICEX defined we year-over-year. delivered of with XX% pluggables ZR+ samples customers. gig as our the validated points objective reach, the for and And first XX% product XX%.

I'm systems rising supply considering market, conflict year. a persistent we outgrew lingering performance extremely our and improved optical range gain to Despite sheet in the from extend challenges impacts the pleased backdrop faced, for XXXX, a in especially our the continue Europe. share, these profitability consecutive and we to inflation balance chain with and pandemic the of of macroeconomic third headwinds

macro. primary As two that challenges micro one, were think I the there about throughout with One, factors year, and presented the year. us some

challenge macro mentioned of Without elevated for navigating and full-year above the supply profound higher our we the would our million costs. earlier, as $XX costs I margins was gross been the environment, over have On points as chain basis absorbed the most XX% front chain these for full-year. supply difficult XXX

supply We first-half remain expect XXXX. elevated to for costs of the

to sets and margin we line transponders we products our new do with footprint These integrated as demand well higher-than-anticipated future systems business and expanded our integration. at we margin but On non-vertically us the initially, as with a products. up expansion locations metro geographies, vertical had and for the micro new own fronts, experienced come our for grew customers lower

XXXX. and Let commercial now for of our me turn to portfolio some highlights

we within year. system accomplishments the Specifically major group, business had in the three

revenue combined ramp to in product wins including year nearly exited and XX% in and mentioned we of growth major with customers X long-haul revenue in ICEX market to successfully ramped service service XXXX XXXX, XX% First, segments. a the revenue resulting U.S. with as provider, ICEX We secured subsea XX with earlier, in beyond. design and providers, over Tier I the plans

grew metro momentum the revenue Second, strong in GX-XX XXXX, XTM products double-digit percentage years. a the the last continuing over this and segment in segment in the by from three

product makes open systems. to networks our continue automation we faster our Lastly, line in and which easier advance to competitors over onboard software, use of to suite

also of game higher the on changing software pluggables and operating their gain in lower visibility levels a and costs differentiator and Helping industry. We security, believe is our customers while agility. maximizing

Similarly we in several the accomplishments. group notable also had sub-systems

the First, we look Show, North forward results delivering pluggables service first At our of gig performance. our X in software to XXX in in traffic industry-leading turned on reach, momentum Tier we've had additional sharing environments pluggables power in business. off provider OFC we with the live the units Industry defined America and upcoming the recent ZR+ details

XR commercial first XXXX. orders received pluggables, exited first of validation we XXX set quarter point-to-point our We for these gig Second, the year. the pluggables XXX remain we in of track gig of of and our on the for availability as point-to-multipoint purchase product ZR+

XXX total American pluggable equipment Third, pluggables spend a manufacturers, further in open edge We of in the game our gig point-to-multipoint global several in the to we quarter, Membership be service Tier will in changer on representing specifications including development XX% cable category. our Forum the Open XR multisource XR Forum architectures. network in based of believe a the the Forum. about providers, open networks expanded the new and seven compute XR advanced the developed Lumentum now this And mobile XX North with joining a access CapEx includes demonstrating members, this operator. coherent X members, the the of being commitment The forum in new and the industry. XG

-- the also of we finally, the development pluggables, during believe performance we performance manageability. industry high XXX-day launched power will the believe year, we and And and next lead generation will our which

business, our quite and record drivers for Looking planned remain infrastructure, long-term bandwidth backlog. ahead the to by significant with fiber being the our position, competitive The made encouraged insatiable portfolio XXXX, for Infinera and industry. our drivers positive coupled of frankly, the we in investments secular our appetite

With take said, capital see timing in result of their variability and no this an we skis of mindful some our a to XXXX. near-term we'll a our time prudent customers reason in recessionary in which ahead demand as that business and get macroeconomic spending, approach We the climate. uncertain at may to being backdrop, are of manage

of to some the assumptions color the financial provide high-level on planning cover will details for like our Nancy While outlook, year. I'd our specific

Similar we optical expect again coalescing be in weighted in market analysts to appear last a systems to the XXXX resulting we Industry second towards gains. our systems share the high-single the half more market the year. rate outgrow be we to and of market First, of year, XXXX, growth X% growth in around for further we will grow to expect believe X% digits-digits. to

as continue in the of the to our operating margins expand attenuate gross to costs like as ICEX chain products year. and plan vertically we back XXXX, more integrated we ship margins Second, supply half the in again and

addition, vertically integrated level will to with own the of pluggables, expansion the our exit our beginning we fire financials. In in year next with margin

given in our earnings investments $X additional growth Finally, share pursuit as line we opportunity our efforts refreshed of and of market appropriate market increase that's gains share the strength us, go-to-market portfolio a accelerate in to believe the front target. opportune to and per and top of of time our in an drive

financials, last externalities. Overall, some has improvement engagement delivering service, three us the steady despite we portfolio, believe years, well across customer our over and employee solid served and significant

a margin multi-billion-dollar expansion the and unchanged opportunity. to remain Our market, officially market, enter primary objectives than pluggables grow the drive faster

engines strategy to and XXXX technologies San remains XxXxX products Fiber is our Show of services Industry growth and into winning systems, additions portfolio OFC, Day the portfolio traction plans Communications and the of Optical high-end We as upcoming demand look Our Investor healthy. and driving to deeper customer embedded our for X, and March by on robust California. exciting strategy, our evidenced Diego, pluggable some our our announcing in products at at and forward

would their team shareholders close our would their commitment a and XXXX and one I our Infinera on I continued to thank to to for support. care and thank the continued partners, As delivering like also I customers like for customers another. today, solid to

the outlook and for to the to will and the I call the hand of Nancy over details cover year. now quarter quarter first financial the

Nancy Erba

full-year everyone. I afternoon, then Good will and our quarter David. full-year and by results outlook and quarter begin XXXX. of covering fourth the the for first Thanks, provide

my Relations to on Investor posted your with we commentary. our non-GAAP website, including to GAAP details, reconciliation assist with our have financial For reference slides

product company and and ICEX of up ongoing with a This by up growth basis, ICP metro business. was Americas year-over-year the us. operating in quarter great continued new Revenue for greater for profitability. was of quarter margin the book-to-bill The higher than $XXX quarter gross margin, ratio and an fourth X, was record revenue, the in We strength momentum driven XX%. ramp the a on primarily and delivered revenue in a with million, The XX% year-over-year customers. all-around GAAP our double-digit high

from $XX Revenue benefited year-over-year in million acceptance projects XXXX. and acceptance Performance in in supply-related that of first of the up sequentially on were with the from quarter business year. of also impact X% for the approximately we early the services recover in improved revenue to a quarter further the as continued slated completion the basis, XX% earlier and originally

derive in the U.S. from a strength higher XX% normal, customers, the we domestic providers at revenue several to level of ICPs Geographically, due service our than and

contributed points XX During quarter XXX basis on customer and ICP revenue. and within basis our sequentially. of XX.X% to greater our the of margin points year-over-year than outlook QX XX% range was gross a basis one up

basis points outlook, two-thirds our compared that lower of revenue, system we our basis metro from of points XXX provided product the about including shortfall was especially and Approximately due impact when ago outlook margin our in from expectations line to the to XXX revenue about of XXX to higher products. gross range. when performance days considering high lower, margin came Relative to mix,

from While approximately costs. one-third was higher chain supply

attenuation X.X% was Operating XX.X%, leverage $XX of costs vertical a we in mix in a with our in of profit the of our the ‘XX. an supply percentage QX basis, business to quarter the half. benefit with second integration the of product potential XXX% drive model, This better as get the to will up operating chain higher which and in approximately highlights in only in quarter clearly believe year-over-year margin on we margin the operating performance million, compared from

quarter. was quarter. slightly were to expenses range share, up quarter the managed resulting in $X.XX $XXX EPS of the tightly million, The we ago spending our quarter as million the per in Operating of diluted in outlook $XXX in year from $X.XX million the $XXX below

growth, was Moving onto fund as in $XXX use we flow cash working quarter. items, the ended quarter balance quarter slightly and to our sheet capital down and chain. cash our inventory restricted we in and with million of from invested the cash cash, supply strategically The the in securing last primary built

typical use our receivable While business. accounts in by quarter fourth seasonality is cash of of the the

operations Consequently, flow was the in was cash of million. cash $X free from an flow quarter flat approximately and outflow

XXXX, very difficult you performance As heard the our made reflect our ‘XX. of full-year business on for customers, despite I with we've and for in a portfolio progress model, I'm all macroeconomic David of from environment, as the operating proud of

to We our on margin We X% operating points range within ramped range $XXX basis to And for operating stated of a performance up $XXX XX% X.X%, million, XX% exited delivered remaining XXX margin XX% XX% points bookings more record our and record a stated range million of basis within We of billion, basis and stated set backlog the growth. of up expansion. revenue $X.XX above year ICEX XXX XXX of product revenue of obligations of than with and our and up basis to year-over-year. doubled to XX%. points we to year-over-year year-over-year

by our million, and portion over million our down Furthermore, therefore from we strengthened $XXX balance a refinancing of our sheet approximately to $XXX convertible debt debt previously. XXXX reducing

ABL better a capacity new in year expanded terms. and We in the facility also put place with

CapEx the to for customer we now operating for outlook same remain business, record uncertain the We the we first turn by of our and potential environment impacts XXXX. time me our the of near-term macroeconomic the and drivers At backlog. quarter in to of encouraged mindful are momentum some customer Let budgets. are long-term

with being impact pronounced XXXX, more carry over ‘XX half first We into expect from of to the the in their year. cost chain supply

we basis, on at the range or growth the expect plus these revenues midpoint account, $XXX into range. of a million, the $XX QX be Taking approximately factors to in million of minus XX% year-over-year representing

typical customer compared is higher in we stronger in two to certain our the outlook experienced trend Normalizing half, consistent QX seasonality our XXXX QX of mirror will first-half. revenue million early trajectory the last a business. revenue of the We $XX for the the acceptance from of with our in the projects, with years second believe

be minus of basis We the plus at or in of the expect year-over-year margin The points, points the we outlook is from chain continue integration impact to of is and the the increase up our Also XXX QX of year-over-year gross absorb margin in percentage costs our driver assumption margin mix. that range supply QX gross XXX higher elevated to vertical embedded fees. basis will gross in significant midpoint expedite the XX.X% in in range. primary

to expenses operating R&D million market take roadmap. be while to of business and the in to development, QX forecasting are to of sequentially We invest the range as continuing million, opportunity, up investments sales advantage $XXX accelerate growing we global $XXX our in in

million income a plus taxes. The for XXX resulting operating line, we points, to X.X% $X for XXX QX net the in $X minus basis and interest operating expected margin up be is assume approximately approximately points basis expense on basis. or million Below year-over-year

in Finally, share, a million minus million a a of of of assuming XXX we loss or are XXX share count and $X.XX range anticipating share of diluted per approximately the shares. count earnings $X.XX plus basic fully per shares share

Looking focused few further to progress of making remain earnings we next out in in a the on financial over full-year $X towards performance, years. per XXXX, as the share we our march continued

XXXX Our contemplates outlook following. of for full-year the the

approximately environment in lower additional X% range the is growth considering for We and our now. of the rate X% our to revenue growth $XX set it end of revenue XX% backlog. the prudent QX, believe lower towards uncertain long-term First, outlook to macroeconomic approximately million record of our --

committed the rate that growth market. the to X% long-term I XX%, to rate our than growth want reinstate of higher of remain we to

the margin to with approximately second ramp Second, the most and drivers year costs gross of half supply the continued relief for points plus will basis some the The through year-over-year. of in full-year the expansion two of XX% year. key expected $XX million, of XXX of approximately gross of expectation chain of our benefit margin ICEX of of flow the be

basis Finally, as XXX year-over-year, accelerate our planning margin to of expansion, go-to-market points engine. XXX investments basis are we with continued points margin we for operating operating in

in to long-term business over I few my a today, confidence $X earnings close to strategy, our the years. I next XxXxX commitment our As want reiterate and per share our model in

I thanks innovation, extend to another would commitment the unwavering also whose execution, team, my and like to to to one remarkable. Infinera excellence is

our In X. addition, to Diego Investor forward Show to thank in many your and San would support. at We and of continued March like at our you customers cooperation on OFC the look I partners, shareholders Day for upcoming seeing Industry

Lisa, questions. I'd like for the open line now to

Operator

question will from We our Instructions] Henderson, take [Operator Alex first you. Thank Needham.

Alex Henderson

much. you Thank very Great.

So talk of mechanics over fourth book-to-bill the us about would bit time? what terms little you and excess your anticipate backlog/working I you of down your Thanks. expectations some on Can that books backlog a orders quarter number as sense be was some helpful. you around that around and we still how about might hoping are Just that? should the color you year? what the in Do could give the exiting think terms in you're of have in

Nancy Erba

Sure. which (ph), record year-over-year Yes. for remaining of, The us. was our, proxy $XXX was performance million backlog [X.XX] obligations, up a at for which is kind

we at start originally we the in expected, QX looking earlier So than same. and see customers we QX the some would own work do backlog we're first-half, even some to though acceptances through to and seeing of expect did our their

we building be again, year, position the first-half, in we as out second that we're However, expect a in second-half would demand half. where the that backlog again will the that in back half plays of once

David Heard

above be for X%. book-to-bill total year in is the to time point forecasted So this at

Alex Henderson

be That's So Thank XXXX expecting you. you're X%. above helpful. book-to-bill to

David Heard

welcome. You're

Operator

Mike Rosenblatt question Genovese, is next Securities. Our

Andrew King

on Andrew Hey, Genovese. King for Mike Moderator. is This

heard, around you have just a slowed. Can U.S., around providers. advanced and if to, ago? idea those the question quarters of Can customer demand A talk the you changed? couple is X has service to trends Just any demand other just we've of ordering as around a in what Tier conversations there quick give us particularly the any lot that about sound right what versus now of us the

David Heard

[Technical That's of this Difficulty] that. question Yes. kind precludes accurate.

alleviate, of bit think capital at of box year, the supply are year a actual their of see little trying any out the as still inventory, year. this of we look carrying a this of first-half of to terms lot we into are to eat over excess coming I that the costs As the slower beginning chain again planning, in do first-half people those the

of So on I bit then think up access network. a those half, in orders into the obviously you're of in the yet because fiber first-half, going cut a the they may their of terms spending little back metro speeds both to the CapEx, driving long-haul CSPs, while in is CapEx see or some the picked bring hold in still fiber slowdown of that and to priority back and the rollout the

see On have the their we in web scalers, talking business people seven certain grow again, continued And now all despite area. we exposure continue layoffs of about to segments cloud top of their services to ICPs. to the

again you today. full-year look of or view positive I better planning CSPs seen are think -- a is, and out year long-term hold better now less order ICPs, the versus people will going Nancy the able a tell to at are element of So I But ago why coming to that less is moderate and and which a we sooner. we've

Andrew King

And color then… good Really there. Great.

Operator

George Notter, Jefferies LLC. is Next

George Notter

Hi, very much. guys. Thanks

David Heard

Hey, George.

- Notter A George

I'm mix in QX. just of the curious ICEX about

percentage of about sales I'm comment As I for full-year, just curious the QX? a the heard product

Nancy Erba

range. that in getting XX% approached it Yes,

George Notter

of contemplate? year, for as margin think XX% of your Okay. ICEX does guidance that full-year, the you for think kind what gross And then said I mix about next I

Nancy Erba

giving myself little Yes. a there. But... I I'm XX% plus, room said,

David Heard

XX%. to XX%

Nancy Erba

for but And Speakers] gross ICEX, we're the Alright, yes. to Yes. product XX% margin thinking for revenue. XX% of for it's [Multiple full-year

George Notter

Got it.

down Okay, like, bit it year you assumptions is thinking this that think gross know, little but mix, then guys year. a next that, the is know, lower? don't margin previously, lower it’s the perspective I year here? talking you were and for I exiting the a like is quite Is XX% apples-to-apples, are there then were it feels we're for else year, you missing it driving mix? this gross now Is something about, margin mid-XXs Is something a -- little

David Heard

the certainly question. that, good A Really about No. costs. piece George pretty talked of supply we've is chain consistently

laid we the the be weighted So very that half and front year. about more on We in is backlog half large the in out million purchase last roughly already that to of likely of that'll portion of the commitments talked there know That we've out. $XX that the from front year. hit and having based year, PBB

is mix integration the vertical piece second to we’re come lay the of line prior continuing and metro The out systems again. to

George Notter

Got it.

much. very Thanks appreciate I right. it. All Okay.

David Heard

worries. No

Operator

James. Our is Leopold, Simon Raymond next question

Simon Leopold

Thanks for taking the question.

First on newer series to recently to press of was thing just know you I hit systems other from I a releases have ICEX. regarding ask you're your players optical wanted generations. about there stride starting been

early the can to your be seems whatever And towards headlines next-gen that assurance be of of But follow-up. a got platform? given us I've it So offer to asking it. the then ICEX you you timeline, a quick roadmap terms kind or what about in in you series calling liked of

David Heard

conveniently good right, this No, it’s about call. OFC earnings time the and year, always of question get our as we this around a always happens into and

I've best the it's Simon, So, felt.

XX% strategy you the remember in for will will pluggables, us heard XxXxX XXX strategy, of which very out talk terms of out our getting market to metro XXX We in and that's our and be gig of pluggable roadmap terms attacking gig, line access. about lay about gig. in in within And that XXX

side, long-haul vertically technology of because our block being integrated. and the us On fully

position. competitive technology, working lots these we all actually generations strong take we about product that at of We OFC cycles very, on two will that announce know We feel very and our ICEX But feel will I a very gig will product very and -- we again, be We've think ICEX cycle. good. very long XXX a be ICEX time, of a that. beyond got are

Simon Leopold

good vertical, you're cable and I specifically laid investing. a over thinking TV has follow-up, see in if seeing given two? Comcast out wanted trend you could businesses those been past from or just to you're just Great. you plan have has particularly as year the In and unpack for a next And been what want then you. see how charter the about the as the Thank to cable maybe TV

David Heard

next sales great us. to in. they have this believe my I the not these That for mean, only are our areas been as putting one about hope I going very growing generation architectures, XX say, segments now you're I X very, more to is of listening call, and but gig they would to don't XxXxX to Because reliant team because starting you're architectures gig isn't home, we are gig hearing and home. to hear Those X investment I about the on be move to the strategy.

look raising -- got I'm expectations time, got investment, that the make there. but is are for to My right channels the seeing right get got right we've are go-to-market So relationships you're we've the my expectations And at be and portfolio that for we've raising able sure right. segment. what to to

Simon Leopold

strong you've a year or had historically couple you've let's loss some a of say last the you've Because in been two. -- and share been with -- guys those

just wondering making So I'm of you're if comeback. a sort

David Heard

Yes.

referring in feel very we Europe. MSO Yes, major our you're position and revealing the without about any one one customer. So about I think here one good to particulars

Unidentified Company Representative

wins mentioned quarter, new comment. they reminder, a we the ICEX were a so as last just also just approved Simon,

Simon Leopold

about forgot but I Great. that, you. thank

David Heard

no Yes, worries.

Operator

We Chatterjee, now JPMorgan. will from Samik hear

Joe Cardoso

any displacement the whether gains then Europe. opportunity, into And is rate. front whether demand an in trends revenue on are have My Samik. seeing of the provide XXXX on just gain guide you're there for on Cardoso improvement Joe your is update region share you taking This Can still share for kind in sequential And rather sub-XXX level question developments quick whether question. what to in specifically touch the on first has I or and revenue follow-up. positive? the been is then The run overall any you're still a relative for on thanks that? that more whether Huawei there any that seeing you and Hey, encouraging

David Heard

good Okay, well, good. All questions.

that and I on think we year-over-year. XX% subsea prepared overall but the stated in up revenue is reasonably segment remarks basis long-haul a was Subsea lumpy, our segment as the

as now, good really mentioned, feel not we with our roadmap. over just there, So but I position the about long-term our

Unidentified Company Representative

Joe. Hey, Yes.

Just question or to Subsea? Europe clarify, on was your

Joe Cardoso

Europe. The question on was

David Heard

on So I Europe, did on the European in Europe, look, of think softness a yes, region. we see bit

disclose one us. factors: I think of the based is region, that but don't on FX, the one by of gets for that's impacted which a obviously we most couple which

The is second bit, service operating I looking on think are providers look, at their as as digesting a budgets well costs.

between the CEOs in especially we've as four-fold up have power the over up last Russian, years. have to and area, talk As noticed and the costs Ukraine the two power to that gone I CXOs from their conflict budgets gone two

the and there. going Middle I that we're for for think we be us. Europe the marketing robust can growth to both going So to that's nice growth sales add continue robust to high -- a of third where and and still that East, be think see But element that is we're resources area to very continuing

Joe Cardoso

in into that of next in that baked of progress terms any any guide year? region? opportunity just the And then is And for your Huawei displacement

David Heard

Yes.

about talk let's the look, rate. So growth

XXX hasn't has chain year relief and when acceptance our business not terms the ago would and in The to that in, assumed supply we meaning changed. quarter contemplating next days fourth QX. projected changed. bit come Nancy rate were revenue be have of of that growth in I in a So We absolute we number happen

and XX% next an that growth lift, rate absolute for Where if of XXXX having maybe changed. X% year in because not just XXXX about has number talked we that. So

being opportunities, to tenders. invited if Huawei they're just The becoming new harder they're and decipher, to because harder not

we inflow are so seeing a future And bigger tenders. of

it for in-house in some ones big is just are have not region, very included we fact, In that particular where that. they

in us ahead next given So I the think contemplating get just to do than there. for I of don't bigger terms it we think of skis that. pays rate see opportunity for do our of everything that growth But else, year anything

you forget that I up don’t of provider share think some roughly, significant of solution years. business sure. for market for couple China, continues Don't our grabs for again if tailwinds to for next long-term sorry that best for forget XX% it's about they're the -- are of the be outside overall think over the those their XX%

Joe Cardoso

Got guys. color, Thanks. it. Appreciate the

Operator

Fahad Najam, Loop Capital is up next.

Fahad Najam

thank weakness? at taking I it a And seasonality. little addressed if typical Hey, if question. is ’XX this. XQ you bit more for guide, below already your apologize you But look I my had correct if you quarter, correct? fourth I'm weeks help one you us above me driving what's that And but seasonality is in the just the understand mistaken, XX can maybe

Nancy Erba

Yes.

look of of So in million close in QX, QX. had hit the range anticipated in $XX that you that if outlook that at about we to we actually are revenue the us would down we able saw QX originally exceeding

take So if X%. is that about about you seasonality normal, the into consideration,

that you're why directly. just that's QX higher number you to QX if So look seeing

David Heard

call hairs also splitting in growth I XX% wouldn't guidance the weakness. contemplated there. QX year-over-year We're

Nancy Erba

over then look you the CAGR And if full-year years. growth. look saying, for at two right, for year, the as And X% David over years, this two the if at was you that the is on

revenue timing of So a on when matter hit us. just that it's

Fahad Najam

the wanted Got a to dynamics. chain ask it. I you supply bit about little

still you're level you I shortage. for your new enlighten chain? getting a guess, incremental speed it to more Is contract supply in XXX-gig us component new what of seeing you Anything One terms some same see manufacturers challenges challenging? about of in Are systems, can de-commence? talked about higher the of continuing

David Heard

and six challenging. are to same I portion we're cost. eight components a the huge do say But wouldn't the to way. more that it's say I'd seeing relief along driving handful getting of That expedite and a underneath. it's believe suppliers Yes, I star

the In a our first-half, half costs year, of at it the the so supply plans than they we're see more is chain general, in beginning some continue the year. optimistic. healthier the of much going significant in So last pretty to in dissipate then was back lot I'm

Fahad Najam

Appreciate answers. the you. Thank

Operator

is next Meta Our Stanley. question Marshall Morgan from

Meta Marshall

thinking Great, headwind that thanks. are that sense gross just get and implementations just fundamental, I of? of, second kind margins. there mix is product kind deployments Maybe on to we be mix on more a initial the Or a kind causing is of new gross that product kind just margin wanted that of metro a down? the should of

of it we efforts there. those market mean, you are meaningful then I but think should the of Thanks. just kind with on of for investments I being second somewhat just that, cable bulk And to of target alluded a and kind made? consider the go-to-market investment where being the kind

Nancy Erba

metro, the seeing So right? quarters it's this and there. talked Sure. growth wins, new at look a about we're now Yes, we've rate I the for on mean, couple of we

new the challenge that that we today our it And but pluggables. be metro know, yet, are systems. seeing wins line with own margin happens, But whether You integrated expansion. vertically will in when be see the that or in isn't that is we metro

business that So is more Do I say just winning the It's would terms it's you anything of that we're not margin. there. new in to a matter of metro go? want

Amitabh Passi

half, short-term, the I thing bad is be systems. in everybody this third good, because contemplated those components everybody's Yes, gross their I first other the is some year for under for long it’s really dilutive like to is in Nancy's supply half second holding were aware a were just in in for the our the think say say it's up line to short-term. impact, second of But for would line which are And Passi, the systems -- margins row, chain, wins. the is, good there the I’d Amitabh forecasted and the we've that

seeing year. those half first the those to now out Coming this we revenue are so in of come and are dilutive. backlog of And

get new is to we'll efficiency So those winning dilutive grow continue will materials lines, to of that XX% is pluggable. bill that opportunities, the and because we're to be great and while of is as is well the means better, first which our metro again continue fight half, that ICEX is it going of operating in to to what going as layout XX% routes new

And own quarter. we we will really financial of, -- that the see have exit to go as we we until, commercially this implement that, will be won't pluggable a our benefit year. available significant kind we as But now

dynamic. So those the are that's margin --

in question, go-to-market here, you giving cable without there's that And East replacement not we're I and of that area, jurisdictions tell sales would opportunity then markets. a the your in. on those the away Middle certainly strategy Europe lot Huawei Meta So

didn't relationship the didn't a cause the when there. in one the deal We know loss hard are really opportunities, number have and we where going pretty there. we we we investing the because weren't root is we're was missing So do analysis down channel,

about and to enough good sales position go-to-market feel for answer and market we resource the that time us marketing portfolio, your our that the and So it's that lay Did down. Meta? question,

Meta Marshall

Yes. No, that answered. much. Thank you so

David Heard

Thanks, Meta.

Operator

Kang, to Dave go We'll B. Riley.

Dave Kang

Good afternoon. you. Thank

should you revenue correctly the is regarding XR that orders? next hi, First XR, hear had over couple guys years? think regarding And -- you about how projection purchase I we question for of did

David Heard

Yes.

as our stayed Products the network So -- switching other did when want remarks in equipment an see compete Day external with I our as we'll making I XxXxX reason see routing. we've said, we and in optical to we've is think those that very and we supplying. strategy not we our see Analyst last player excited those to manufacturers we're that, today, because get and onboarding start I sales what don't prior

not a to So be year, see I think will that relate wins in externally that this design will you'll see It's going -- to see huge will marketable you number ramp to we XXXX. start but year. revenue more this

in on. the also as that in metro platform. qualifying been own in margin that will this exit recognition of our again revenue accretion be that in we've XXXX continuing through But big will we begin a time income the we’re by year, cycle rolls terms really the statement, the We story

Nancy Erba

next our through And the model. I years to would our that can Day, transpires say have that on business walk at kind several it and how the plan overall show over of we impact Analyst

Dave Kang

about but the you you'll be $X the during that billion you billion to XR will -- Day, over think market maybe $X Analyst your be? I share about think in do what the past, SAM go to talked

David Heard

Yes.

something not not it's the advanced that's market. have, small niche pluggable in a players are at player. can't small assets capabilities, So you're -- fab you the There player all a capabilities, let's integration, talk the will you having industry in vertical a the packaging Analyst the we Day, I if that more the tell no -- you're not

oligopoly. an of kind it's So

And of It's in within the Day. so to good that we'll fall that And a Dave. share Analyst the more tend market about talk numbers question structure.

Dave Kang

Thank you. it. Got

Operator

Jim go to Instructions] Citi. Suva, We'll [Operator

Jim Suva

to Thank per earnings when mentioned of referencing for Nancy, you David, timeframe I I certain dollar XXXX, quite that you, a both calibrate that, of is? and you I'm have think want weren't just but make of sure share. do you

Nancy Erba

‘XX, to that whether And happen walk ‘XX, ‘XX line line. Day to during through rather No, what not I falls timeframe. it referencing you or ‘XX the could think on ‘XX as a has Analyst we'll was but about the

Jim Suva

are XXXX early doing Great. you think that customer when some kind That's and of then that faster we Is are that how future had these that purchases mean than that you exciting. in And acceptances early be to potential QX mentioned in customer customers that acceptances, rollouts referenced? about going you does expected. those

Nancy Erba

mean I it think matter yes. some we December, when certainly some was wins. them, of of in was whether fell of new they I But it hit. to them were and January a thought going

us have And allows frame systems expect the and them that process fill systems line That as And start that coming grow. line those them to have so we're December. which we customers then second in where earlier, would to is order and in we line to on time pleased right, that good. is systems the

Jim Suva

my question, the we then we thinking flow? for variability through as final as kind XXXX for of seasonality Nancy, year or How probably CFO. should And cash flow be for about Okay. cash progress

Nancy Erba

But our to cash we chain generating be the free turned QX that out in have supply additional $XX our us we to the to advantage absorbing saw there. and additional on took million about want supply going our Yes. cash year which inventory, would get my in contemplation to the Certainly, are Again, terms clients. flow. of ability chain, modest operations -- bring from and additional of plan costs we in and

I I'm drawn our at either. able mention pleased don't things the have that ABL do we anything one that, is time we so have And we to of were not not did on this --

free generating cash that flow to remains year cash to flow. modest free capital. So But and needed we and [Indiscernible] for flow as in still for modest operations from ‘XX available cash us generating --sorry, the

Jim Suva

details. and David you, Thank Nancy, the for Great.

David Heard

Thanks, Jim.

Operator

call everyone And there or additional back to no further for time, at I'll management hand any this are questions. closing remarks. the

David Heard

working third think all that steady more No, year Yes. of year. doubled We it of our consecutive is XXXX $XX delivered appreciate and year. we a That going chain XX% our we executing approach did. market, mean, very and improving at solid be gained We the addressed great consistent while our improve million is very financial winning. than questions. in performance rate and the top the line grew really over supply overall of I the XxXxX strategy some ahead We to for the margin operating Look good was I profit it's the this strategy. costs and absorbing to share, really level macros. continuing progress. That's tough

our to expectations and in terms the ahead products. our timing, performance the executed the of product we expectations portfolio of our to While

elements right to want having you integration all of that been remind the I vertical important. has more never

and into noise U.S.-based fab, to low speeds modulators, to comfortable development through having components about own That's packaging our U.S.-based higher R&D our our are and the own integrated our on of facilitate allows are so rates. technologies So as own increasing wave these photo lasers block photonically baked talk rates that our us advanced broad people why faster us output own have detectors, packaging sizes, circuits, efficiency. we're allowing to cycle greater RF high broad advanced move

For that to gain intend share. intend a that subsystems business a a continue business to we both we leader systems and be in to

backlog going that think beating year. gaining see people book-to-bill we're budgets and the through second the for dynamic the Now half the for I their of and and to we're in in again is the I believe seeing overall first-half year year, this going what of

strong. to look continues demand So

OFC. out at day all you you give forward forward to your We evening. lots as a we this your for continued look to Have you look will continued Thank We again wonderful lay engagement. support. seeing more guidance or And there.

Amitabh Passi

Thank you.

Operator

Once again, conference. conclude all you your Thank everyone. participation. That does for today's

disconnect. You now may

Infinera (INFN) 23 Feb 232022 Q4 Earnings call transcript