Earnings call transcript Q2 2023

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Operator

Good afternoon. My name is David, and I will be your conference operator today. At this time I would like to welcome everyone to the Infinera Corp Q2 ‘23 Earnings Call. Today’s conference is being recorded. 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

you of your Head Passi, may Investor Amitabh Relations, begin conference.

Amitabh Passi

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

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

coherent macroeconomic plans, to but projections development business call expectations performance, that our of including projected funding, operating and competition gross and the to estimates excess industry-wide beyond opportunities, business our adoption customers XXXX. include our growth expenses engines; and financial progress product held margin; on impact outlook levels; growth; inventory statements, and and for strategic not market will our revenue, our supply expectations regarding statements including and its drivers related Today's results; the forward-looking constitute regarding expectations limited quarter regarding customers; priorities future dynamics, obtaining third environment, financial capacity operating margin, chain revenue normalized expansion of by further growth demand, and trends, of and margin against milestones, regarding Subsystems year-over-year and government optical expectations

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

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

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

Heard. the our turn call I’ll David now Officer, Chief over Executive to

David W. Heard

Thanks Amitabh. the outlook thanks quarter QX and call our us results, I’ll cover details and second for to the Good for from over turn and today. to afternoon, Nancy, joining highlights our QX. begin the then of the financial with

XXX XXX to midpoint programs. our the revenue, basis basis, quarter grew was quarter operating we revenue financial X%, range by EPS. solid Overall, margins for beat invest margins our and We all of year-over-year by metrics, a key increased strategic the gross the margin, second On in another continuing points, margin, expanded points, outlook us. across and operating by gross basis while

just XXX% EBITDA our in-line below was gross half improved increased In XXX we approximately which of the and sequentially of the XXXX. by compared X, in points to with grew improved by by XX%, year, our expectations. with Bookings first the half XX%, QX first basis topline margins book-to-bill

continue the we've areas in win been deals we prioritizing. business, to Subsystems strategic our In new

we with our service a Metro consistent turnkey Metro For our provider. first, line is award next-generation customer new professional which This this gig The to made XXXX, expand integrate GX include which available. suite and deployment major ZR/ZR+ will services. software we footprint own will platform, pluggables with we established we margin our allow system U.S. a efforts example, in our just XXX with expansion footprint, commercially for as a future want

growth hyperscalers, increasing expansion investments India, both new presence our wins we go-to-market deployments in resulted their in and and the we Second, in deals India, have span for where service and believe providers a subsea who geographic in in are terrestrial market U.S. These region. significant domestic opportunity.

our have with the a customer major segment hyperscale share we with in we new deal us continued for in future we momentum positioning this Finally, expansion historically less whom subsea a account. hyperscaler, where landed well a

In the first of signs Subsystems business we're progress. commercial seeing the

of now pluggables expansion about gig ‘XX. of is on XXX XXX second software ZR/ZR+ integrate the available, Metro commercially excited the half portfolio. make and the vertically potential commercially available We're to into we're as in pluggables Our enabled we the set schedule first gig margin

of We and gig at network, with will greater reach distances to and leverage edge to customers economics. cable on enable market that And, performing highest our pluggable nanometer opportunity XG power the will lowest access significant X XXX a the the networks. at track open we're unmatched broadband deliver technology

of of and get router investment gig. are The resulted our for our going from entire In management, pluggables in have increased pipeline they're and These and lowers our providers small these service addition XXX to in dramatically encouraging solid return gig our Well, and initial orders purchase signs a orders to forward. to purchase XX and wins the expect are relatively from manufacturers include software broad-based we XXX in costs that customers. components switches, achievements magnitude, operating pluggables enables which to-date. all network suite allows equipment of seamless have from agility, and intelligent integration simplified

We're Open to to portion of is network represents XR XR architectures we've members, the excited the in Finally, the new as of now spend. a company, in networks. including up a members significant Open to overall been quarter, XX a Networks. see Arista Total Forum and proponent membership addition the and three the open Forum open to

that one technologies a and ICEX, Our XXXX our significant at a validate in XXXX Metro expanded results gained annually, to XX% history ramp, as average continue hardware half in From in by our added portfolio as to the five portfolio. segment an revenue of first basis of working. refreshed customers points, operating fastest new momentum the we've last strategy over on refreshed company the our to XXXX, margins with years over software of grown of build ramped GX share, especially our XXXX entire and our number the

expand to year. portfolio. from ramps, from $XXX further integrate once investing the the higher leverage, business, we as margins up At this XXXX, which close operating And expect ramp million we to we're position the opportunity in vertically business of our business benefit We're Metro external sale into to with this launched Subsystems a this now our market in a a newly we pluggables. as

we've Furthermore, to position the benefit existing CHIPS to continued plan. Act from ourselves and Science our to business augment

semiconductor As increasing is U.S. is a to at government based of a situated supply customers. significant secure an to funding time Infinera well issue on optical chain critical importance when manufacturer our table, reassure and the

amped original of the as expectations through will is are from demand believe half customers growing network they're rates machine second We artificial our going be and the from than are this continue long-term for to industry-wide taking digestion, a outlook period three environment. year a we're to through going period, data While getting healthy account roughly with payloads, about spending our four inventory learning. be of to intelligence quarter our cautious are that's of year. the quarter into four and in We this recessionary digestion in believe being halfway projected half the back and lighter

for growth. profit percentage and percentages EBITDA full basis. We'll revenue expand operating year expect However, and by the deliver double-digit in topline we range six a we'll our consecutive of the on year, year-over-year grow low-single-digit

[Technical Difficulty]

March business focused timeframe. dollar intact. executing least and expanding share we're Despite of and business ramping delivering term pluggables temporary per mentioned digestion in share business our remain outlined the milestones. drivers the additional strategic Day, near-term to Investor and market the We earlier, secular on the margins, longer XXXX at target six We're XXXX, the model during gaining industry-wide earnings in a and our

Overall, thesis remains our unchanged. investment

EPS. expand to continue We

that strategy execute this our through I'd I the close fact confident As am today, like our to in ability I period. adjustment and reiterate to

while past consistent delivered and we Over years, rates. supply commercial pandemic, progress, a chain interest few navigating financial the war rising of disruptions

over few our I'm equally business. progress the Subsystems is best systems shape outlook years, our new by the been, evidenced ever portfolio of the the in excited As and it's about

unwavering thank Infinera innovation the would take their one for in to team delivering this on another I our commitment and that customers opportunity matters. to to like

like and their addition, our ongoing In support. to for I'd customers, partners, shareholders thank

the the Nancy? call now over I'm quarter of and to financial details to cover outlook. going the to hand Nancy,

Nancy L. Erba

third will then begin I the results everyone. quarter. provide second for Thanks, outlook covering David. afternoon, quarter Good the by and our

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

heard above This just strength of was was you by strong the the Americas, outlook second midpoint X% basis us. and million quarter David, driven performance As Revenue quarter $XXX another for a was on from in year-over-year our range. customer. a our with in up primarily domestic for quarter, QX and over who XX% one was ICP revenue derived consistent customers, with Pacific ICP XX% Geographically, an from the which level Asia customer There of we revenue QX. our of customers. accounted generally was the

increased was quarter, XXX midpoint ICEX, from to prior of points vertical XX.X% lower supply QX work gross above including backlog. integration, margin and professional basis some services lower of we by higher year-over-year. Compared the margin partially margin relief in gross costs, through continue the margin range our offset services as our in outlook quarter benefited to the and

first to pluggables year, gross our portfolio margin by and in continued and Overall, trend ramp in my vertically gross the I'm our the Metro as XXXX up our improvement beyond, external half integrate of as it confidence we ability supports the margin in show revenue. encouraged

ago the our in of by range Operating a year of $XXX a operating compared range which our tightly we of outlook million the with basis, a at an at profit expenses spending end we QX our investments of was XXX quarter. breakeven outlook the points. loss in to below higher our Subsystems our $XXX and was Operating at basis managed while X.X%, in of The the as $XX.X On margin expanded quarterly make of high-end were margin outlook range. million, a to substantial year-over-year million a diluted $X.XX to in resulting continuing was EPS operating million business. $XXX quarter

drawn cash ended cash million sheet flow flow million we the the from We was $X.X Moving generated amount on cash the cash and flow and a $XXX with no to ABL. perspective, an on free quarter $X.X million. in flow outflow while with equivalents items. cash cash a balance operations, From in of

our and XXXX, now Let of for to expectations for the turn third of me outlook year. the the rest quarter the

As inventory. continuing of original our work from has the become more the David, near-term than bookings you challenging industry operating to customers down have while their in environment heard as pace our expectations, slowed

However, by four and increasing the year, quarter this compared XXXX. we against expanding in period. our even growing first about basis operating we customer first XXX margin points half We backdrop, the halfway half by XX%, revenue by of achieved through are of this the industry-wide plan to believe adjustment EBITDA XXX% temporary

of a line, a points. of we operating net gross revenue Below or million $XX quarter basis taxes. for $XXX minus expenses expense operating of for minus the be expect points, $X As million assume basis XXX and the million, our $X result, plus we margin XX% $XXX or million $X or margin of plus now for and interest outlook minus million X.X% minus a XXX income or to operating third million, plus plus

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

capital, QX, working We expect in return from cash generating operations to and operations QX. cash in utilize to from primarily for

We full-year. operations to are from the continuing generating for target cash

driving in our XX% double-digit gross Despite and XXXX. ’XX, revenue growth year-over-year compared in path low-single-digit include This earnings in the investment are the in to to improvement is per EPS growing sound, on remaining planning margins a XXXX, the in will operating percentage XX%, percentage delivering the near-term thesis financials ‘XX. still expanding least $X to in on delivering our delivering share at profit of range considerations, range, and we

of We believe to expect QX, then exit improve in million, to year or which and in up again for bookings RPOs we start Performance us normalize. set to our the and well sequentially QX, demand with continue should Remaining $XXX to XXXX, Obligations approximately when should

performance, initiatives are especially experiencing. near-term, pace with profit pleased the year would on-track, toward quarter In are fifth back for that and believe our first consecutive and I'm tempering As industry-wide year, our we the of are revenue I like but year that half considering close to consecutive today, we our reiterate we I and the half of second are growth sixth the our of expectations strategic operating expansion. slowdown on

earnings while we delivering XXXX, share in to per Subsystems a at investing And in to share at million a remain least $XXX ‘XX close XX% by to the path improve $X ’XX, timeframe. the our expect We year. in this in on least earnings per business our

and I team continued commitment as to customers, execution to and Infinera and and cooperation as would for continued your partners, excellence like thank the innovation their shareholders our well support.

can David, we now for the line open questions.

Operator

first our from Simon take Raymond Leopold James. with question We'll Instructions] [Operator you. Thank

open. line Your is

Simon Leopold

on if could terms wanted all and inventory of similarly, behaving concentration to other I because slowing going got a Great. maybe kind your reasons. they're of Thanks. an of whether aspect there's of that verticals, Thanks follow-up. this absorption what's question. for quick And I've in stands in or customer whether either then taking see out unpack the you terms or

David W. Heard

We're Yes. you. so XX% ICPs those significant from on Yes, I'd say to each I for we're doing portion hear form the with at of we That's are lumpy ICP still Simon. orders, the inventory. exit seven. nice And ICP as the front, of are Good be top XXXX, again, with a as they maybe and burning some that CapEx think an the to I of time. we now I a differently. have mentioned, forecast one from business through and question, used -- a one behaving is of year, good look, expect

for exposure A in their well strong, them machine the are bodes and immediate of AI. learning to going future. quite because that couple So, still of

of a the portion by been interexchange affected largest I that CSP the of that. that's large What to kind where the the think see we carriers, domain, used have in inventory. In world, CSPs you call less

think the conglomerates that been others, burning offer larger have inventory. I access, multiservice wireless, through

a been challenge Let's bigger them. that's say, for

last packed it's spotty overall, they identified they're in cover So, the on, chain, inventory in it's in that supply chain, the to on did ICPs, year, buying and supply again, using. themselves applications CSPs, meaning based they the on but their perceive They're its And at this isn't about, out halfway the they're we inventory there, going to that industry. the burn the down. levels that when we I in in Feels like, inventory industry, inventory through look think, inventory, burned total are our the down. like

Simon Leopold

So, my follow-up that. up that sets nicely in

couple if fourth mid-teens of quarters low-single-digit like quarter. the with for prediction your Sounds a combine that in midpoint growth would but at expecting of XXXX, sequential this the in guidance I growth least imply XQ you're remain, your

So, somewhat the of fourth nice a quarter. rebound in

David W. Heard

Yes.

Simon Leopold

Thanks. what sure, I'm implied I that you want correctly make that see and quarter to fourth strength. interpreting fueling

David W. Heard

Yes.

have, So, that our backlog, right, our we have, base. so, with client and intake the forecast both our order order that we backlog and

service system softer back wins the of trigger bit in a despite they've design just orders inventory, pull the getting the and have half, to again, even carriers. once slower providers, there got continuing a we're as digesting They're with the ultimately still think, on to getting I again, in, scheduled. So them orders on out we see

We a think normalized rebound to we get more ‘XX. the begins year, and exit that as we

upper view, of it efficiency, this you it's kind and year EPS, that's in levers then kind at our look And view year contemplate by my to go that EPS. which despite of all. $X.XX consensus needed at we we we'll our the if XX%, for Simon, row, kind Day, the Now at and us the fifth least grow comments, look, do that this of math, can that, of Nancy, back drive when was times next scare will to the the said year, be, says like view in expand when end to doesn't that you pull of you where Analyst $X.XX and we both, you for a we

said as platforms, back. begun on yet if hasn't $XXX Nancy start that, a That's see will vertical you drive exit start kind And we next is, of pay Subsystems spending that true year, Metro to in business. up. it start that million we’re you over operating the when when add payback The integration a $X.XX the large we sales from and to leverage putting any the we further we'll ‘XX in as fashion. scale external then impact also pluggable

you? Simon, did Long Sorry. help answer, that but

Simon Leopold

so, Very much appreciate details. the

David W. Heard

Thanks.

Operator

Okay.

Meta Morgan to with Marshall Stanley. go we'll Next,

open. is line Your

Meta Marshall

just to was make wanted I had to the fact of I the expected. kind throughout of And commentary along alluded were to know that of kind the to kind improve With of some to that expectations. lower reconcile largely going Thanks. way. of year the your the some orders kind of order need see as you you commentary book-to-bill

David W. Heard

Yes.

Meta Marshall

trying So, that the just environment I see this see, guess kind I'm is deteriorating? to just you didn't of improvement further or

David W. Heard

question, Yes. It's good. Good Meta.

certainly QX we did improvement So, to QX. see from

We including and the in half improve. QX certainly of back whole the year, see to QX expect to improvement

that much QX the industry, than the in but if lower competitors had lighter. think I don't we're think back had half think a talk We that I lighter doing the job reported. our their book-to-bills We half pick you we overall, first up the will pretty sparse our half. half bookings, But the softer expected, to anybody you'll where and doesn't anybody environment, anybody anticipated. first all at think first was think anticipated. was in maximizing have bookings been, industry a in a where of And look and than good they've

Meta Marshall

quarter, win Metro of Got going follow-up, be ZR it. new U.S. any new the XXX to on customer, Just multivendor? on or this as a kind service maybe on that a -- win? that that of major And piece you commentary the is it win just is that, on then noted provider, the

David W. Heard

Yes.

for are pluggables be customer integrating platform, our own call in we using was our using, merchant And so GX will it, us part that deal. already pluggables. XXXX, the into can our New we out that leverage pluggables. whole that we starting -- of And platform,

the margin. That's a of see we'll the expand. example So, how great will margin

With our systems We're is customer first most our most important customer. Ron who pluggables, first of our runs important Johnson, our our most customer important business.

Meta Marshall

Great. Thank you.

Operator

to go we'll Needham. Next, Henderson Alex with

now Your is open. line

Alex Henderson

whether hoping And course quarter, you Great. you was the of, both out linearity I improving guidance over in a is, book-to-bill clarity period. the push orders give with the orders, Thanks. and one? some given year do the the was as somewhat you have year us XQ, on that XQ of any above could, of in anticipate the exiting for there

Nancy L. Erba

the through capital half But for usage be and challenging, And in planning industry I a start there. and And as Yes, one. has over in second us. believe you Alex. of work terms of the linearity Hi, we're first that we're versus little certainly to for exiting for half. been the year, about some working whole, a the see for things as QX terms we the should second think can of potentially that as half book-to-bill

as had at said we Just year. the beginning the

So, there. things some definitely and expecting out in good a growth how in see, QX, half shake second bookings, growth we'll but

David W. Heard

Yes.

to Just Alex. clarify,

one. the be the for half, book-to-bill absolutely, expect second above So, we to

be year, current think for and, the we'll be close the year For if to prediction. ask you one our to were to I seen

Alex Henderson

and to with when change you're going The there you second the was of, an But, vendors on is the in the follow-up deals? question have me during perceptions risky themselves. to XX specifically, of XXX out, Obviously, talking standard in piece quarter as them close not of had about of supposed on side, pricing all a gig for be industry pluggable of any was linearity was linearity on an it does this to product. CHIPS, open question that's The lot I considering strike players, the ZR. from quarter really for integrate terms recently

ability you a as on So, generate do market them, and these relative to pluggables to decent for the profits standalone view how business? pricing

David W. Heard

Yes.

So, to Alex. we'll offline, have talk

that we -- seen then and bidding see the what and bids are We the today we're awards we're active getting. against competitors haven't

They think, see again, I have don't but probably not or of you're XX. certainly And, I or all in rebranding not them. and might right, three bid. particular be all their their see I any own I something, own DSP optics. them three. see of four

software the start vertical XXX on the our the on side software products. going be that to things. I network scale important. CSP carry certainly tend gig our especially as to all to of be only the prove we these you also more platform fact, out integration In product, And of same That's enablement. company and think will has gig to that in and XXX And has into

form So, you I'll that's to look if way have have no talk more shape the seen, when XX, competitive we've we I like to or offline. at field that.

Alex Henderson

came -- that out report a have I But

David W. Heard

Yes.

Alex Henderson

the Specifically, there's XX competing saying that companies space. in

David W. Heard

I Yes. I'm for see what you competing deal. just a telling

yes, but -- So,

Alex Henderson

Right.

Do price So pricing? what to going of think roll, you but is to you to going pricing think think any like? sense you do look going it's in? Do hold

David W. Heard

Yes.

terms again, the what I’m And starting power looking I reach reach bit trying spend the ROADMs, to that for of, punch an So, we're we're if DD and going even factor ICP, the the vertical annualized after price differently because on going be to a positioned in a performance, there's be to I bringing to network, into whole ZR which There'll overall a basis, on the bit that's the with a think that and hit technologies, tends in typical an time think going Metro value stronger a certainly it's versus CFPX that's to of depending network. form so be down. integration through in into far, some pressure more get tends the they're it more well of form on pricing and of factor, today. because they're but

Alex Henderson

Understand. Thanks.

David W. Heard

Alex. Thanks,

Operator

with go Securities. Next, we'll Rosenblatt to Mike Genovese

open. is line Your

Mike Genovese

to in potentially a maybe And lot. be you disadvantage, in in market? David, products just, say about? not ‘XX, products for terabits what those to that. could intersect the ‘XX, seems, talk Oh, you you're you would X.X have Anyway, about X.X and which ‘XX excited me, say why out point who make those that could basically, good the having great. a people? to particular, that about excited of is product So, Thanks a would sort although but a you're there to early

David W. Heard

Yes.

a overall, entire right. our Look, the So, question. refreshed product that’s line, acquisition, good we've since Coriant

of platform, a new the new line a OS, takes GX line new sleds. whole whole of have a we hardware, software, multi-generational that whole So, state-of-the-art

take line. ICEX. It'll ICEX, take it'll pluggable So, It'll ICEX. take our and

So, the take are don't I'm pretty about a, product excited plugs Metro go that where buy a to I have having in and from somebody margins else, destructive.

the winning Now, line. of a for systems we've systems this been the been we've feel investing and the Huawei less growing the we've good while very I five line, and market. exiting company last EPS that's in competitors years, competitive with that And got

them So to this out timeframe. how haul. and in closing in How to and XXX many well, got be to and economics. It's say, about I the links going push far know X.X I gig And, XXX then the in you come Metro long them? everybody's wave can all just, going the continuing sizes I a gig closing at carry

in it, model about where and against good as competition. that -- pretty So, feel the competition we we we the sit

act the a systems investing we're drives in us. the portfolios Subsystems work throws expansion $XXX long-term putting what good the surprised as We're shape. been second a no just shareholder to And growth. EPS sure we're piece, million never in that make trading, to at a now, the we're And especially right continue to just market given we probably little drive where matter

than helpful. you asked more Mike, hopefully was So, for, but that

Mike Genovese

Very, moving technology in maybe final you'll of the Basically, these Yes. technology My just think on higher a the early Thank you growth rates component the impact it AI, or helpful. optical center. two for second stocks? year coherent story, do more line, DCI your down might and question, AI or thoughts future, some market very you like how probably on you. that, an any likely the data into have either,

David W. Heard

recent Well, That this I a impacted will trick the isn't order and AI book, this is we as as going going to what I rebrand on look look, call and year But, to not you given I'm next tell went we're being an we environment. play. story AI this into is, year, trading through ML. by as promise our

hit to and eight to head. to boxes the to able ICPs You more that move they XX and software get to to it. just that, to the means some going manage on run Metro, and be payload. the that be able And There's are payload, it more closer other solutions the do if have times closer DCI to

chipset to about So, about how use And, going that. had do to, our capability I what obviously is center think inside wants we Nobody folks you indium the with But hear that's data to happen. long, a copper yes, yes, look, have term, optical our, have discussions can longer driving, phosphide absolutely that's in against AI. fab doing that's long term.

to keep the to a mouth going want to our EPS expansion. drive to that piece and to they heads we're ground, continue hear continue Now put

Mike Genovese

Fantastic. Thank you.

Operator

Okay.

Schwab Next, we'll Craig-Hallum. go to with a Christian

open. Your line is

Christian Schwab

just on Day, form who Great. talked even you mentioning recently hired the people, some you and Thanks Bloomberg But, just to, that. you've -- had David, keep for legislation CHIPS my the said gave Act taking and that question. Analyst I I Germany and helped run your to the know there's at big chunks money, $XX It grant much the isn't asking right? to over Act. time too XXX for billion, CHIPS out take Intel money people going TSM billion. of like, to $X.X

left makes you something for I be I'm wondering that, So, guess Infinera. just that think there'll confident so you what

Nancy L. Erba

is a optical check that of and Pennsylvania. and pursue as we're terms model. at long-term expectations, semiconductor based put we into the and can, when believe our have semiconductor forward into been none none and of We the of manufacturing, talking our looking the of of, and in the or we've going into dollar generation boxes told or they're we incorporated we've assume of outlook saying business packaging U.S. still were EPS is we anything for, advanced in lot all, first cash that our but even that Analyst from CHIPS that with Day, So, Act. said, we're in our California All

Christian Schwab

halfway is we of Is type second inventory Great. of at of to guys expect digestion, return the that as And what that, kind on outlined of my then growth would to just you should be thinking? you Analyst the exit this we kind through, when backside of question, that topline that the the Day? on kind rates

David W. Heard

a couple to at six year been We've above ago that and been a clicking of questioned if Look, along that five our years or you we in X% take Yes. growing, Analyst Day, us. of we've kind said everybody view and a year XX% rate. again view,

continued I I guess if But, it's XX% talk trading grow environment, that, this business what? And about little long-term long-term continue if have to early had. we've me. our in We've care. EPS our EPS bit one will can't rate it. even EPS, for in and growth blurs expand continue too a plans, ‘XX, which buffer meaning had, a know would that to to blurrables, to can be to little do take ultimately, X% is and we and have of explain to you I and expansion, And, you expansion. even them Look, but it thing Hopefully, EPS. somebody And the valued view tell room

Christian Schwab

other Thank Great. questions. Yes. you. No Perfect.

David W. Heard

Okay. Thanks.

Operator

Okay.

go with JP to Samik we'll Next, Morgan. Chatterjee

line now Your open. is

Samik Chatterjee

I that start your revenue think simplistically you're that coming I your to I'm service we guide, so. questions. can taking sort by like, buckets. for at revenue between of you're a or sort Hi, sort year. of how Americas, being expectations about million that to the and Just look provider split the wondering, I as even you just be your maybe thanks the more of is going bit down my bit to get color guide APAC and how ICP of if should expectations for or India, I taking terms quantify by can where couple mean, seeing a much prior about that in a had to geography, big full-year $XXX versus on from? of updated if reduction more with

David W. Heard

quarter rest The are to service of is from remember, Yes, revenues these across in that ICP. broad let's have from providers. I of I'd mean, it customers of hey, coming laid management out of new XX% off of broad saying, as digest trying based. have just honestly, our And, and or they're the that scheduled have folks to it's in It's XX% just delay And lot inventory. through, they a based pretty some say period kind sector. them place. nature two. probably and projects And, a again, make XX% I'm those

of kind things going it's two at once. So

yet And when we Nancy And look margin that's what all So, XX% efficiency. have and contemplated our pieces XXXX. investing for a in to myself to operational not again you in back $X.XX at business back back expansion an are over next we're year, It's is point. it's the remember, that this why and paying EPS at subsystems at this that pay we make, year investment confident EPS plus of year. and in starts through can

XXXX, So see that to license path that and license in a XXXX in buck. you

journey. when the started Let's not we were We a forget EPS in this XXXX. $X.XX first losing

Samik Chatterjee

four four how and of normalize, my a that for plus out you just you start visibility of from of confidence comps about And really primary maybe the quarter of being that improve then, push sort do And sort just there be the sort What or do projects Helpful. XQ follow-up, million is of seeing. you get driver quarter the that Correct. specific sort uncertainty easy digestion, of that talk some overall also the of to I the get $XXX how thinking more when sort in into that you're the completely you expect digestion? revenue, enough mean, inventory drives implying. Yep. you're much given of to

Nancy L. Erba

Yes.

So, based And growth QX, expect QX. QX. in today order us we have seeing off that and confidence is backlogs right? what that we're now with we based the customers, I and that is that again, we're that the in discussion mean, through on gives opportunity working digestion in That's pipeline

on already has more dropping. the order. this RCMs sheet saw started our increase that start you the balance quarter. we already quarterly, see at That is start but on should to we've the in hand through, And commitments guys is own terms One NCNR our to you inventory. annually you of not something see So and on dropped inventory seen inventory see has comment than work and there

that's visible backlog what you in see the starting to to of in gives we're then quite of normalizing into And not exiting see day, all but us in the So, the in confidence I know signs. what as QX those terms they're terms year demand to strong. day we pipeline and XXXX.

Samik Chatterjee

Got it. my questions. Thank you. Thanks for taking

David W. Heard

Thank you.

Operator

Okay.

George to Jefferies. go we'll Next Notter with

is open. line now Your

George Notter

QX. Thanks number have a Do about and then much. number products integrated very mix I for vertically guys. Hi, the ask wanted a you for for I of to ICEX overall? guess

Nancy L. Erba

Yeah.

it's about ICEX, For in XX% overall, for it's the… and

David W. Heard

XX%. to Close

Nancy L. Erba

For the half. first

to year. plus track on the XX% so for And the

George Notter

it. Got

I And to then vertically that Is in or think also integrated Okay. maybe. for for product. the still XX% target the like had guys full-year you XX% card overall

Nancy L. Erba

Yes.

David W. Heard

Yes.

George Notter

do how Okay. test a which GX will for you're then you… great. product, start it's think certainly deploying that long about for incorporating I think testing into there's they phase that period, Like, you you to margins, take? before pluggables think, long how but, And How certainly can be the family going helpful very customers And before commercially. do is that

David W. Heard

yes been you the July, – time that, recall doing We've if doing period. started in we August,

said XXXX. of prior our So today, started of And calls quarter. both And Day the end as the be Analyst in what outselling are to as expect soon in and in had deployment by be that the is early we mentioned kind but complete would July the year. we we we teams

optics qualified, have merchant dozen I we own in a you, tell probably Given over even our can't different platforms.

to needs what there. of aware happen pretty We're

online that'll through will And in solutions and the balance those Nancy So, happen deploying we'll yeah, the the see XXXX. the this in impact of year, income year and sheet. end be statement

George Notter

it. Got

XTM. for I in that has Okay. And the then, well? assume pluggable guess that as I solutions now question in same

David W. Heard

Yeah.

through in XTM GX. we're So, going the and parallel the

George Notter

Great.

very much. you Thank Okay.

David W. Heard

But most of the volume GX going forward obviously. platform, in you'll see the

George Notter

Thanks. Great. Okay.

Operator

I'm showing now turn back CEO, over no closing Heard, I'll call for or this to any the time. further remarks. David questions additional at

David W. Heard

for while ago across board win you the we Well, the beat solid in consensus to David. milestones and short particularly integrate that talked March. just in you, CFPX geographies on-track as We're We're modules. months six few optical. in in We're a quarter just to half George, about continuing to the own those Look, the We'll the in accounts. in another new I we us. is thank QX Well, was and mentioned start making the margins progress where as see our the to in market metro to over growing DD XXX gig ZR/ZR+ new XXXX. strategic

We mix growth both forget embedded in start in we're the and in why investing we're investing we not And engines $XXX to in XXXX. year be we're We said. we've it vertical control return pluggables a in yet both. not the that's million there'll the in integration but products are own something in expect increasing pluggables seeing the believe and we seeing that as our let's from,

Again what both getting do it is chain harder the technology standpoint do and proving U.S. advantage, an in to from we be a to security and a from innovation is just doing do to the standpoint. supply and

And I'm business. excited where the really about portfolio. I'm really in terms subsystems at about good we're feeling new systems So the of

quarters the been it again period people continue to be days. like over commitment valued. that from to there's EPS digestion. do we bust that in seeing, we the do. last difficult being the is particular, in have going years in last five is like competitive the because continue will the can less what to couple times industry to out been this Now last our a been And this But ultimately XX over of said, we've able are seeing of and we industry through I've think field

have to great great our So, our your mouthpieces your in, EPS Thank night, go patience, support, and a questions. to your expansion. day. Drive an heads appreciate down, We're I going do put good put back work. and you,

Operator

today's Okay. conference concludes This call.

disconnect. now may You

Infinera (INFN) 9 Aug 232023 Q2 Earnings call transcript