INFN - Earnings call transcript Q1 2024

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Operator

Thank you for standing by. My name is Krista, and I will be your conference operator today. At this time, I would like to welcome everyone to the Infinera Corporation First Quarter Earnings Conference Call. [Operator Instructions] Thank you. I will now turn the conference over to Amitabh Passi, Head of Investor Relations.

conference. your begin may You

Amitabh Passi

press Thank replay the you, where Infinera's to call, recorded be Investor of afternoon. quarter is will Infinera available and on our This and discuss the call website. good the the copy we'll A for section fiscal Welcome issued preliminary by of today from of the Relations XXXX. operator, for release website. financial first being available results is

on file include our results. XX-Q will Today's report quarter financial on before fiscal fiscal that metrics based fiscal on first first commentary XXXX or preliminary call May Yesterday, we and quarter currently our Form announced XXXX. we XX, the XXXX expect for to quarterly

during preliminary, financial discussed this results management's date XX-Q. As included a result, conference subject and are current the in Final the notwithstanding are said call, today expectations results the anything based are of change call. contrary to and to of on be as all will Form the

subsequent In second quarter the company forward-looking to may statements, XX-Q time. differ X-K ended SEC report from filed subject materially the December XX, XXXX, and amended filed XXXX, our to the its those financial could current XX, Actual results in addition, not XXXX. for SEC time year Form reports to management's expectations. set Form Form outlook for for our XXXX, risks differ forth annual estimates and with that the related These as result but as with ended statements include constitute will statements results on on limited with of to, XXXX, XX-K referenced XX, February September February various on XXXX, today release are the today's factors, report the and XX, including, in SEC on and that and Infinera's as furnished of or the the press quarter to current well cause including that uncertainties report and materially risk XX, to quarterly on issued February filed matters from the projections call a

reminded forward-looking or call. Today's made the yourselves that reflect the circumstances preliminary of limit to conference and references financial GAAP after all Chief to Relations Officer, these as no today, events for items to is of we update a non-GAAP any financial that a plenty measures question this financial Q&A measures now please. but call Investor X most available which David release, revise today, operations, allow our obligation revenue, cash which of ask Regulation website. on sheet provided undertakes statements we've And you non-GAAP call follow-up, the our that finally, are David? for of X to Please to directly flow reminder, to I'll our Executive statements Heard. from may includes a on except we'll section measures, comparable the be reconciliation or and to discussed earnings as of basis. turn and time over balance date are in Pursuant G, GAAP arise for Infinera

David Heard

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

continuing some Strategic and were much up from line X us. strategic large very outlook $X systems, Margin contribution and a year-over-year. on us. multiyear The tale deal were plan network first lower-margin are for for million laying in unprecedented, cities decisions X trend the cash groundwork the potentially EPS for healthy flow and of the range crucial representing quarter, was flow cumulative over $XX our across positive with in free quarter high-margin which like Cash billion fill. within the future was generation the from as of flow. despite we amount QX ended XXXX, cash for accounts value was $XXX equivalents drawn $XX in new cash with momentum bookings million hand, $XXX won no quarter On in ABL. where strong We and of million with free against generated million-plus cash we our fourth

our And year full XXXX QX and we results. XXXX financial released

our you've prior now, QX results towards end upper came overall, by our seen outlook As hopefully in the range. of

growth XXXX. year to revenue our gross we to close normal get full the sixth our which our approximately in file Form on to XXXX, earnings quarterly we first occur margin delivered growth, is quarter expected process, to of share of of consecutive the back XX-Q, With cadence next For compared respect year XX% plan and per after of week. XX% we

reported XX% this to below range our revenue declined outlook by in many basis of industry however, low quarterly Despite of peers. our year-over-year progress, came and in on already in revenue our compared to X% XX% of the end the a optical QX declines XX%

normalize orders to book in the of of Our the release the first from year shipments to the a due of to pushout revenue shortfall second approximately million, the quarter $XX half tune ship continue the get to second slower us to was of conditions the in addition of the business through the of growth year. believe start second to in half market half year-over-year quarter We the to these in back the enabling half. will back year, dynamics before

future we the [ the positive customer groundbreaking to quarter is of that are some with The company. I awards trajectory the mentioned expected notable to significant win a have ] news that on in logos continued earlier impact

aligns map cost road per operational lowest the bit, optical bit while improving and the open efficiency. per deliver open that lowest well agile for architectures power need customers' with our Our

the fiber our networks intelligence. the with wins artificial reinforce needs, help customers recent center Our capacity deep supports demand, evolving especially ability new efficiently keep applications pace with to build-out and of manage accelerating data like traffic

in systems of optical take of and the share The the it. pluggables portfolio and are pluggables $X products billion-plus coherent into capabilities As grow a our segment leverage through growing break to for our in the billion market payloads business on laser-focused the intra as market to billion $XX result, we U.S.-based higher integration from vertical significantly allows our maximum ramp remain which priorities, drive systems driven of our center leverage AI. high-volume fab $X our onto data volumes intra-data addition the we center and market,

Systems In solutions of of PIC tend part embedded tens of be associated fact, units. the our as annual with are thousands volumes business that in to sold Optical

hundreds and volume tremendous will we model. the cost believe critical advantage We in factor a of expected in units, are volumes to to units into dramatic future, increase business our scale drive across in unit the scale of annually. our thousands long-term Pluggable millions of to volumes intra-data center portfolio of realization expect a this

fab abroad. in to advanced increasingly center the and Our enhanced and our also semiconductor the and benefit provides U.S. of important added supply chain customers U.S.-based packaging which is resiliency, security

Let me the the further dive business. the in recent and specifics beginning of into first strategic the with wins date systems progress QX, to

the momentum and next-generation hyperscalers including with we our our portfolio, GX open First, continued line systems.

we GX X subsea a million million worth $XXX quarter, worth won $XXX new potentially major years, million over with open we major X $XXX $XXX to a with design hyperscaler secured deal the During our to win million GX system years. and over line ICEX-based potentially a

with secured onboarded GX a addition, a line system we content win provider. X In solution Metro hyperscaler and ICEX Tier another and with open our

significant continue the Africa but hyperscalers, customers demand fiber land-and-expand multiple ] in optical traffic start India, MOFN East, least the These hyperscalers. them the by with of or portion in of expect we deals, new influenced managed regions, Asia with [ small, a Second, we at revenue opportunities QX more the winning in networks, Middle expected become out our and in these supporting growth future. to X

for estimate direct that full to exposure approach we XXXX, year As revenue. of our of and XX% the a indirect our product hyperscalers reminder,

wholesale we with third, GX U.S. wins service in and secured portfolio major the a international our provider And in provider Europe systems with major an

We continue increasing capacity marketing including XXX-gig bandwidth needs carriers. and to see of by markets, our services increased across target connectivity

major anticipate upgrade networks second their higher to shipping from at the this revenues. continue a pushing win year metro quarter initial they while to into half bandwidth of We service begin orders would orders provider also in customer as design XXXX. These a service U.S. capture the

to solutions. our pluggable Shifting

aware of we the about $XXX can what are this with landed are to a we hyperscaler sizable contract, but this we XXXX. we a limited in million ZR/ZR+ QX. over we're now, half opportunity win X estimate in specifics XXX-gig us you $XXX between in of to second to Since the NDA, say major by million in for As years a strict beginning revenue generate

quarter. our also orders I XXX-gig to am first our that MSO U.S. pluggables we received cable announce this for from a major excited

ramp the potential to network both opportunity customer years address and service at orders about small as offerings. initial size, a relatively these excited X are customers' $XXX While $XXX are consumer the we use a the enterprise important to of million cases in over we across million this

potential architectures Finally, much our [ of our Xx linear of OFC it optics, phosphide in fab power of competency is semiconductor in optics. show March. halftime [ is by and bit for offering to U.S.-based serve We ] data leverage as center per AI-centric the the ] will our as turning launched solutions, latest [ to our reduce These the center elegance IC in addition applications. agnostic California pick core The optical portfolio. have to solutions our ahead intra-data that Indian ] pluggable which XX% and and

year through working are the of set partners the fab. with volume ecosystem deeply are customer our that available our towards have We and chips drive could significant second engaged in half leading now landing

can well in have As and for the you business beyond. see, us XXXX sets momentum we up our

we from As suppliers our are trust evidenced by our customers, and mind show, business, and winning share partners. OFC

positioned Act well remain the CHIPS we believe also We for funding.

fact, call today Washington, D.C. In from this taking I'm

for the receiving and of expect quarter the begin most to have larger awards fourth been of awards in smaller this year. announced, CHIPS As Act companies companies we third

the than are dynamics prospects year. and industry long-term the challenging our short-term more macro coming encouraging, expectations the into are While

in in we half focus half, to continue with to a as the half. growth second slow delivering We on getting expect the back trends improving first year-over-year

we for year, revenues compared down full through expect walk Nancy shortly. now X% be As will our XXXX. the the X% a to to to result, details

as of for what new Deploy cycle optical and market start our growth, be wins be X% half curve, the XXXX. year. second future while the half several we which will an for second overall and share we routes, fiber expect first for into and keep and As to in the our number systems to the in is drive investment overall by increasing for But significantly backdrop, design AI the demand. expect overall build-outs, center resulting decline year, next-generation global data which a discretionary to the new of line in down fair of expected the market in down and this up to focus to on systems will of sales; half drive bandwidth X% continue the to normalize on massive driven investments record the of and pluggables year Against in head the XXXX, down I in deals, the of optical ramped I spending next higher-margin the X% OpEx market, taking ICE-D; to across of into flat year. overall systems R&D transponder growth

our up strength our $X.XX result the next getting our to end can X% long-term we of recent target we drivers our of growth size should our share the XX% and believe year. This wins, of the per XXXX, to of the XXXX. underpinning range in depending we to rate $X.XX secular of for where in scale back Given portfolio in earnings competitiveness return and business, our on

execution, strategic along confidence importance like I to our and contracts, our XXXX strategic long-term the in our beyond. size difficult, customers The like business as support. today, couldn't and RFP the partners, unwavering As to thank vertical for believe of near-term is one reiterate the the to wins term. shareholders opportunity and positioned of Infinera I'd innovation team in head to and our that recovery recent long and industry. for environment our of also into and continued about with see and give we I'd close well me drivers I'd integration matters, I another. in customers we commitment but our I ultimate scale like for the increasing of change position, I funnel, their to no scale remain the and the the feel thank their better business

I'll to and the call Nancy cover Nancy? to now over the hand details our financial the quarter outlook. of

Nancy Erba

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

trends business David, from in paradox heard the for you first bit As a a quarter us. of were

line momentum design our company the expectations, X unprecedented while in ever win has the On with strongest was seen. and were the hand, bookings

On a range came the other million peers. compared down to outlook hand, was $XXX year-over-year our our of the and by basis to reported X% XX% quarterly decline in revenue below XX% many XX% on of

these trends, from been tough it's to the evidence industry year in industry. the As start a

pushouts revenue and QX XX% lower the customers the both we attributable posture domestic primarily spending from major to was customers, book past the and due overall of of ICP volumes our the Our decline U.S. Geographically, X an and lower revenue a provider quarters. cautious across percentage approximately our our customers. to slower project QX trend from than derived in service ship orders release of

points our range Compared the primary the quarter impact of driver fixed midpoint under below the higher basis and volume. QX and in the absorption the to margin systems gross year, to line the product prior gross margin was XXX just XX.X% from revenue the mix; year-over-year. contribution of of secondarily, lower of of and decreased was outlook lower costs

up for future to While in quarter, revenue system overall deployment. company the well XX% setting approximately QX, up ago transponder year us compared revenue line was declined

an the impacted X.X%, expenses lower mix. end operating managed cost for and at was loss million of $XXX outlook and Operating $XXX in of were The in gross our compared growth. the while $X.XX by margin flat was a $XXX revenue, was QX to with diluted continued resulting below in to year-over-year EPS range lower quarter investments quarter. of to our lower due million, $XX.X of the we margin product and loss our which Operating of discipline ago outlook earning range million $X.XX million negative year

flow on in with on the flow million flow. equivalents, and no free flow $XXX sheet a $XX and cash the $XXX and when operations perspective, cash cash From Moving positive quarter from drawn $XX we in million-plus ended items. in to generated the $XX QX, from our million million trend continuing in flow, ABL. million We with cash generated cash we free balance cash cash amount

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

and this heard the very out push continue afternoon, excess operating some near-term across As environment you have the to customers as industry projects. remains our challenging work down inventory

and outlook margin interest taxes. as $XXX minus of due second for into basis; $XXX of operating we result, year-over-year a XX% the $X of at dynamics quarter and X.X%, we the XX%; plus the modestly $X Below on million a loss $XXX million million minus operating QX down up is: assume million, business points, expense basis year-over-year approximately expenses basis XX.X%, the operating lower income XXX or expect basis net to to implying plus plus in revenue. We of a on $XX a XXX range; year-over-year primarily experienced flat or approximately basis, million, revenue line, of midpoint persist year-over-year on QX and to or gross contemplated for a our minus of for points, million, decline revenue to

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

compared meaningful second back and of XXXX. with growth generating a step-up to and over expect to us about utilize XX% cash the I half with second mark to gradual quarter half cash X% expect of first in of for the the the the improvement half year. QX financials from in a low from primarily to working our QX, point in capital, operations to return in for We operations the in the year, more revenue

year, expect For XXXX. we revenue between the to down and full to now be X% compared X%

depending serve planning While end to shift revenue we to about framework the share we year This the a us to on industry XXXX obviously foundation growth, back dollar next the it be rate in longer-term XXXX that talking which of dynamics $X.XX roughly XX% out to and would our early that X% EPS year, where to in of get our objective. normalize EPS is XXXX, in realization assumes to as back per get our XXXX. implies growth objective range $X.XX

and I'd portfolio, contracts Operator, considerations, line near-term refreshed in design a as RFP to the size Infinera partners, and team the these signed, trajectory cooperation quality the like commitment would to activity momentum, our innovation and to support. our and their of excellence continued funnel customers your customer questions. confidence open our Despite now give I me wins, the shareholders more thank and the for and for long-term for opportunity like business. execution lot continued well of

Operator

Thank comes of the from you. [Operator Samik Instructions] Your Chatterjee first with line question JPMorgan.

Samik Chatterjee

strong of a I But about activity the orders, maybe had carriers XQ. you the that in are sense those what related sense in have more And us of the to So can quarter more providers you into bit first I bit know either customers. terms you talked for or a one, terms the give service [indiscernible] us order about you design give in trends you the there? follow-up. versus a Can telco in translating seeing

David Heard

it's okay. Yes,

would kind past we quantities, of ICPs projects was we're of out continue design the QX. mostly wins CSPs million the pushed But in, shop bit was half into pushed had dollar bulk. given well in XXXX. what overall we about into -- it's as and As the it orders expected of booking million, back that a profile We base. calls, implementation we that back and the think to in about some more $XX we've this Did $XX And on earnings answer to bragging, that based as the have ship at and book back about that in confidence revenue X. of into But plan our given Bulk in was reverse come. isn't year expect pattern orders also tend that above there indeed pulling for terms half. the value, us will in question? Which that year. the the normally The of mentioned of to half we credibility some had ICP, your

Samik Chatterjee

XQ. here if maybe margin are of to -- us And you mean, move you walk still that? strong of if we you you if Nancy, XQ from are I Maybe that? to just No. I curious still year? a sort the sort expansion thinking can can gross still through -- Yes. have margins. thinking clarify we gross And can mid-XXs exiting And

Nancy Erba

Yes.

certainly as call. margin, gross systems impacted in But last QX line of talked bit that number terms from impact line was on basis that this of We another just gross little think can lower then we our deployed. almost systems a by the in in you about of So about and from million margin costs. XXX fixed about $XXX absorption the volume point

would the still As and with target it down if get business a that likely fiscal will are up is X%, margins far 'XX to as exiting of be which into back that X% year little bit expect to to our still slightly flat mid-XXs, I year, going model. we're to time take us

Operator

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

Simon Leopold

of the to what before? previously. given the about see your second are expecting really And at you to in to you that of softness in thinking the key Great. March my similar same to what saw I just confidence? be the that your informing your me, anticipated very in you're looking correct arithmetic had half what's you of this results is guidance And sort year talked full just quarter the sort year drivers that wanted and guide, you and It expect September-December sounds

David Heard

Amitabh?

Amitabh Passi

think mean, you're I Yes, right. I

slow be similar I the $XX The a half. out And to -- we second pushed will this the ship half sorry, million. first think contemplated to but half about release David about second first talk our the half from cover more talked is David very to in projects detail, of to the order did of being book expectations. prior in

call. quarter's last in that mentioned also We

an I So you're expectation due have add. what part David, these and to half in through of, timing pushed the been But ahead seeing is fruition. that that projects think, come back please out go

David Heard

Yes.

to are back book we those we is given predict projects pushed we're is I ship hardest think, had our just to slower the just Simon, what in the in expecting the to what industry, already not half. thing doing which add

half So tuning kind into of that back plan. our we're

what And it's the the bottoms-up so we're we've both That's RFP second half. the wins, line our any into systems view for project pushouts, laying put out.

Simon Leopold

my on for more is interest, give customers little baking wondering follow-up, could you for full Were your are a in there quarter? really any I'm XXXX? XX% What And concentration customer more think, concentration. are for expectations us bit if And color I what of in? maybe you the the year customer

David Heard

Yes.

and So hit one. let's let Amitabh Nancy that

Nancy Erba

Yes.

customer concentration, up not customer a strength of to are still in close that bumped top for our couple was seeing terms QX. So for the XX% a were in There there lot XX. we of quarter ICPs a But in that.

Operator

of Christian comes Group. Capital next line the Your from Schwab with question Craig-Hallum

Christian Schwab

anticipate I and had so get win going I Can number the just was? that the that starting total the had. design a a through that all X-year 'XX, you walked kind few every over you of of us 'XX ones in basis give wins through design that difficulties, for Great. what you total you didn't

David Heard

Yes.

it, it's do maybe that so through go just you to recall those? I the point. pluggables walk clear can Ron, want ones an systems it's for for important I quite and think through to think we because

Ron Johnson

We we a Sure. had hyperscaler the wins. had in -- of domain, number

applications terrestrial of was $XXX open million over we win for a is $XXX $XXX a subsea years million ICEX worth $XXX see for to million worth over years. million. line X them GX that to X We based system on had One that

David Heard

hyperscaler. Also major a with

Ron Johnson

$XXX is $XXX was a similar million. Metro. one an All third of didn't as these a ICEX with well GX to talk but about in are this as likely this, the between solution, hyperscalers. A range number million We specific a hyperscalers on

had motivated of MOFN then [ fiber outside the but number managed the hyperscalers. optical networks. We hyperscaler and right, ] -- wins, space on a also We

So to as these are do typically We East, operate land we what places in and wins. hyperscalers are service where Africa aren't leverage in so, massive refer wins, in They providers These Middle the don't had networks. and these expand. the but X new in Asia. to

service within other So providers. and into the applications expand these there are service opportunities providers to get into

the XXX-gig if that to spend as side desirable our $XXX the leveraging in to our the look with providers, and is first pluggable Subsystem space that X-year million. this win a but U.S. $XXX just Europe at major not And on then cable we wins, On has the And We in in would both hyperscaler. cable well million to ZR+ years million but with it, with there. decision really million a it a $XXX had technology split that systems booking, referred our say systems we strict Really, with in the service $XXX X XXX-gig the then sizable same about XXX-gig. as is provider use multiple the gig. Again, for potential subcarrier a the just and next $XXX GX is David over applications that service so had million period. And had a win point-to-point a million in side, a can't the applications U.S. be for and this anywhere time, we to a over years, XXX-gig, win wholesaler between a a that worth NDA, provider. network also we one over as in provider major win portfolio -- this will under lot XXX ZR This to $XXX

David Heard

Thanks, Ron.

provided or those all Did customer either that on that forecast contracts again, help? So set. being from again, are the design -- RFPs based the wins, and those on, were actual

Christian Schwab

tremendous. on number of And customers substantial is, calendar that That's for? to expect occur question more you're is Would throughout that there top you a XXXX? my then orders working follow-up of other

David Heard

we from had X scaling we'll here. we mean last be an about a time that I order have the of up initial we Ron got that call get quarter. when had this we year the almost, And XXX-gig be into as design think 'XX. sampling win example, the as then the first believe design major receiving in U.S. we orders then Sure. updated, That we that into U.S. service that QX it, provider that ago. win for talked the a talked we also quarters back would about, Yes. I happened half And MSO the

of the we're 'XX. obviously, fill out in half of curve growth curve the But of out people finally to kind needs the that's substantiate ultimately, why helps into this So definitely for back kind riding and the the kind inventory. short-term burn both as traffic bottoming optical the us out This of capacity XXXX.

Christian Schwab

clarity. Fantastic. Thanks the questions. for No other

Operator

Genovese next of from Michael with comes Rosenblatt line question Your Securities. the

Michael Genovese

wins and off. based second the much you this wanted the on this ]? The number on design new was -- having industry? something half that never an list [ can much through Like be share gauge to going before, is here. is second seems to guys And to it's the you outlook design the like you have, of of is unprecedented I that mean -- on like really strong, heard how specific I taking and you've like how And you half it

David Heard

now everybody a really digits, the When It's of question. kind into looked good I you us announced were growing gauge, X%. right? optical the look, we had industry appears have -- low single XX% at at year, where between to tough have that to look and year-over-year who's most far, declines so been in When with QX. right, it that announcing XX% folks announced X% mean, we at coming is

industry, we you're hate of compare for when the based growth based bottom on And what everybody it, improve I will half. everybody's that lousy the for imputed at in think in on we say curve the to the back front really year-over-year QX. will I a Now there for mean, be but half. guidance see the

But Now, don't orders kind get for that at position execute. just able the forget, to portfolio being our a us still the deliver get I we years where said, seen have and haven't that, I've orders these wins. of we're in and been to design company with X

do we're for best our what give to everybody So you is trying view.

I supported lot new that and schedules at between last years out our taking of an think more that share over X half our fair recovery centers see traffic if book-to-bill the the especially the these technology are start lot compared and we aspect. for you in products important a in the into data insertion. back is growth we of are rolled and seeing competitors. than But look for the for again, A QX XXXX getting by to

Michael Genovese

And Yes. but numbers particularly -- metro, gain feels that the seen any have think come GCI in quantify year, I'd you of is lot share the hyperscale in that share in gained ]? in [ but to also and feeling last right out metro market, kind Great. the of a ICP we've whether like in say, and it I

David Heard

not pluggable to -- the X%, in networks seen final work market mentioned anything numbers was the grow the just the QX still you're yet again, to pluggable front inventory in I curve hit. that through when the a lift a XXX-gig high-capacity those out. of X% think the for going come for bottoming for industry next the Have half people that's up the metro, and networks for the think I of because And XXX-gig seeing -- I in networks the reload as decline to

across record they're number the world. as subsea, of out well As cables laying a

figure. typically, you I'm it's this based with quickly then come maybe looks on will the overall year. get a share, sure back or That's X% but looking analysts calculation don't optical X% declined out usually it our see today. like what we that the market So very calculate down analysts

Operator

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

Karan Juvekar

on is This Karan Meta. for Juvekar

is just The of a question. clarification first more question

you guess million mentioned think you I $XX the ship hear surprise of detail on side. that mostly book Did pushouts so, sort -- guys? the was any of were ICP correctly? or sort I how And I on a of... if that that to the

David Heard

the give and midpoint our contemplated of shareholders of what -- not the our Obviously, view range and company no. see. yes, the higher best got, as than of that's we job executives what we Well, leaders to of stewards and was

we front at a second yes, then our we of out business on are scheduled primarily And of you being see in surprising, more the little And own actual to that being bit see just bit year-over-year, delayed obviously, ship half. on things people yes, that in Again, ICP book to look see wasn't clean the up So happening that And some you if half. the ICP as planned. their was we that kind that's why are QX. continue is and financials things shifting something decline of in projects But that quarter-over-quarter, and try some a front. had there. numbers a

Karan Juvekar

X pluggables that And this Okay. that That's question was disclose to may it's be there? not NDA for me. the of had in more you product. does win around quarter? margins? integrated so, last second guess, given And then an I the traction you if on impact any helpful. Just And appreciate saw pushouts that quarter, the details able but... so have the vertically much, gross a I you you

David Heard

want I clear. be crystal Yes, to

until as call until about on So last we XXXX. mid the our wouldn't talked the in we're XXX-gig of start --

on So and impact had QX. in that QX no our business

on America the to in we fabs, XXX as the haven't of through contemplated capacity MSO new the the year. the order look again, that scale drive talked we the that that based right -- XXX the begin at be new half about those prior. to and as Ron our get Although the engage happen that in gave something to forecast is, The into talked win that with contract -- would to is on here we we meaning the back number -- to we've then something to ability or the have, the first about, again, numbers -- QX, design in is we in win North able

not also dip the was that for the experiencing. contemplated. code is So we're not that an both industry and half excuse experiencing That's front

Operator

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

George Notter

of roster wins I content mentioned. wanted the just you back come provider to on

customers? be to with are rates clear, the doing of run Just to existing all business these incremental you're these

David Heard

Yes.

just I on side things. The is of QX system that subsea is the we incremental the ICEX And a think the win win certainly, new part, for XXX-gig system for hyperscaler indeed announced most line in the incremental. win. OLS

existing talked The moving we have to So the that those over on about. an we ICEX to -- largest somebody that's X were customer is that actually platform. moving the ICEX

George Notter

Got it.

Okay. trying second put now. up these to would to And specified? the and about that together want are the expected dollars guess guys ramp. sure make dollar I be you of assume strength that business also those at I into I backlog bookings least all here. the pieces of values that with or And just guess year specified then kinds I and Or I'm I just to the firm have wins, then it think contracted for the that these all given more are have half outlined, in unit of volumes translate

David Heard

language on we in you a wins George, wins. when them, are volumes And I it's roll These pretty many great. cases, win good out. No, contract, in question. forecast you here. then but based RFP are then you the it's And When -- our were think design that a they specific the sign

as the So design These low be It's a these forward. predictions get much range, we what are low these roll to it to be hard price given easier pluggable We because kind in the out actually negotiated as you medium program and great would them do high quarterly customers. X, and that from volumes Y range, not is volume quarter going contract Z. and RFPs, talked high That the of well would we've range. we've as wins, about.

we've So the we've client that's And that forecast these be these right? those are, from as gotten deals at. on based we the that worth landed said, should ranges,

George Notter

second half it. the is that big of it given Got conversational assume ramp? is the I And point. a element

David Heard

half the the pushouts you to reasonable mean more at the win line of primary and the the pluggable, from and many on that's XXXX. to a And QX. I ramp, of OLS the second them It's and material of side [ when that's look half. QX ICP portion second ] MOFN the the then system, the ICEX win,

Operator

line David Your next Kang the Riley. from comes of B. with question

Dave Kang

is question the My inventory first situation. regarding

we got more Just maybe are few And to exactly still inventories out excess quarters how pretty and there? we a much close go? are

David Heard

was half, of RFP up well growth, are ICP that be, should equal begin in things shipped book call it, to that we in million to think, just that to and that as first we do down and to continued QX narrowing the CSP pick prevent Well, having But as QX. the side, there pushouts. in an a engagement $XX year-over-year there half both enough will things half again, we're second believe on not the second this QX quarter based where the over on activity certainly, beginning the you'll number And project think the and, because are see and for industry thin I trough is, growth down. the

Dave Kang

multiple like Got these Are ranging amount? forecast And just wins all $XXX where is then from regarding these to there you million $XXX a customers? about clarification, it. a it contracts for million. these, just design hard talked Or minimum is from

David Heard

against contracts off orders wins mean, you I are are purchase right? wins wins all that. issued -- design where are these quantities or that look, then have against, then these Either No, or RFP

forward. what of feel XXXX good there's volume a low part that range why And of through we to just why educate try better high. go period wide time. a we what a that's of over that's And and we about such to on process, put Now moving folks

Dave Kang

like, they And when hit would then? start your, backlog to

David Heard

Yes.

to the this So of and be see backlog. you a we have hit for rates I think and start That's that QX would towards of year, start out you as in end in normalized I view get kind XXXX. the growth to of for mean, what the QX would

Operator

to back call closing session. for Heard will I our question-and-answer concludes remarks. That David now turn over the

David Heard

Yes.

than to the all the year on ICPs we hotter and their I services their we as the of than certainly, for But across and expanding you'll a they carriers lower and expected that on orders going planning networks ran XXX-gig was and services kind So start XXX-gig expected, industry. see held those as high-capacity routes. mentioned, bit think to are

go XXX-gig That's that front then the in to going the center, are the decline world was as still not the I temporary routes by X%. high-capacity to anything XXXX. I that half. and we analyst, XX%, on in in as next the front everything that As that overall market in not followed -- that's not we're pushing subsea normalized cycle inside there's albeit back second half, back optical the market overall probably to we're decline calculate, pushing of market half it the the missed growth a but data X% half the in to of nature, kind said, in think, we're an finalization for generation digestion, call AI says into ultimately, But to drive, optical traffic get we

pluggable side, model. us system contract kind of already on -- we our which wins line huge cost as But for these that potential in certainly, lining benefit and in ICPs, for guys, on significant a this history, seen nature value the just long-term not going brand-new hard-coded So have drive of ICEX the well as is, RFP a wins value. into -- are I fair questions, not company's it's to the think,

outside think for I important inside And So is data optical know strategy network cycle. for optical well is the and we the VI becoming all positioned center. next to more the our

and So QX I line a know The XXXX well strong. optical little the even with second the prospects more that half bit outlook, very, the not news industry importantly, in is very on QX and on growth great. better, into the or is

as driving see the efficiencies and execution keep share, continue we we'll fair more keeping it develops. heads than our and in focusing our taking operating on with market and transparent So to down what

thoughtful the and everybody. to you Have So a we'll soon. I be Thanks, talking appreciate engagement, great questions and night.

Operator

disconnect. for may This conference participation, concludes today's you now Thank your and call. you

Infinera (INFN) 14 May 242024 Q1 Earnings call transcript