CIEN - Earnings call transcript Q2 2019

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good morning. My name is Lisa and I will be your conference operator today. At this time, I would like to welcome everyone to the Ciena Fiscal Second Quarter 2019 Financial Results Conference Call. All lines have been placed on mute to prevent any background noise. And after the speakers' remarks, there will be a question-and-answer session. Instructions]. [Operator you. Thank

President conference. Vice Relations, may you Gregg of your begin Lampf, Investor

Gregg Lampf

Thank to Services today's Smith, and second morning of portion Scott you, Good Lisa. of Vice Senior welcome us and Moylan, With President for today McFeely, Q&A our CEO; Products quarter me Ciena's join is call. and Gary and President Global Jim CFO. will review. fiscal XXXX the

the an In section press investor this addition and release, Investors this website call to from the reflects as of posted that quarter. our well certain accompanying items we've presentation the as to discussion highlighted

Our fiscal comments financial speak our quarter to update third quarter our outlook performance industry our the current view as today and environment fiscal an and market second review 'XX. to our our as the fiscal for for position, well of guidance

and targets I regarding statements Before remind markets the forecast and to including be certain turning company and today. forward-looking actual will statements. differ we the long-term are you that guidance discussed assumptions materially uncertainties results its commentary to call include risks statements will over from this call that financial making any expectations, and on based the could Such about our Gary, during that cause current our

be June SEC in by file filing should which the required we in our statements is date. and with viewed the our and detailed of by XX-Q upcoming These be expect most the that filing risk factors context in recent XX-Q XX, to to filed

GAAP this whether future Ciena the obligation events today's information, these non-GAAP update of information no non-GAAP results of result new our results of A as adjusted to discussed operations. detailed or certain includes of to in assumes reconciliation call otherwise. in press is or included also conference a measures discussion Today's release. measures Ciena's

I that, call over Gary. turn to will the With

Gary Smith

revenue growth market and Today customer reflects financial good segments product exceeded performance flow of in and included strong and favorable morning, everyone. balanced gains. of our by long-term all very verticals. This revenue a we continued and growth very across giving metrics. share quarter a of all outstanding major This Gregg, well reported strategy, This Thanks, execution performance strong deliberate and significantly confidence quarter, our as Order and competitive dynamics. increased in business. is our driven a the across the combination visibility as our

all technology leadership continue achieved consistently customer with to base our customer deep and scale we and diversified relationships. Specifically, markets, build portfolio at across in high a global growth

our multiple increase And result, significantly expected and we consistent As performance the remainder the enabling outlook performance, around a across dimensions. outpace in turn that most partner in to better including is we financial differentiated stable represent This competition the believe strongest of the us we riding the and and is for customers continue to world. combination year. QX, than to revenue

Over customer the changes the design communications in of shifts competitive profiles industry, past the few as the including network to well the years, there happening in technology, as base have been and several landscape. and evolutions notable

these shifts how the playing Ciena. impact are of Our on our QX today illustrate results out positive business very for

remains executing on in intensely are robust demand. and demand delivering forms And this verticals. its capacity for robust market we customer Specifically, and our geographies focused various on segments, across

and offer deliver structure strength to sustainability financial engagement continues intently more industry Also, customers out models, really quality seeking the and flight these do over are leading to where the the innovation have redefine by who a currently long-term. to on vendors and

of rebalancing on vendors. but in of geographic with perhaps occur, an overall the equipment spend their continue certain dynamics our overdependence In industry less also an continue business. face on markets effect certain evaluate particular, customers Other to in to Chinese network

in been some stage. has it business benefit this on difficult to that impact at this to been business minimal the directly is discern, has we to believe time. our for of a place relatively be And it our Although dynamic

consistently, in favorable the diversifying our it our our while have these global our leading business we scale innovation, industry's As is of and addition to industry the to said underpinning strategy dynamics, deliver strong is execution leveraging also that success.

strongest to our respect financial direct our strengthen, position foreseeable most Automation competitive future. continues and focused credible market believes our that With to the reflection offering innovation firmly are investments the Planet software. fact packets and the And has a the particularly in optical Ciena of for leadership, roadmap strong given Blue the today results

are industry Our introductions the timing as roadmap and the frankly current portfolio well as in including today. feature of sets unmatched market our

second for demand head XXX further to we leadership program, will X to continues extend Ai gig deliver on WaveLogic wavelength And our optical this year, the As that remains into WaveLogic half grow. single with of later which track year. we systems the

the flexibility of leadership in remain Just our to the our enabled development that time-to-market capacity, as importantly, ahead ensures is by and this have we innovation competition. significant which and depth investment

access and specifically service ongoing long With from to and was base investments. aggregation Japan. great players another illustration Tier customer a provides our in X We benefit the the it North breadth to American business. the their spending densification providers, Moving continue for strong on frankly we diversification, of to had from showing initiatives, haul QX buildouts, Asia-Pacific, service benefit webscale American providers, yet and metro, and North

were In including North and XX% total gains under XX% growth deepening. in fraction of was relationships XX our are that companies, again QX, differentiated important a our driving our vertical. just these with and share revenue. in of three Tier this continued one were QX, of customers top American Once breadth our webscale X service providers. is is This business customers customers of expanding both webscale The

landing Asia We are India. new capture wins including share and service providers accelerating also in beyond with globally, Pacific,

well scale. grown key around among of world of and to customer in these global business business finally, half XXXX, our Because including we We significant we’ve our second optical organization with any of the advantage have with world within markets. expect resourced broadest with priorities, deepest to be strategically we sales focused the the and the go-to-market segments customer industry, and team of with those customer aligned three largest strong the to drivers to innovation higher the exposure positions groupings the in That exceed that essentially fiscal vendor. how other relationships class and foster combined agenda their our have respect to us market growth our including

elements, these are performance In gains. execution confluence us and that summary, multiple continued dynamics financial it share is industry with favorable and deliver the enabling outstanding to continued of together

our QX Jim? With that, I'll ask and results higher for the rest Jim us through the the year. outlook take to of

Jim Moylan

a strong top-line We QX in delivered growth Thanks, representing performance year-over-year. XX% of $XXX with revenue Gary. everyone. very Good million, morning,

Some Blue million, of include: packet services million highlights QX Automation to revenue from last ‘XX $XX.X in our year; $XX $XX of our of revenue fiscal $XX million, and of achieve us million. target software Planet XX% on keeping to QX revenue track up

verticals, revenue With $XXX contributed year-over-year; of QX across was revenue million, revenue and was respect up to subsea year-over-year; XX% $XXX non-telco revenue XX% direct customer revenue million, $XX webscale year-over-year. up up XX% million,

operating guidance for our than above range higher of our mix Moving QX confluence estimated and range. The gross reductions expected above million the for variable we quarterly compensation was are QX higher margin our operating except plan XX.X%, performance. adjusted mentioned. in favorable R&D expense given related just higher compensation timing a due adjusted cost as factors. Year-to-date, to to slightly was of to gross the on $XXX.X essentially was margin, OpEx, certain expense expense as strong increase the projects, well

XX.X%, margin adjusted of second profitability in quarter, adjusted With we net EPS the respect $XX.X of operating delivered measures adjusted $X.XX. to million and of income

was adjusted million. $XXX and from approximately investments. our We the In was operations EBITDA addition, million cash $XXX quarter QX, in and million cash ended with in $XXX

plans. on continue share our to Finally, repurchase we execute

quarter, X.X repurchased $XX million. million During we second approximately the for shares

We are buy to our by on fiscal end $XXX share year. back approximately million the of target in value

I guidance, matters Before current our I on general industry. markets comment briefly two impacting move geopolitical want potentially to on and in to

First, impact regarding our seen US-China business tensions on relations, not we trade to-date. substantive overall any and have

nature many many our others no have to the is to that this we given in important are note industry, unlike revenue there supply elements chains, While it to situation China. global exposure of almost

imports fluid breaking, is ultimately the Second, will if be to in be in place what sure regarding -- the long. situation anything potential put US very can't place light for tariffs we put on and the how it’s and from Mexico, for

range and strategies alternatives For the of on to our mitigation are in a effects evaluating distribution and Mexico. now, operations potential address we manufacturing

week conservative assumptions If the I number. QX that proposed, much by impact ability gross and initial preliminary this to that which it a around X% conservative in preliminary is several could our reflects emphasize our X%. as is mitigate place put analysis indicates our as tariff very next margin as

continue will situations moment are highly The carefully. China to them the we Mexico uncertain and monitor at and with

they any of we matters, we into or and yielded competitive fundamentally Importantly our by of either the factored scale. not diversification position for outlook effects global you, leadership have today believe alter benefits potential will these our innovation not our and significant do

range Looking to ahead, to $XXX deliver range. the XXXX $XXX in we XX% a margin fiscal of gross in expect and in third revenue million to million quarter adjusted XX%

year, the Given our half the fiscal our guidance increase the our projections we of of are full a half year. first and for in revenue strong results to second for position fiscal in 'XX, the

XX%. Specifically, the annual year this to XX% revenue we growth expect in achieve to of now range

revised And for higher except million. million compensation potential for incurring As in expense half to quarter plan compensation expect year, guide, With the that, $XXX OpEx $XX expense for perform the expectations. I of the we if quarter for be on be of of the to some we third except in our per compensation-related said approximately the With operating before, we for anticipate expect are booked we we new year. expense the in QX. on plan expense year-to-date, variable essentially to approximately our rest higher second

for In very share in quarter, continued today second we every our vertical. market of results gains closing, fiscal strong a posted including set

reflected visibility addition, increased confidence year, for strong In for gives us the in XXXX. fiscal higher our revenue outlook our

to in In and to our mid-single-digits our our positively a low us and continued to competitive position. of enabling a industry advance market grow business strategy range, strong dynamics of are execution that continues influencing the set

that, the With sell-side now from take Lisa, analysts. questions we'll

Operator

Instructions]. [Operator And you. from Thank from comes Paul Cowen. question Silverstein the line our first of

is open. line Your

Paul Silverstein

to Certainly guidance first incorporates margin clarification. average that XX% X% is impact, that correct? potential gross Jim, for a that XX% the

Jim Moylan

XX% year range we that is XX% not. for does we third the our it rest to of of that No, for and believe the margin gross will quarter No, see matter. Oh! the

Paul Silverstein

in the percentage of consists put that’s that’d if X% X additional mix just because… be So impact, proposed place, point

Jim Moylan

Yes. To a emphasize conservative very that's number. that,

Paul Silverstein

Alright.

Gary, question, sounds like outlook your decent it a webscale in Jim, the the for you've change for pretty Now fee folks. had

of the you second the in talking ago softer being of days XX think I half were customers that about group year.

expecting Can you're issues of So on some you that step strong insight off and out growth put second obviously, investment have community year just aware think that half I going the And peers you one of that or give of the heard another. us group. and we're comment some a that I cited what's revisit all of in Gary there? your the

got concern platforms you of could one XXX-gig sort related an it versus on impact rest that the those address like Ciena, sound XXX-gig question you've two then of And issues? if that’s XXX-gig in shifting the based now doesn't competitors driving,

Jim Moylan

Let me start Paul.

clear, to we Just vertical as were to good year of we to last good going grow. this that that last for And year. that to grow but respect webscale. never were said weakness going be going year we to We were we the grew grew spoke with as have said have we webscale a to we year. in not going Remember, or we XXX%, year. We much a something were with

came from not comments from All other weakness places of webscale us. and the business in about our

I’ll now other address let Gary question. the

Gary Smith

beginning the continue think to with We're we're that's have so I as we double-digits. leadership the we to share. two Basically, America, the to above in like Xs specifically, play Japan, in in to strong. webscale, that well It that's about service low that. growing grow But market just talking the embedded want done The half very that is and market we're also Yes, good And take a that very is very multifaceted. that to we North We’ve with webscale. have are wins But relationships technology and going single the driven is by markets Tier rate. global there, strong. growth visibility we've second well. to still the innovation in through, specifically them be that webscale and clear One, had to elements. provider not going appreciated business

better be projections on dynamics. So, going our strategy broad-based those a it growth pursuing. that that we’d benefits to that in seeing of been is in, And balanced based than we've are frankly set going we're the anticipated

XXX about Scott you the gig? talk to want

Scott McFeely

Paul it’s Scott.

in dynamics, a I'd demand of record portfolio. the in for had and WaveLogic QX, our we of terms quarter shipment product say this, existing competitive In terms

is look we that second in of the of half the height. record accelerating As year, that off

into you a that's like. dynamics, the So window competitive if

If we're that comfortable announcement, very we leading terms I the and with that you we're we competitive and we across market visibility up more the position. of our the the X, our demand in when and that as that look thought execution backed couple made half have WaveLogic we well at if great of importantly, second think you here, brings, the But that's with guidance announcements portfolio. innovation around path be on fact would that that

Paul Silverstein

enjoyed, loosely. speaking to terms us that insight the can you've growth to year? But in flattening just and do on you've you the give half clarify apologize referenced explosive as what relative the that I’m you're webscale in base that sort from So of customer second what to expecting -- growth you previously the the of of I

Jim Moylan

We to it good be would were comment not share. this the be it's year, not on to going going for be I'm going up it's strong. to the rate, take We're quarter. XXX%, growth to going but XX%

Scott McFeely

that if our space. As perspective. past, that’s high perspective, we at it’s the in the referenced, our that do webscale taking rates been a that growth look players I’ve year-on-year that that Paul, our was low we're I changed said clear in in Jim that share was think growing market single-digits, perspective space the double-digits, haven't And from you spend

Operator

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

Your line is open.

Simon Leopold

that telco to bit seems as give I'm upside little the of a of surprise click putting non-telco. quarter. you're the emphasis detail of maybe the hoping you But could it’s that and the business, It lot a on double sort majority maybe on in the more us sources of

I'm but American I this your India this is increased whether to that growing. is Specifically, Japan, sense declining, North did trying of the of get Japan you evidence whether a or traditional in better traction highlight imagine is customers is

your understand if the us So help of you strength the Thanks. sources guidance? really could versus

Gary Smith

Yes.

multi-dimensional, would answering of with this So would global technology, overall the call relationships, around it's to seeing I providers. I the and is the the quality sort flight the that mean start innovation, the you're amongst I the around that service what And scale sustainability.

Tier lot of global think of I I to service favorable And providers, around many think around Ciena. technology Xs also very there's big the seeing competitors. sustain sustainability a overall, that the ability those the the concern dynamics And roadmap. you're and towards the

think We it's of not macro though in dynamic, this and market brand up our year it’s results. it's I the think that's sort accelerating new. So showing

say I year. terms stable. order is very providers. forecast we In X that, the of North geographic have have good of America, and strong the would the service elements remainder we Cable, Tier a quarter flows the strong That's big to and with for

growth I that we've year this new space. think with that probably had us a in for little logo wins bit of

most EMEA up grew we year. was the regions, the Internationally, for of

good also I flight longevity in is seeing well think year, growth. of the quality as Japan indigenous particular, load, election and picking take of the think but the their it Japan. to concerns and to around will very are to We've and about other sort Pacific it, of advantage placed that of that And out we're be rest again, the strong it vendors think markets talks flat growth Asia that. well the the the given broad-based for up kind got strategy. growth I of India, I of

that the months benefits I’d broadly second providers. getting beginning come also the it, had some summarize gives we've that service So, We're the the half based. to to of last about X year good revenue in good very provider wins service and feel of it's us visibility business the into XXXX. We with the of over now Simon, how XX Tier very that's

Simon Leopold

What for terms would results? these you you consider biggest the surprise in of single

Gary Smith

think robust. has advancement think position, I the think the for really this. in various extremely talked forms been to WaveLogic competitive its I the And Scott of desire I

We to we expected be position but the it competitive have. the talk it that good does year, for think I to

Operator

the from Our of Venkatesh line next UBS question comes Securities. Tejas from

Your line is open.

Tejas Venkatesh

another of math had have like I I on outside year-over-year, If it of and America direct strong. particularly strength. webscale your grew my sources Verizon looks the question revenue right, North AT&T million $XX about

I'm if bit a curious, that? So you could comment on

Gary Smith

AT&T enterprise result in a for customers the and -- to We're Tier that had doing I'd Yes, whole good quarter with doing a and Tier say Verizon. Tier Xs down were and addition and half. market. for the the well we're smaller we're of enterprise the well. in Xs We set

very me. so and We're Tejas. broad-based, excuse well And -- it's government, doing very

Tejas Venkatesh

then would historical what that comment And would patterns? you for AT&T expectations year, and look this like your versus on

Gary Smith

we with As out growth been several our of part. beginning on share we at certainly of flattish the their had spend AT&T do to for said, year, that years of more down of expect AT&T. of and optical in sort to on loss the We've a any year

We year of they're out everything -- expect good AT&T, off they a truck. pretty of buying buy much

Operator

from Rod of Sachs. Goldman question Our from next comes the Hall line

Your open. line is

Rod Hall

volume, in first the on to the that execution here. just year. and least job are expecting guys the ship ask X Waveserver Nice if I track platforms And the with WaveLogic you quarter? this at I to by on question. still March product more the That's of in you the the it start to guess deliver end then importantly wanted on in XXXX are

Jim assuming I'm this still second slower was revenue, you The to And R&D just to about is that than comments as the follow-up I but OpEx, your mean, ask about want numbers, wanted sure you talked clarify that? about that to The I maybe should what be just that growing mean, to then what see R&D thing you I there. well. one

Jim Moylan

Scott OpEx to we the and Yes, revenue either Gary be piece I'll do of deflate then somewhat the OpEx things volatile inflate will and do timing happen number. we talk your quarter-to-quarter the OpEx, do can quarter the lots On [NRE], address we projects, because R&D which spend during or or first, question. can of

The OpEx on important we year running quarter; be that. $XXX gave guidance million we for the thing of we're to that beginning the note were million to going $XXX at track between a to is,

will We compensation gave if for the this we we spend guidance you. deliver bit year, a that more on expense

Scott McFeely

the answer on WaveLogic Rod X, And on question yes. the short is

announced in back all the we be So would Waveserver that's available it shipping execution. the marketplace to at year. products for the would from QX end it in volume has track and year, on bang been be QX, The and XXXX expectations. products calendar said next calendar And on in program we we our of on

Rod Hall

has that to about hard Did gig it's buying cover believe WaveLogic be rapidly of seems per could little gig. the hearing And pretty gives -- maybe that shift what XXX going I versus on maybe that? that to the XXX you Back particularly would don't from question, like volume, is keep back price talk wouldn't people gig people you a higher. it technology. it guys XXX in you're know be significantly bid to available just to But to DCI on the over just bit X, just the color, market

see year next maybe bit particularly of you on are how that dynamics as volume? color early shipping competitive just that start in in DCI little you a So developing,

Scott McFeely

the network. performance versus outperforms it competition. from Yes, the but gig it's X, the say this really I'd tagline specs WaveLogic if comparison at the you is application gig for it is at anything that advertised the every in And the a on XXX way, look XXX Rod,

future Now application in at every the space. we're foreseeable

a say of no we're the So with the And and question. great terms we that. that. we're said as track got confident in front in have deal very about the sophisticated competitive And they're in aware set well. with way, the in the roadmap. of a those capabilities by But very we execution past, roadmaps only us, of stuff buy I got spec also very confident very for record partially buying We've to on that year buyers demand doing very, our roadmap of we've existing they're visibility half but not of robust second and the set, as they the we when it’s on

Rod Hall

also quarter or just continue do accelerating because few America, think you out trends. just just you Or know quarters? could guys you saw And you comment were North next as strong the could much to things. going to there my the whether you said look April? think than so this America are on as in you one, And good -- of a that you've what do be that wondering, particularly a year-over-year the see already project would to be that, surprised I visibility, But last couple we April. guys North you in stronger growth

Gary Smith

yes. answer The is, to your question

to backlog. continue strong into to order be North America the expect existing relationships We both that, of visibility strong our and terms in

that Some Tier amount as publicity are got have that fair a up of a the well second the -- couple be in will Xs that now that of with ramping new half. now wins had we've of

or North around degree in total been not, spend again their being increases So player strong Rod desire not very before. it’s it necessarily, than CapEx there have talks ever it we've I a that’s I way to they think with. in discerning who sustainable got more America and of a confidence think their they have whether to high And

Operator

line Partners. from the Genovese of Michael Our next from comes question MKM

Your line is open.

Michael Genovese

packet you as understand gross strong how and sort margins software you the in line. by us of Could much did, not help was was second beat quarter you as particularly

So what is dynamics behind GMs? the there those

Jim Moylan

call within things mix, to of a band, very margin as or projects margins there have Mike, projects, for is margins. said a stage gross than given lot quarter, early before, impact of that good because margin less difficult a customer gross specific Yes are we narrow good us which in

which that both QX. things mix margin the had of favorable generally a unusual in differences. say speaking, And that so had than note higher accentuated some then And quarters and generally reduction. you'll in a QX gross cost I'd And services sort what

we what I I margin I a we're we're think XX% So company from today that's can to you. to tell as XX%. range next XX% said, going we're up still think to go but I year, think XX% gross that

Michael Genovese

Yes.

XX% want conservative, even would I this tariffs But conservative to on these it assuming it So you're but Because is be assume more are XX%, follow-up affect not like to that. quarter. to sounds that that. Mexican going

kind to I'm what like me Mexican sort tariffs, be So trying sounds XX%. It fair? to is understand about of of XX% XX% saying of at even to partial you're you're quarter saying you could a that with

Jim Moylan

to being margin. saying said conservative estimate our X%. base as QX gross next I'm for margin that place by of XX% XX% tariffs is then could what our estimate the -- impact And that in Mexican we

assumptions that going of a effect, we if lot haven't work that they to tested, XXX mitigating based on we're into into there's that place. Now, do come

to And believe. we base so say, XX% that's gross margin why is our XX%, I

Operator

JP from from comes Samik of Morgan. Chatterjee the question next line Our

open. Your line is

Samik Chatterjee

believe. Just And start is the proposal want that to escalates as in to itself. probably X% topic I off October, tariff there the XX% with tariff well

footprint alternatives So, that to can if you happen, over what are the the mitigate impact? terms short-term evaluate that were in to of that

Jim Moylan

no And would looking there like why are this what's the we results, thing. all, predict do, effects. we've if We've been are necessary. in can in a to That's it's But, we a to to for we're we'd even when out do on to mitigate to place assure at You flows going the in these we difficult things always I be to -- before. QX, and our put the that chain, give all tariffs that the imagine changing gone right of but I you That our put place if alternatives giving the that at if very, about very we things able you, tariffs effect beyond X%, things manufacturing, because other through tariffs. like things are number, like happen will supply place. do. potential we're before number include like conservative some can does going moving put And

Samik Chatterjee

relative just on the and to customers, their overdependence the you And can follow on up Chinese supplier. [PMS],

want rates this not see Europe, particularly now acceleration there around win impact and just -- in comments it’s you've year? if material right -- in a you if have you mentioned to if business. the on I You any win the seen rates in an can

Gary Smith

comments to I a lot dependency. driven make would now, in I elements, and is here. is is publicity, obviously for of a this Whilst dynamic, that couple think getting a couple that we've wanted play that a this And has frankly, share years. vendors of looking that their think certain not market of the to that, right of been I of very taken aware just which large a and sensitive it's Chinese very have by number of are least within it, decrease these customers -- customers are to

about ago. plays quality I et overall cetera. play exactly, time some sort here. a that Difficult which talked piece discern to factor also see it a of years into this these flight And think it I has come earlier. about I to But over dynamics two which of We into customers, to revenue, period of began been think

that difficult particularly amongst exactly concern overdependence being Chinese a impact there of and discern they it's mitigate number they're is us. to over what have to in to So, is the just an But actually looking on a time. Europe, large vendors, definitely, carriers, that

Jim Moylan

problem. be on seen security to of the selling be just that our serious with there's is first on have that no situation, how security whole American is talking vendors, high But the of sort certain which effect this companies which seen which we would affect holds a trade that the Huawei US-China set There's concerns markets, component I way around was makers our of share into real effect that clear, US it's and the Where revenue will concerns market Chinese element, And knowing to on no concerns, we've talking the about another the for in our we've is prohibition thing element world revenue. about. future.

Operator

Kvaal Jeff Nomura. of Our next the line question from comes from

line Your is open.

Jeff Kvaal

a Yes, clarification. and a question

mind the to of long what how I gear like think And how gauge Thank be essentially it the that would us there? be able is process the sticky Just revenues -- for the a impact who how clarification all Mexico question, from quarter then like the Jim I would that -- your apply, we proves on in your the half would Huawei or X% in general, is X% rate, be of implication Is from you over switching to that would that and another guess helping timeframe? to a vendor gear? you. a X% at the for is what impact quarter? tariffs on a point full any

Jim Moylan

I you and to for than On our want QX, much Scott, think base excludes topical margin that address any today, it's Huawei, give impact. you a not more that And conservative of prepared gross we're giving because do that? just to number Jeff. I'm you

Scott McFeely

think from, to, a one processes our it's a of new in take short expanded has answer of cases, because cases, give that a introduction In customer each some period I period anywhere product other tough white a very you time. different black relatively and to time. of basis year,

of run And also question. the here's terms a, a this lot move answer model network, there and systems. drive a or to So variability totally different it's about the give in how you wavelengths that of are they perspective, to typically, overbuild there also difficult to existing form those approaches

white one. give you black it's So a difficult and to

Jeff Kvaal

over with their speaking on cases. decisions obviously years, here if commentary some I'm mean, general, to more welcome sounds to so visibility, a and in all it's did switch telco these And they shade the But process, in past, it a detail? many gauge to your networks in about wanted into made forth. better like back are If points at some that slow Huawei trying wanted I

Gary Smith

the particularly Asia, had seen. can in wins, in about say, to because I on we've of of vendor. that and thing point parts Jeff, a give bit maybe for has of to sort two alluded been more can I it. a is of years. a it to said that particular I Europe, that's probably concern color this going sort on the when to This three-year dependency We've certain I many

have has Huawei we just not one seen both that. The them. beginning and that to big And the And out roll is year business been a we're a won most offer we Telekom and I right that domestic now. international customer So customer. been Deutsche you who Ciena the very has public with last would

So that your the I’d point in year that of a one shift. office of We a that taken about that's has give back example so or to integration, et terms about but publicly cetera, talked kind of you.

Operator

from Needham. Our of the next Henderson comes question line Alex from

line is open. Your

Alex Henderson

three with those clearly for describe healthy a time. of I quarters row I are on days have averaging guys XX% You seen growth. a extended don't having in of would about kind long what period revenue as very conditions

and Japanese you've displacement the a number and the vendors, historical give tailwinds at Olympics in Japanese got got you've Verizon, Within AT&T of way the above positive lines. got, of kicking to backdrop, you've strength trend you all growth

as far Huawei gains, reverse that weakened thoughts continues, in other that, to is it this it? versus we above Or revert you've the I because and against pipeline I of line tough around rate XG is to those year is and and X% to of the competitors your period to tougher starts built question start would trend the of put is some we're should just couple comparisons into into things to I three X%. appreciate talked the there back terms actually much so next so guess some for think we that about my comps it? share get How quarters growth about and at past this do extent think looking of what you

Gary Smith

Yes, year, because to this given year. for referring this have beyond guidance be we you must and

that, in a low In And of to sustain. as we context is say, a confluence years, range. should until really believe, that some X we our market, -- to I we had we which nine factors, growing, grown taken mid single-digits, rate to that when that's we low above the can we've for last we're a are to case about have the or per point driving year, of last single-digits growth think which eight years. the points what beyond we’ve context, up Just couple been share said, X of for

X%. year, will is X% So beyond to this to we revert our belief

off higher Now, much a that will base. be

should XX% higher. continue So achieve our think higher, year. also going going out. it at we're numbers XX% are we that be just And EPS run numbers EPS your our guidance we growth, a be if above say rate year, you can we and to be I'd although our this And to growth

Alex Henderson

a a if it. round to a term, XXX clearly question, XXX into I feed more One big is be XXX the cycle, Again nice going gig longer could. to is

starts driven gig, helps we over an the has virtually plus, the as where start dynamics. moving and at past DSP, So getting you decade, more that been away always in whereas the rate, supply last XXX chain? push all phosphide, health baud environment we to important everything are from But going about by order that in it concerned are the to higher of forward become indium

Scott McFeely

Scott, take one. Yes, this I’ll is that

your out about question we've announced So generation. there's what of DSP, first beyond to of performance still think the eke we the we next terms all, can in

control what around allowed over but and phosphide, And the of in WaveLogic the terms is putting has you're X. aggressive space work to drivetrain we're that that to property a destiny just drivetrain, in on acquired ago for of say that of own reasons to actually get there. the But one control I'd over and be out electro-optics and coherent extremely indium actually silicon done doesn't capability the innovation cycle the So on including also why still TeraXion be the include And photonics. went quite was it’s right, whole years we have we the us piece intellectual couple actually table the execution DSP. the innovation that

Operator

of Jim a Our line next Suva from from Citi. question comes

is line Your open.

Jim Suva

basic pretty I’ve question.

you import Mexico forward an tariffs, thus acceleration orders pending far? the or Given have seen

Jim Moylan

to is, that I quick answer think the no, haven't. we

I think uncertainty ordering think that, not it's any based forward the no, we very situation. on of a But seen I it. given fluid have

Gary Smith

sure. for days early It’s

Jim Suva

question up of and went kind costs, And quarters impairments line had it you’ve last some kind or In restructuring past In lower. versus is X an million question. then past, of it’s the accounting impairments. Okay. the and time my passing this the write-offs quarter few about to

the be on up? going and go going that you're having direction. up so when Why profitability and restructuring would would revenues into more earnings that's the I it side, going there? And should expect that other is

Jim Moylan

to answer Yes. we is the we this that in The year, earlier about talked that said that.

We we are looking operating in getting said We we do that, efficiencies that that XXXX. margin have did still to at confident or our a felt I XX% of to order a expense. we intensity of in should of say -- said in reduce to But in our target OpEx. we our have number the

to outcome And percent every probably costs of function so as or we a actions But XXXX. year. move And to of the have just take a in number reduce these restructuring reflect the of revenue percentage more across about we we through this try costs OpEx initiatives of those will as the out. again,

Operator

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

is line Your open.

Meta Marshall

on First question from of win. X Tier me, more maybe public kind just the smaller

to XXXX? consider be of continue just the run that Or what mentioned calendar that the kind of in that And get full we will half. we in half rate? in You year the to should rate see ramp second kind run second will towards

just you second when reflections ZR And then see timing, question? timing then the and developing Thanks. the just and maybe on XXX some is your market

Gary Smith

X Tier to expect alluded continue to to, would The ramp for you I 'XX.

to the forecast size But most 'XX. little of we'd it's So our our of what we'll in to I believe but second relatively come uptick for for that in see? expect We'll see business, half, the small, a sure. relative

Scott McFeely

as different though, applications And And you overall it on we the fully the last market. our marketplace I'd also small think of XXXX. on space, intend as look optical make said X that portion to I'd at timeframe. last in relatively X% the -- what is, that of timing we be say of question, the I some believe late market family, We it's a ZR we think with we do the the it’s sort ZR WaveLogic we I said announced up time spec in and call the very that the market. is you market remind

Operator

the Our next question line from Catharine from Trebnick comes Dougherty. of

Your line is open.

Catharine Trebnick

non-telco, Jim? of revenue that for XX% One total Was clarification.

Jim Moylan

Yes. Yes, was it Catharine.

Catharine Trebnick

the there was then I've And you some an chatter other Okay. America mind? some Thanks. the organizational North could question quarter address -- of the and is, wouldn't that chatter that you in if heard change during

Jim Moylan

aware of, were have don't We're that heard, having what always no there you at senior positions unless I I'm knows organization, but sitting Gary the major changes wondering something executive here, might changes in know. our that

Catharine Trebnick

be AT&T I been around totally be fair, some was leadership clear, around change to to in AT&T that be fair. To there's

Gary Smith

group larger runs is The who in which part revised the to in nothing go-to-market AT&T. of it’s worry, organization the how account just still a works. have AT&T changed a a another see ran organization, Yes, our in having to here, of position with not fellow we account. He's restructuring active the if taken time -- great there's we're

Operator

Fahad Cowen. from next Najam the comes line from Our question of

Your line open. is

Fahad Najam

new what's was you that’s driving fueling help at North flat commentary. market? growing? what's win as the the us growth other your your Can outlook? going is besides fueling question be to American happening So a to but the just your footprint you that's CenturyLink of detail said it driver in when can us what's understand American bit little on My Is AT&T outlook, North you provide outlook, other than

Gary Smith

would board. I share new it’s describe as business Xs. you new Xs, webscale, Tier X, that well. government, Tier Tier logos Tier well. the cable It's mentioned the It’s the Strong growing performance, across X space into enterprise is CenturyLink, as

the half of So And into in America. sustainable, have visibility given very we that it is obviously, the second really think North the year. it's broad-based we

extremely So it's broad-based.

Fahad Najam

wins? have relative software wins the footprint of than previous previous much Okay. wins And it much you content, is larger you've do to how recently? How new of the had your that

Gary Smith

America, obviously overall opportunities bodes had got but the Blue modest, for point I significant that's of good from I side of that revenue important platform. some sort strategically but which consistent. We've on an progress us. some of the validation think We’ve North to there, well relatively would say in Planet view,

space, share. the flight the we've obviously, North quality. would obviously, But But alluded think, number sort to a I into you wins in we Xs hugely a point it of I to cable of saying And a again of continue view America couple summarize to. that of not materiality Tier revenue, that take from by And new on it's had impactful.

Operator

comes final of Tim question Savageaux today from the Northland line Capital. Our from

Your line is open.

Tim Savageaux

whether My focus increase, with your at from increased or Xs number. would order that XX% growth more upside, was on spending wonder what potential looks driving bit of year-over-year those revenues least gain to And from I of which can of you any kind the of in increased of kind central customers is, relative competitors that if I at real on may in to metro growth or which for that characterize largest you, share fair something -- have unanticipated say in accounts, what pre-XG Tier at responsible two question: you the Tier a like it's in relative access look it you was sort perspective? the the the the you our seems the quarter question quarter. think comment X as can have of be in to those

Gary Smith

expecting would of did that say growth But we XX% and don't I impact grow the out those year accounts. XX% that will both of year-over-year. they think I started quarter. not certainly It certainly the

I think those an good customers. with we had quarter exceptionally of both

that project are customers we emphasize project We're those that extremely at cases, XX% right both but every up look we're in always well. a And so And trend don't the about in is maybe North don't doing big this engaged expect bit and two doing highly that year, I quarter it -- optical just only would in involved as in their would customers. every a doing, And think I they aren’t the American any said, growth are is spend that not emphasize -- individual we've those situation. they're now. I

Tim Savageaux

India in current wins, I I was what earlier, of a me, fair terms mean, in it looks to partially least the a and Understood. of that. missed with up I wrapping But assume it drag it quarter some that forward terms much looking summary? for comments maybe, that new pretty think, so are I guess, the out, just Japan. regards your at does quarter, by Is international, like seems I your customers is impacted central of much to flattened offset And of in more some the

Gary Smith

has Yes. of program. some been investment think India kind particularly expected year we digestion frankly, that, summary. -- That’s year massive a as And on well. this of a fair election We given I expected the

year. be We we -- good Also, we'll growth feel the as be and would the weight that second marketplace. half well. us some our of on will sort up European markets some strong the Europe have feel remainder is of for flat But -- Japan the view that into pretty think the I are around for of go year. that as the So for particularly come taken of other markets see will other the looking of we out Asian the

So balanced. of we pretty sort it's think

Operator

I'll turn in Mr. call no queue. We questions further for the back have remarks. closing Lampf to

Gregg Lampf

us Thanks Have day. up catching forward a several We We the interest. today. next everyone to joining everyone good weeks. with look appreciate over your for

Operator

concludes today's conference This call.

You may now disconnect.

Ciena (CIEN) 6 Jun 192019 Q2 Earnings call transcript