CIEN - Earnings call transcript Q4 2019

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Operator

Ladies and gentlemen, thank you for standing by and welcome to the Ciena Fiscal Q4 2019 Financial Results Call. At this time, all participations are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions]. Please be advised that today’s conference is being recorded. Instructions]. [Operator

like Gregg conference Relations. Lampf, ahead. now today to Please hand Mr. to Vice to would over the -- go I President, Investor

Gregg Lampf

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

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

how QX the us, discussion Our and front outlook. of fiscal we're and of in targets near-term comments well speak dynamics addressing our view today opportunity as our to performance, on XXXX as current financial a long-term and market

reconciliation operations. included non-GAAP press includes results of is detailed in measures certain adjusted to GAAP measures A non-GAAP Today's release. discussion or our results of today's Ciena's of these

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

the recent factors filing upcoming XX-Q XX-K statements our viewed These context on detailed and should be most our the risk in in of filing.

XXth and filed with by be SEC we that is December file required by XX-K to Our expect to date. the

result or information update to discussed as call, this future otherwise. events obligation information, whether new in no assumes of conference the Ciena a

With to that, will over turn Gary. it I

Gary Smith

Today gains. of leading everyone. strong financial rounding an results, out and good fourth reported top and market extraordinary Gregg, and share year fiscal quarter morning, bottom-line we Thanks, performance

and margin adjusted growth steps year adjusted and revenue and industry and fiscal XX.X% again important year growth that growth full the we year, profitability For greater drive operating including than for delivered the leading improvement. will delivered continued leverage the in We during took XX% XX% EPS.

We very any going year for to $XXX cash in clear over measure, cash cash $X our from forward. than the in million delivering with and a ending positioning generation more also operations us highlighting strong phenomenal with frankly a We importantly, most profitable and year by year had fiscal growth market leadership, billion had continue investments.

visibility our entering dynamics We are strong into confidence market business, and have key prevailing customer XXXX and relationships. with tremendous

clear our innovation are an enviable We the industry's competitive leader leadership. with and have technology position

particular balanced customer. any Our business, resilient global segments scale in one outperformed face a that market of and the have short-term has and challenges our diversification peers, and consistently in even created and or the geography

understanding of and forecasts Our consistently behaviors guidance industry have short-term deep has us met and longer-term customer that exceeded. enabled dynamics or both to provide we

us giving market While them business, fully there we in bottom-line we positive and headwinds continued head balanced them expansion. XXXX, view growth documented faster have taken our towards the drivers confidence of as some into and into than against are well account our

In of which later certain increase targets positioned Jim fact, has long-term this will us confidence this our in also discuss call. to

our from the for very drivers the several unchanged demand industry past and fundamental the dynamics largely Overall, are business remain compelling quarters.

giving segment EMEA. on this to growth a to relationships see with relatively environment, North build flat visibility true is recent America in and in this win on new our strength strong Despite spending continue to And Specifically, customer we overall business our service customer a within customers. provider particularly we our to spending and continue in XXXX. execute awards,

respect in aggressive growth a a to Asia certain of revenue India, regulatory to despite very other challenges of remains like in build-outs, there couple fluid meaningful saw reduction XXXX. some after our With a outlook present positive network we years and companies, fiscal and opportunities, continues geographies Pacific during environment.

we Given to there in in have India good modest a position, our our some compared and market XXXX. growth line position overall of sight competitive the key to in accounts XXXX

Regarding our in web-scale position sales XX% market than of grew accounts. customers has broadened our total customers, to global clearly XX% strong business market key market. XXXX. the meaningfully. to relationships Direct And in web-scale incumbent we several established we’ve a year-over-year, are year. greater now those led in considerably This the DCI XX% an revenue representing benefited This share for

although to rate more that believe recent grow, Going web-scale will we moderate years. spending than a forward, at continue

opportunities DCI fully customers share we as a beyond. financial to global long-term. strategic offer and quality, are flight technology a XXXX increased and and partners with broadly, a strength market engagement However, who to to across expect continue those on and and leading basis deliver innovations seeing the models over stability multiple engagements segments, pursue to in to our market More we maintain

A we environment These in operating we Overall, to have reflects transformation needs. a within made how network unique and and our a and scale Ciena. in key are the growth fiscal investments architectures, position automation represents this and market ability traffic we address several And that are XXXX. diversification markets, great of and proved us we've favorable these demand significant for year enable of that network driving opportunities, strategic our ago, high-growth we a over areas dynamics opportunity the innovation, significant where years. last explained

with XX% grew growth led web-scale our revenue customers. Non-telco by year-over-year,

fiscal we advance in stronger. optical innovation even business XX% that and We leadership grow continue to to very that business a with expect healthy in nearly our grew XXXX,

obviously very modem, seeing. were share our made from development house We extremely fact performance I’m Customer including continue our pleased generation Customers with we've already the offering. in are XXX during progress X, remain of Ottawa received. at an several Vectors well first and very we engagements market optical of with recent well ahead ramp solution, POs lab WaveLogic the coherent confidence event next them. will we be of any as great this confident in that commercial gig of to the On to in the demonstrations Technology

track to As XXXX. have begin hands fiscal the to such, half to QX, QX revenue momentum of are our and we second X in with continue in in customers’ in more expect WaveLogic revenue on material

designed At aggressively this segment Ethernet XX% this had with year time Packet our space noted Already record complex customers and open would grows. Tier global solution to year, we is our revenue automated, we also customers, We and Networking last evolve Vectors, the means lean that expensive Adaptive a Packet growth just fiscal options. with At market expand we IP more metro of need simpler to market applications. our their Layer feedback attacking year-over-year. we access IP are our IP solutions. XXXX, effective a capabilities in Networking X in is to two scaling IP be And networks our Adaptive received X resounding routing traditional and of with in versus nearly augment what Adaptive addressable in for as deployed cost that

will look doubled service with Revenue complexity significant our fiscal our customer transformation. as including And finally, service their meeting some play This critical from reinforced in our providers network XXXX, the where growth annual network tackle to software automation our in entire our Planet intelligent this globe. in a year, and we business building included Australia, Vocus Blue out business software wins, to target. Blue role across revenue portfolio commitment Planet

enable We closed automation software also greater performance in and our service of acquisition of a out network heading Centina XXXX. close-loop recently rounds analytics provider to capabilities management the This us and leading even positions for assurance solutions. opportunities

and our leadership global continue business. and scale with we segments, leverage customer market for compelling advantages and and and capacity, financial differentiated share performance and portfolio we the going roadmap forward. those directly to most diversification credible across our today strong are our across these have the technology driving most investment As Coupled the geographies robust gains

I will that, turn to Jim. With over

Jim Moylan

Thank as higher expected the you, a our XX.X%. was than XXXX. million. extraordinary revenue accounts This variable morning, in marked and in to compensation QX doubtful Latin in well everyone. to performance Gary. one-off for adjusted operating the Good Total million. largely tied expense an as due a margin America. was quarter quarter the end year, higher gross strong charge was Adjusted $XXX fiscal was $XXX strong to QX

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

In addition, and million. in $XXX million was our adjusted QX, was operations EBITDA cash $XXX from

we mentioned, ended and quarter Gary in As approximately investments. billion $X cash the with

the above share to Finally, year X the million which to points fourth XXXX, of fiscal believe Gary quarter, X on to for execute growth our annual growth. amount year, market we approximately out $XXX XXXX. In full With million X% for revenue the above repurchased we and as million result X% in fiscal $XX approximately from performance percentage repurchased market XX% increased of expected. our close a as significantly we with that well plans. target gained to as of buyback total shares approximately respect performance this rate continue share our mentioned, We of was

of our greatly million XXXX our represents Adjusted cash to was target flow adjusted fiscal rate. EPS annual well exceeded target $XXX for XX XX% was above income, XX% $X.XX, percent growth And which XX% which free plus operating also range. finally,

XXXX. in the again updated financial fiscal set through of in providing this three are an strong targets, performance XXXX, we year year Following case

reflect part, the most execute. confidence targets remain the long-term and continued in about our to the same For ability these

will speak full call. will presentation only in that our website have I’ll and The after few address the long-term metrics those to this set be So on included that of changed. a our targets earnings posted be key

on per and approximately X% maintaining revenue over start, target driving focus rate as the three growth rate our continued in To next year over three our the a we September, to next increased a adjusted With years. target of annual to profitability, growth years. share in XX% at we previewed continue per earnings X% we are

margin start with an I'll operating adjusted update. And

to operating revenue a XXXX. From confidence there, as to an we some target adjusted Given gained growth we increasing is long-term expense be as XXXX, now operating operating margin efficiencies improvement, and our as in sight of for fiscal additional well disciplined operating our line model, management, now and XXXX. for within operating margin fiscal for through goal our XX% gross margin a margin are to that have well XX% continued XX% adjusted achievable performance as

years margin continued that operating our set our know future for for performance. out many Ciena confidence Investors targets reflecting in we the of company have

have space. a in again operating these bar higher a target, performance new for for a have to operating And ourselves we targets, set XX% next achieved XX% target higher this As for of our new this margin. done year. We've we each margin sets this

years. three cash of of our Services annual next targeting to segment. adjusted our to now is we growth Final in we are annual income long-term to flow Blue revenue respect and our update XX% cash for are expectation targets XX% generation, over With for operating are increasing approximately the Planet

to target that For segment, million revenue now XXXX. are our fiscal to we in for $XXX million reaching $XXX

these long-term as in headwinds, industry With provide I'll drivers targets takes while earlier, our view for against positive into our fiscal account mind, expectations Gary business. year balancing the mentioned XXXX, of into which, a now

recall consistent we revenue grow You in consensus that when September, will that to at that we financial XXXX said QX results expectation with in the reported time. we expect

for long-term We level our revenue years to two the growth growth X% our of return after rate X% And low extraordinary growth. expect continue a range XXXX. target to reflecting that end of of annual target to

that approximately expectation grow growth by mid-single-digits, in low faster Specifically, given expected continued for and XXXX $X.X to the our consensus of it closely leadership. billion. market driven market to And gains share only revenue with current the market represents the aligns than is

range With year XX% we XXXX, a efficiencies additional expect drive of improvements expense, taken deliver gross operating steps adjusted XX%. we've respect and the fiscal to the business. across last for significant process to margin As over to to in

be expect down million we to flat XXXX to average slightly per XXXX, in from quarter. fiscal $XXX to the result, a million levels As OpEx in range $XXX of adjusted

that increased operating XXXX. As an margin target XX% I achievable mentioned confidence efficiencies goal adjusted is us fiscal gives drive our previously, in for this

XXXX deliver quarter the first finally, expect following: we to speaking And fiscal to performance, our

adjusted to Revenue of adjusted of $XXX a operating million, with consistent expense margin gross $XXX million. seasonality in the million we and shared XX% $XXX in revenue disclosure range; approximately to range previously; historical XX%

with close I'll this:

We our the space. market in established are leader

customer including we press business financial technology. to segments The performance competitive deliver down geographies, diversification intend ability leverage differentiated global to our We advantages, our to aggressively in in applications, to expectations. and our our continue and ability on our to target leadership our scale critical meet remain outperform and and across our consistent,

XXXX, continue our proven the of growth in about feel increasing verticals. and business, strong We basis Year underpinned and we with the to and to enter share, ability navigate form by New market broad-based geographies ability taking challenges, great a strengths drive visibility foundational resilient These and profitability. confidence balanced across our and and great short-term

now sell analysts. the we'll from questions Sharon, side take

Operator

Instructions]. [Operator

Kvaal first Please comes Your go Nomura. question ahead. with from Jeffrey

Jeffrey Kvaal

the of I'm web-scale from, wondering lumpy I came in this there XXXX. where discussing the some if a variables outlook little we could underneath it last for your of in Networking terms start by particularly was bit quarter, ask X% sources revenue down, up. Packet because

if could what for it? view, bit kind what help or that So happened little us quarter means you the either in understand a the we'd of XXXX about appreciate

Jim Moylan

Jeff. Sure,

we project-based are diversified First have very we and of all, a business.

among customer movements groups. So, saw to in QX. that you And there are always various going be

and XXXX, geographies verticals. in really future As broad-based across we expect we to growth a look the

North of we We a expect bit I’d geographies expect the highlight growth that different America. in is what a lot across just and verticals. particularly point broad-based providers service of with

Jeffrey Kvaal

Okay.

that, Just revenues guess India. level success what quarters. better some XXXX. in sounds that the follow-up in the other regions be in of like to to in there, help Asia has trajectory Japan I Asia talked suffered the It of to prior somewhat you've and Because extent? in going about confidence in Pacific on Pacific the What's that's from

Gary Smith

this Gary. we Pacific. have Yes, is growth Jeff. in -- expect We to Yes, Asia

years. obviously, in going that and markets what the of that's a highlight year. the think expect we But XXXX year I dynamics for realistic demand, momentum think for I feel Japan orders the in of relatively there modest had some to like have we Australia bar Asia and good some And given next to was frankly that customers given bullish expect stronger we from more specifically, India of wins and have challenging are our low the been of reinforce engagements think a seeing in probably a to last we We would around going we say be couple in year. the very I said understand sort number the continue broad-based and challenging we and the India cetera of would guidance is Pacific in I certain have very to we of there, visibility India. growth also that year. would challenging I well places think all I Jim India, I guess in XXXX Also very into and good around got et got the there. year Subsea good built is be have have to I that. the

been I think we've on very, that. very realistic

Operator

Next with Raymond James. comes Simon from Leopold question

Simon Leopold

explain the your like maybe your you. question. for fiscal -- are relationship, click web-scale is, appreciate you couple us you in kind Thank think for X%? growth hyperscale I double Appreciate prospects vertical or particular Great. Part web-scale correlation this of maybe and address. many Thank lack wanted associated if to the and just I'd 'XX of because maybe of things for correlation? servers I market, revenue I taking the that. on folks What appreciate could see your switching you to prospects within of help implied a market understand what's I'd you one to have the assumptions? how or drivers you. with And the forecast

Jim Moylan

part second Simon. of then and answer Scott the start or can the I'll Gary Yes. question,

the that, web-scale I'd space. phenomenal we've First, had years say two in

now. share. they sector really we As their think that they've CapEx have grown XX% We’ve at in grow rates. will over extraordinary grown themselves, We that gained right

to range look we something. or to CapEx X view In our that that it's get That's that we we moderate. in environment, checks. into to think but from our XX going the XXXX, our expect going We to share. probably what is their grow As it market is maintain

year. share, think we into we hard given have next to going to market market we be share such move is share our I but as a it to high that maintain expect grow market

Scott McFeely

it's Simon, And Scott.

In see in application two from maybe if as that with to the different numbers of from continue geographical And looking us have seeing that that at What's you other some and we with. One think the demand really in just concentration that just coming center may dynamics, the absolutely deal some we folks you future. the marketplace other breadth you us And terms in different of I customer shift, the of at the looking forward can just that growth. you're is port dimensions. expansion; of be look than same data competitors don't is logos at bandwidth us see the our then here. of you at sort other, see coming the footprint. growth We

Simon Leopold

Great. looks that North pointing to quick clarification, right? please. like a just I if got telco, a you American just customer, And might XX% verify I The if one want are

Scott McFeely

That's Yes. correct. absolutely

Operator

question with Cowen. from Next Silverstein comes Paul

Paul Silverstein

On the Infinera about a share. stabilizing competitor Jim, a of concerns and taking away been Gary talk XXX front and has gig, lot about there improving lot of

a narrower So here, questions broader a and question. two

there's to has WaveLogic that, are you been your the the will question, having on that, in I It near-term. On or comments investment the X about not talk that timing that like is from in you narrower confident the community sounds case. shift trust re-spin.

You’ve your are you competitive hand. from in the Infinera key question, and in generally customer particular in competitors? broader already But got from seeing environment what orders more

Scott McFeely

Yes, Paul. Scott. It’s

than the in witnessed is by the to labs that exceptionally we that the September, confidence Vectors away had this placed customers last they and And several us expect said we that before hands about performance are from that perspective of Just on we call to witness his and And this thrilled QX, capability on far many our we’ve in important away say as our and that But we fiscal and execution we starting walked and the generic program the to group of way. it fact which more forum the where have technology come QX. performance with X execution my remarks. do execution, the orders by the just in would which end to we both Gary confident WaveLogic since in and perspective. question revenue which is talked reiterate, hundred for their I and have the talked not had witness as them

So we’re the on that thrilled and feel about position great competitive one.

Gary Smith

Gary, market broader in which providers. benefits X just is of web-scale, XXX WaveLogic in has the we’ve with the of frankly the on causes gig, we engagements stuff we’re seen gig enough any that that over WaveLogic most out There seen for that two the is coming frankly, speed in quite really of service that of Paul, this in had to In we’ve the advantages dynamics, to in reach the that’s in the deliver of XXX now. going years overall we’ve not AI, terms question, skip competitive is XXX competitive frankly and three them think to terms been and the requirements which with some

Paul Silverstein

-- at think quick I are one could worse do any look clear it’s follow better I I the question, but fiscal will there ‘XX? up? for just we if comments hey Gary, ask I one-offs as Gregg can one or from -- your

Jim Moylan

or revenue what we You talking are talking are about?

Paul Silverstein

worse, a But look meaningful particular are any impact Vectors I are product, cetera. mean from from year? et the better any there on of revenue markets, diversification Jim, customers -- standpoint. from there regions, theme any we out particular certainly revenue or the has for been over a as sorry, those ongoing across I’m

Gary Smith

over make can that those we well some couple challenges, last India then some year. I certain such what had years around this or strong scale of saw navigate way think a markets I which that breadth withstand now like it and three We have We and challenges the pause are pause markets, describe real pause. the point of our would is certain those understood. we’ve to is, think and I last two customers go years I in very challenges. for seen we've And got would XXXX Paul, they some that through

what particularly in think was was strong web-scale. XXXX I

to that We continue moderate more grow to expect as but at Jim rate. a said for

strong particularly think North think if I think that the broad look will that. we’ve growth in what more strong characterize in at what some that was But had. a customers across absolutely is just seeing the segments, very I it you XXXX XXXX American as service moderate and and we're ‘XX, wins I across of I service web-scale was providers. providers be market

Operator

question Rod Hall Next from comes with Sachs. Goldman

Rod Hall

into drill talk you there. people pipeline this to stronger platforms the seeing sort wins. just could things Are IP you a there revenues what I packet Adaptive bit I alluded -- about onto a wanted market? I off The and you the number. more little this. And seeing of wonder talked Gary think know you lot you're about to of in I out switching routing are

know that nay drive that's the question. ahead that's then up. follow color that's I have XXXX? then you And first of one on of way what was it's higher more So what that networking to winded, platforms in I look And likely Just does growth trajectory -- expecting? my since long were like possibly we for

Scott McFeely

Yes, [Paul], it's I think Scott. --

did we migrating packet definitely they at with they packet, of terms legacy number sets. IP In we've aggregation approach what it benefited we benefited at a rearview QX, the we're drove really people -- looking when the networks at on to applications modernizing and mirror some of are more which Adaptive that. in looking of the And their their applications go it actually number from look Particularly different an wanted I and that that, growth access with of from infrastructure. projects a a deal from when onto is looking and to in a modern, call services to a TDM

that that around grow expect faster that standalone start product there at set. make to we people packet for for XG an than decisions our same do perspective think opportunity aggregate But application see start forward, numbers. to driver. portfolio We to also and a looking continue from forward look I architectural as portfolio there's Looking that, as to an

plan, they're higher the haven't plan, higher think year the three-year in exclusively but aggregated with in what I we double-digits three targets updated numbers. We be consistent the our very last -- had don’t than but which is

Rod Hall

Could there Scott, two right trajectory word with to a or what's just XG regards you could expand now? that comment visibility about revenue and you -- on say happening and

Scott McFeely

think those on number the right from is, what's to now Yes, in in bandwidth us network. benefiting of general, going bringing infrastructure have are different been the is of those are I And drivers a packet-over-fiber drivers that more on business that consistent.

I think not they are deployments, XG, going onto network, to because but vendor now more of be wireless consistent going and what's new necessarily networks augmentation on new decisions that. yes, at on right access going them forward. a think architectures looking making bringing, of which Specific is in lot bandwidth to the standalone their I is

standalone a going really to for think but the look as displacements that's they for I come type ourselves, start and forward like conversations in deployments, those vendors going up, think at new be I XXXX future architecture to there's opportunities timeframe. competitive

Rod Hall

that? was follow -- on Could may my And for? mid-single-digits India, Gary in ballpark put any are kind you it you then -- you I of on be quantification just or mean was the growth. up do moderate talking what look guys to Like there, just said

Scott McFeely

the I pretty that up growth in range, single-digit India, yes. kind of would -- say type sort performance, from of of XXXX in

Operator

Jefferies. comes George Next question Notter from with

George Notter

I go networking in to wanted packing I the back guess to business. strength the

big other very what North is guess major also my with project. in well. early is I is X project hunch that a those base my cross-connect impression a still is seeing customers think customer. that as American there -- Tier I a My it's install dots, I some you're platforms connect replacement to is that and Just there days impression and many of

to was hoping we the of and in of picture terms Thanks. of you can I get any commentary give application to? new where in kind and kind are project it what on that grow of inning wins us So, kind just could there for

Scott McFeely

two I George, things, it's Scott. guess

growth, than So was for that. of packet the that first the of application one broader drivers it's all,

how wouldn't that I one fixate but itself, it. that, that just resonate of do On you So, certainly the on was I with drivers. phrased application

both number we're of I think them. the of early customer customers the out terms I of it's logos this but front challenge think that innings, there have also that in in in,

Operator

Jim Next Suva with question comes Citi. from

Jim Suva

far to very you much. Thus is absolutely which do. the have on questions revenues mostly the Thank thing been focused correct

So margins like came my and to looks a maybe maybe operating little you is right, off math If a expenses your in I it bit. on that. this operating operating I'm XX% switch like seems quarter, around it costs if can OpEx, it and down but margins us bit Or higher you for little doubtful of of maybe like comment about related what expenses Is were understand like a to, you a made us that higher. seems adjustments? can operating it accounts bit help have some kind would why quarter? than little thought this

Jim Moylan

really of both our little than corporate part, million our our bonus over in $XX had the sort quarter of higher we of the sales commissions large well in fact OpEx was bit extra incentive because on regular comp than expected. expected, and and is driven We in year. Sure, performance expense Jim. by fact, higher it but a the We came in mostly, on that Yes.

that as So our good a for for employees, good performed thing it's you a we thing and frankly. well

And then on have in we the And South thing million did it took debts $X going what's those was for a other accounts. roughly in is, we million of charge to those number a $X accounts. -- reflect America, bad a

our plan. So to is the the for close very for quarter overall, year and OpEx

it against QX. we comp by debts driven all the OpEx just of incentive about plan, in annual our had charge bad the at look for you our pluses during year that $X is If million and this

those take for out, the very OpEx close year. plan for you we're So, our to

Jim Suva

the for much so you Thank clarifications.

Jim Moylan

And the other thing repeat. I’d just

the earlier, from lower year $XXX which level said going per million that quarter a down reflects to I in XXXX. to flat to slightly of for $XXX OpEx we're million experienced XXXX, to we As the return

Operator

question next from MKM with comes Michael Partners. The Genovese

Michael Genovese

WaveLogic I'm sounds with can revenue in them I applications. typically to uptake wondering is then X, So, given office it in that sounds like the mean it have in January how first going the seen or have testing just you're get field and long Ottawa a And and QX like stuff it come for we strong it more take? the timing? to and it QX does customers

Jim Moylan

Yes, Mike, QX, recognize I half the year. the of will but revenue in start second think we'll to material about the way it be think to is, amount significant in

Michael Genovese

and getting to just an maybe to is year. I mean Is than XXX maybe can expect subsea more vertical in technology. G we get well out sort in the or have And cycle really a talk, life you guess XXX was importance to hyperscale this this we we and of about Okay. in there in is the of the the I the that as vertical vertical I G more hyperscale accurate end, here? product then sense the talking I'm that that that coming need growth to that

Scott McFeely

go So, very are that X optics. future. the folks and very, near have demands that, way fiber in highest WaveLogic I would say high be very, it will the always to constrained bandwidth will is growth that, performance that And

cycle having things gig we like to as to off the regenerate to ship the or today. go on that be coming going will folks are gig just talked able and though, gig technology key important XXX They to the new XXX that's it, XXX cycle, XXX G capability to starting, So, being When are say about because still though of client point XXX that a out anywhere fairly gig, able and move even X switches proposition it of quickly. those routers carry being gig. to you the value is I without globe XXX is rates a WaveLogic want to

So, us. of that's still in front

Michael Genovese

XXX telco in G Thank answers. was agree I of the appreciate and hyper-scale you us asking I about market and that I cycle the the in Yes. Scott. particularly front

Operator

comes Chatterjee question Next JPMorgan. from with Samik

Samik Chatterjee

Gary, next if longer of or to then accelerate that -- in some range? revenue the do guiding have in revenue What's just X% targets, wins X% some I share a you that you spoken the three and fiscal -- the the you can to of you bit you as ask continue to X% the time particularly it the headwinds we about over a year the level should in confidence of in more reiterating confidence and see headwinds horizon don't are about that here. drive X% to the necessarily as giving market confidence growth the term X% guide, year

Gary Smith

at I fundamentals, I the very, think very that's market dynamics and think solid. you look if overall

when at the and take I we've got the and also you If have that. things, got met we look of accurate high the of any it, wins years, degree counting exceeded a with plans that across look think we're and globe, -- we've markets would these on we've few intimate quite the very it's balanced been it the confidence visibility I over not that that. customer say to very we're into realistic balance or miracles either customers. a And very We've in or frankly at last We view it. of it. those on and we

think we good I So, have very it. in confidence

challenges and some that. where the dynamics into a think good good are I got visibility understanding we have there we've of very

which We have great give plans privy and this their intimate to beyond. in us both year and customer relationships,

to and the I enjoying got folks and of are well-documented, quite to But the demand spending some flat a it other would not folks to on we tailwinds that is Australia X level, service at space them focus think that's there’s providers and look have America is of down. specific of -- issue understand provider with in say North And to XXXX. and rightly sort the CapEx deterministic in I lot EMEA that's particularly, confidence what in and and broad on us they actually the both very overall and the in think I innovation relationships headwinds why macro And on providers also we’ve leading think service Ciena, for don't tend and for which it’s service we I in going it the a got I us, we’ve the Japan on. wins as are spending that it’s Tier forward. had

Samik Chatterjee

a use balance here. just follow or on up And the cash of the sheet

strong ended balance strong number sheet. cash with You the quarter and a

be So maybe or are lot that of what Are products appear you you given to like next for the options accessing considering what options? are are the repurchases the also considering largely the generation done? a investments

Gary Smith

choice there appear good have smart we not, us. but the and We're out to a would Well to to be and I have shareholders. pretty probably then generate available those for several options, are for us. think acquisitions they love you do will cash to And over years to if of good preference increasing going a continue we obvious. name they next distribution our are perhaps acquisitions My could the to own make of if some would lot

Operator

Morgan from Meta Next Stanley. question comes with Marshall

Meta Marshall

XX% would those question operating margin of whereas are certain First Huawei Europe just XX% where a on out assume just a of savings be kind be of And we OpEx Should of is comes within it That maybe then sense most from of give question, looked ‘XX fiscal kicked that likely. lot and of OpEx like there target. and kind wouldn’t discussion second of, has coming savings revised been kind accounts. that is kind to the about of looking helpful? more Huawei,

change around couple Just be the would Thanks. any helpful? in customers last over weeks of commentary European

Jim Moylan

to Thanks, the be of grow as take we that also leverage bit will first a we will it and our margin continue expect And OpEx Meta. respect faster improvement. part. increased we targets, than higher our operating combination with believe of I revenue our a to

next to call and things can -- a business combination will year as we go done year. So it's that of flat OpEx, respect the a OpEx our to ring our last into of get of why down that's out factors. With to we've efficiencies over those to we lot be

disciplined I But very speaking, run to and way kind opportunities. will for continue in faster as of grow OpEx. OpEx will going than we're those generally look we say revenue our to a We just

Gary Smith

or Meta, I Inc, changed. European context it's around on China the haven’t would the dynamics that really say particularly

it's difficult how regard I what impact will in own any considerations carriers regardless player, carriers, a And got say think that certainly I play. of our are But now would more a large number over business for it’s to to-date share much this concerned on play an there's security dependence such of and on think are all geopolitical showing sensitivity out. engaged about to think market around presents I other in European our of discern opportunity to the particular certain that predict I we're now a I and vendors, all in you’ve a up and whenever us. obviously difficult a of that of particular financials think this number and becoming the of conversations in

mainly are these type that decisions. stress would infrastructure I

they carriers, the opportunities engaged are are into and number not not on as certain quick to expect over So of this a I player. think major an would quick presents which they within us show a numbers. But dynamic of are up you we dependency for with

Operator

Next question comes from with Stifel. John Marchetti

John Marchetti

I spend Centina you just kind a little hoping, bit you Gary, could was time here. acquisition that that of of snuck on in

bit Just with software talk sort sort like a feels outlook offering combined and of little how the rounds improved business. total that that what software of out an for

of where the really kind market to like and forward? curious, you feel to now changed real for of attack that growth going discussions tone a provider has know look or that be if Just for tenor contributor with you service how

Gary Smith

Thank, Yes. Thank John. you.

a does I round of ways. number think in out it

the generation entry next years, solutions three pain at we've address Planet question a early that at lot the how into around dynamics sort and to needs. entrants automation targeted the we're to -- of we've think get Blue points points their to particularly within around portfolio I seeing, a this overall learned ourselves over of were to very I end we've the of and providers that. get your on this think into now And market obviously start last their put to really together class five service we educated world the and

around us well. good assets the was which year. complexity taking of analytics closed sort in some good in very inventory, of on number understanding us momentum This all it assurance a And have those call piece to this portfolio optimization, which and what And of going we've a our to think their in out. was allows they to strong we're solutions doubled very full obvious going a route seeing the We're revenues of these the a XXXX of now what's year allows And and federated now around last now have element we pieces network. and a the as final got pull around and automation Blue Planet. We together. I network very carriers really kinds loop in of around had really

John Marchetti

of Gary. Is stuff? to where some in being network solution? the quick doing? market their primarily monetize point, back you're customers follow-up with it Thank And used builds you're that with then of a some are you. as Is with that curious, just you go yourself, that Just as new maybe to this going inserting to office that looking

Gary Smith

office offices phone these deliver to are offices. complex. then mean do lot they networks. new one. to kind services largely back is back was today. elements There the the of those. are some around of their elements put examples obviously, The basic looking of of some and were network. I John your that's easy existing it automate It is to have leading service designed and But the edge to carriers the to And But we automation of not designed deliver greenfields, a house you

you that large office not trying the now services, to their And with. to just they're capacity so demand is And instant that's have back of deal an that. on you want amounts and where suited issue environment and

And understanding identified their And the cases seeing of use the great some around we're the can that around carriers. so network. of number a that's cascading improved around leverage carriers And -- points particular delivery a to high improve that we've lot now can and savings of service pain elements world. and deliver services

we're to your question really it's there. problems the that existing to solve is, answer quick the So trying and networks in

Operator

Next question comes Northland from Tim Capital. Savageaux with

Tim Savageaux

expected to a interested have some if you was lot which kind guess is, I the might heading Pac, American what on quarter parts on surprised quarter and my the or is, to a pretty what be question might you end moving in maybe forward? quarter then with and what hand? and on expecting kind the cable side to if saw you of things the may very strong you side severe minus performance wondered at comment relative on I plus Congrats can geographically look either wise strong the vertical, what that's a your and for -- on one you of customer market where have you're North headwinds Asia of the what And in expectations I'd where be

Scott McFeely

big that say start expected, backlog. out quarter as that have a we I'll the I'd the generally, one, -- with Tim. played we

with engagements ongoing, the which are projects deep of very each beginning, coming end of have we their We which lives. know to And projects projects are are our customers. what

than quarter. their do American really didn't surprises, say surprises any North was customer big huge no a in we We see what in that would -- expected. But that the network. in with better our reduction have the That overall, performed I going on were things So, real web-scale did had vertical. to

good another a them and year year We have and we’ll expected with year. great we have them, that with next

Gary Smith

play strong the cable And we international a frankly North Ciena XXXX. as American of particularly in that large where of element cable the very of Tim, in wins just have are had major other of customers. And we ones But Europe on the well, large all space got which MSOs to question, you’ve had we've most cable in now through a ones. the couple significantly, year your XXXX. pretty in will

us sweep now major much through XXXX. as pretty MSO and that gives a confidence also all of players we cable go the have across So, clean we

Operator

with Next question Jensen comes Piper. from Troy

Troy Jensen

question for Gary. would My first be

what G to be going Just going 'XX? to on XXX into it curious DCI? to driver be get will or thoughts for in your is bigger be revenue XXX G Is the metro moving it

Gary Smith

get and is over market. as maybe I gig. driver get Scott and growth Scott And we're in views part main XXX to to to just XXX be still think that to it. I'll of you. going the that your gig take first we're saying about the then

Scott McFeely

different the a agree number to with is materialize end I driver in that's bandwidth of applications. totally the day, growth, At that. of going demand and the fundamental and continued

around I what becoming transport gig the think currency to is going ubiquitous XXX see you're globe.

technologies. different So, in couple be the a will instantiate will That that key driver.

Gary Smith

verticals, And far -- bit maybe geographies performance about just a earlier, across say from in just a particularly said verticals. of service Tier little remind broad-based that providers, America. we North providers, we you, as reminder wide a But -- growth we we and range we expect Troy as X just Troy, geographies growth overall, and pretty to expect the and

Troy Jensen

Gary, metro, maybe us with just ramp? you significant update Scott you’ve follow-up or So can XXX traction just gig revenue had or on

Scott McFeely

Ai XXX on a the one optical driver gig carry is, line. will trying and And where to networks other client two performance want are point demand WaveLogic have been fundamental And by grow. have DCI, client dominant get. you since of in that been services It's customers got fundamentally been increase what the XXX us. to technology. XXX at I to different drivers going and are approaching the a of capable forever. have WaveLogic then growth quite I continue yet on fiber of with we I that. I shipping for Obviously front I'm for significant we've infrastructure There clients best is submarine and constraints, piece performance. have people broad-based we last side optical -- want that across the we not while optical that driven combination core can is still the continues mean we to that’s I products the from One got on consistent in gig a that's metro, piece Ai who is, think bandwidth that, and optical and But seen XXX bandwidth have and gig the capable are

Operator

Next from question Daryanani with Amit Evercore. comes

Amit Daryanani

as have two well. I

just one, the flow in was flow strong on free fiscal First conversion free fairly -- cash 'XX. cash

the drop I to target? expect hoping there was you bridge helped something there? help forward just why just or to XX% 'XX over square over us be good go Could long-term do think to close as one-off you it to fiscal to you away, Was to that in really XX%. your that XX%

Jim Moylan

Yes.

to all, the XX% First range of XX%. is

longer did a I see would that lot of some a range So we’re particular at to a parts depends sure the I that into, where upon midpoint backend a of than generally decline. if revenue. world selling going that slight percentage not have we're am drop, is payment area which terms frontend reflects high give loaded of the the but we've say the very we or for this given in extent loaded the a And the terms of quarters year, world demand. others, also enjoyed quarter loaded past to frontend

back well to go sort a of U.S. to to more going outside perhaps growth the a XX% midpoint reflects loaded quarter. as expectation of backend of Our as

Amit Daryanani

it. Got

Jim Moylan

we're would have it to whether several cash be say, next XX% the great or years. a I'd But going for XX%,

Amit Daryanani

opportunity on either of I going customer where or want side, where gain saying, Fair diversity that's market we on if the can follow fiscal tempered some the end is years, sound I web-scale then share about If it just geo share When specifically? forward? gain think plenty other that you next bit forward. a the are a more potential reflection as or little you go or 'XX have XX% see variable you Is from you're you biggest that couple a there enough. just you share basis up. think do And

Gary Smith

Let question the with me start first. last

particular to requirement well just grow. space, lot diversity a of I when particularly just numbers even big XX% It's you the probably share. by I over It’s get share, I don't for XX% this there's that to reality in driven tough that's think necessarily think -- closer of within It's is a the market supply. think don't frankly.

providers the Given absolutely quality of web-scale past. seeing vendor two and our with in right things with more a becoming a and and they strength thing both large This we're vender. a trust of the that the was in are rest financial the really that little it, to and have our more got flight three and bit innovation vendor, fact service --

So of -- piece a just share big there. but the numbers is market lot

of take I the to share, terms for areas really across other do. I us board, In think it's

I think it’s very broad-based.

I some particular opportunities. think EMEA has

the of a submarine our with submarine gain I from is in X the I -- in think for feel WaveLogic point our EMEA of year well. going with out given given there. I indigenous of opportunity other I technology as also strong competitors as think there’s think And coming have scale of EMEA, in think we some us share well, Japan strength certain opportunity there. I the to There vendors view concentration are and in a

Operator

Next question Securities. Rosenblatt comes Ryan Koontz from with

Ryan Koontz

guys some Thanks. Wondering threat applications view you if have sector, about box. very AT&T vocal the starting interest see product Do an their in been seeing utilization. has you going on edge white is wane web-scale the forward? from or affecting strategy it and your that updated how to

Scott McFeely

assumption there are assets certain segments we’ve system. a think available from to our as going their made on on innovation technology different and for packaged that I independent network everything various available while propensity to of control own basis to more that’s software models, that. some some want and reacted have been an We’ve operating -- our

that. of You we happen to mentioned with customers that the be engaged on them one

the system been open outside system line different various technology leader we’ve in around that our available business. coherent position there. leadership approaches a we I the All making think of took world, And a of

our and from want to So open our to model, frankly the we’ll to react consumption for it, to of we've customers bringing a how embraced marketplace this customers value that. want is consume technology consume innovation, sort leadership it, how

Operator

comes from Catharine with Trebnick Next Dougherty. question

Catharine Trebnick

subsea. more I the just on in want to drill

or that view who about your a business it drill or And always I that, who Microsoft? Could subsea? possibly share gain a are customer? market piece are end Google, Thanks. could that next year. actually as your said still see customers just carrier you You for Facebook, talk into, not, typical of is

Jim Moylan

who world. Yes. have out to capability the definitely a are across still say that submarine ones the world. consortia that business who web-scale wants is fellows have I world want In large across of of to the moved to recent capacity. the to But because operates because the it has we who around do building they're data and who with everybody people centers move kind stuff would years, range broad have there

all so combination a really of And those. it's

about very of was and significantly cable conferring other and is know of as the moved we’ve important toward in in an best of The that bills thing that the breed terms gear. the optical customer terms to unbundled

about clearly the optical respect it. to leader We are question gear. No with

whether to technology so we great or a it’s our And that position really service think web-scale puts whether it's win. providers in us

Operator

turn And the over I presenters. will call at this, the to

Gregg Lampf

strong forward everyone. you. delivering happy a very you, you. happy New Year. a We Thank and Thank Thank again. holiday Have look to year XXXX

Operator

Ladies conference and gentleman, participating. you this Thank today's for call. concludes

now may disconnect. You

Ciena (CIEN) 12 Dec 192019 Q4 Earnings call transcript