- Earnings call transcript Q4 2022

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Operator

Good day and thank you for standing by. Welcome to the Ciena Fiscal Fourth Quarter and Year End 2022 Results. [Operator Instructions] Please be advised that today’s conference is being recorded. I would now like to hand the conference over to your speaker today, Gregg Lampf, Vice President of Investor Relations. Please go ahead.

Gregg Lampf

Katherine. you, Thank welcome year and XXXX fourth fiscal Good review. to and end quarter morning Ciena’s

On is Senior call with Moylan, Global the today and us CFO. and and Products Scott Jim for CEO Q&A. McFeely, is our Services Vice of Gary President also Smith, President

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

of view results speak current our detailed A Our our is release. a outlook. or GAAP comments today these Ciena’s to of well reconciliation press measures includes as dynamics recent discussion measures included of results performance, drivers of discussion to our our today’s our financial adjusted Today’s on operations. and of in non-GAAP as market certain business non-GAAP

impacts Gary, we forward-looking that over discussion you I of financial call remind the outlook, statements, Such market guidance statements. be turning will and and including our long-term and about and to Before commentary annual will strategy quarterly call making business are opportunities on this regarding could statements today. during certain cause and expectations, differ from on constraints to based materially include assumptions of its the the discussed forecasts and results and markets, and uncertainties that chain current company which supply risks our certain actual results

encourage are this important you we outlook, on we the whether call our forward-looking post presentation to mentioned such them. consider statements part will an included relating after, or that Assumptions to investor of shortly and in

our in factors XX-Q and filing most context statements should forward-looking also Our filing. XX-K recent the viewed in our upcoming of risk the detailed be in

information to events information, be XX-K the filed SEC or expect obligations in December whether as of required date. is to new this future XX result by a to call, that Ciena and update no discussed conference we with file assumes by Our the otherwise.

yourselves will question will we one as over turn With much today. follow-up. always, to call one for allow as will Q&A possible limit and the I Gary. to I As you that ask that,

Gary Smith

integrated us projected. and $XXX second expected and customers adjusted Gregg of reflects and quarter, the more more good to than and results, positive both which to were half everyone. gross the we of had that XX.X%. than some the enabled procure revenue we received including a dynamics quarter, that quarter the reported margin. in strong circuits also of especially higher million impact This more on These favorable suppliers Thanks, margin parts developments products fiscal ship originally also revenue of modems, certain morning than occurred market benefit supply chain including expected that Today, in performance able the to from fourth we open in

order growth billion fiscal than across For the year. from a we in exited XX% entirely evidenced year, conditions due and greater annual the of to of billion, regions as the the customers the environment delivered during we with full XXXX that segments, supply $X.XX ‘XX, $X applications, we fiscal encountered demand revenue fiscal supply by essentially challenging difficult and we robust chain Despite year. flat of backlog our saw as

respect continued we delivering also lead their expect slowly suppliers improvement. The improvements increasing. And the seeing signs and areas of the committed including Our results majority gradual times the are supply ongoing we supply, nature XXXX. across of as we volumes continued current through demonstrate FY in to volatility unpredictable ‘XX, of With and these in our are move to strong finish overall, fiscal QX, are dynamics. current

benefit mitigation over so. the taken last year that to starting the steps also or have various are We from we

the and revenue is chain last relatively small significantly year. our impact impact disproportionate and qualification these At what a of dynamics As and product product challenges for shift our QX value, reminder, unexpected QX the on vendors mix, even an of margin, a low favorable same which how number in to on redesigns components, can low these negatively performance the minimize happened engineering Conversely, of particularly specific in time, alternative supply unpredictable designed have disproportionately results, illustrate can impact same and of a supply include if of cost, customers. our revenue are our and direction. components they

clear, generally, the to see the fundamental over to in positive very tailwinds, the respect can drivers, headwinds but volatility durable years. next demand, that obviously and in on be With we manifest network remain as direction. long-term. we Based drivers to including XG, a believe are coming to investment, the moving strong continue positive the environment So we be both and several cloud the quarters and demand them these for automation

addressable Importantly, are technology we areas, drivers to areas market our investment our are in these for well the aligned with that confident key customers. our strategy of as closely and expand as our leading

thinking conditions. market our the specifics demand longer these supply we of to share. year-on-year significant within this look deliver upon we improvement supply continued more shortly will and combination the Jim we will specifically on As backlog outsized FY revenue and growth business gives our our gradual and us expand of and are gain ‘XX, term outlook about how signs with confidence that over

that, addition from from he which portfolio, organic we our quarterly Viada switching year. Solutions year-over-year Before in note I the and is was the does share particular the revenue a Of QX enhancements. to up portfolio XX% and quarter fourth the of for as routing growth benefited fiscal want highlights nearly and in few

reached we QX, routing, customers, our routing in IP metro business edge of by a particularly PON in during metro services. XXX our portfolio. we fueled Adaptive and more momentum next-gen coherent high-speed fact, continue milestone in than invest In and to aggregation, strategy, switching and And

will acquiring in us this Tibit that build to a which Communications, expect of ‘XX. in existing our access in are opportunities upon saw, closed broadband fiber to Networks we strategic These market As we and recently you segment. and pursue acquisition close Benu larger of the we investments enable acquisitions set announced QX

to of addition many advanced significant and modems applications, service segment we more market we services about customers. a you a business than several some considerable of within to Planet, next-generation enterprise XX,XXX will QX, address to we won advance is PON Blue and time the and broadband, than expected routing This our technologies talking our wireless including XXX fixed ability for customers also WaveLogic investment new switching Ciena, our Tier Specifically, number count while to-date. to logos and providers. for represents be Xe residential expansion In the bringing new fast-growing at year addressable been optical, management added XX access. customer for subscriber In have X total more with global something for Xe shipped during presence WaveLogic expanding in area a our

Additionally, live solutions. has now year-over-year. network And win our service our inventory order grew strategic at transformation our with XX% orchestration DISH both services gone and our

customers year, XX% think billion outlook. Jim were in will With year. key X now and than really us from this once in that, non-telco to over customer next-generation increased approximately from customers move of to our the within the major respect I more was to ‘XX, revenue FY lastly, I XX web-scale our reflects demand continued that, through networks. last with we little provide to more customers this diversification, demand And top And orders from hand again $X the detail segment. for a to our like And had take in web-scalers. strong from demonstrating results legacy Jim?

Jim Moylan

morning, Gary. Thanks, everyone. Good

demand came Revenue faster. As the well customers need million, QX Gary by of above This more at mentioned, speaks we delivered the a clear our performance. to for midpoint our in revenue durability of very the strong result equipment guide. and $XXX

which Importantly, it happen have can the that to illustrates gated shorter been get deliveries the our supply when customers. we most more severely have in what of components and

$XXX deliver expense Additionally, was operating in measures, shipments and With it components costs to some million. our of incremental a a Adjusted performance of in XX%, in us the operating the the in benefited components supply favorable reflects and our QX $XX of role at helped and per month vendors history greater-than-expected XX.X%, logistics of strong allowing of QX key margin $X.XX profitability in respect of QX, at income well expected gross largest delivered margin as with October. margin deliveries. on modems. us disproportionate as additional adjusted adjusted quarter play product share. of the adjusted investments, adjusted EPS from more production quarter. adjusted we mix of million supply as Clearly, lower-than-expected capacity in availability net our to reflecting brought deliver quarterly benefit to our mix was which gross

was $XXX EBITDA million. adjusted in in addition, was Cash QX, $XX operations In our million. used

most while certain build We we of components wait for are QX continue of delivery to the those constrained. inventory in components that

which experienced a to increase. back-end accounts With respect annual to also $X.XX our for revenue year, full the We was fiscal performance quarter, loaded receivable billion. caused

backlog, entered year double our we mentioned, ended nearly billion below $X.X in but Gary slightly ended As we QX, we still as the where in with fiscal backlog XXXX.

year in expect order as to of We ‘XX. backlog improved, That significant supply backlog fiscal we have order revenue periods year volumes growth to seen conditions obviously and with said, a a growth and chain over record strong gradually and relative adjusted expectations margin line Adjusted even for for gross the year and XX.X%, totaled $X.XX demand billion. was in OpEx moderate environment. time result the good in

higher we our Given the year, large we commissions intake had than sales planned. order throughout paid

planned. would we over for have expected revenue lower-than-expected pay which bonus was with we guided will originally what billion, adjusted and for than year. been normalized However, items, lower and the two operating much these a just OpEx corporate $X.X income, incentive If

EPS This Moving of Adjusted few was lack fiscal $XXX inventory of and the components. ‘XX $X.XX. fiscal margin XX.X% key caused cash reflects adjusted year was ‘XX by for negative to million. flow in Free availability operating increase profitability. in was a

and we Finally, sheet remains approximately balance in the billion as strong cash $X.X with investments. year ended our

year Just as in also to in million. of in shares $XXX of a plan ‘XX repurchasing reminder, shares in fiscal our the and range $XXX repurchase we goal million the met

years, In few crisis. been the as supply last to from revenue stemmed conditions pandemic, our of led which the flat Turning that chain has market the a a to result unique relatively guidance. global

‘XX. Looking To growth we our which, important assumptions to clear, of environment. includes improvement, that combined gradual fiscal be supply Accordingly, revenue in the us for are expect forward, XX%. sets grow well of up backlog, year outsized XX% range still in in our outlook see this a particularly continued significant signs uncertain to when key we the with in

that macroeconomic macro importantly somewhat of there That economy in our than no less effects First, our dependent does and conditions be year. environment backlog, geopolitical to business. said, significantly outlook the dynamics, believe ‘XX we our typical respect due material to and fiscal to the with adverse clear, are is size global our a the that not more on assumes worsen guide on

continue respect with supply to Gary we we we component but Second, as volatility, general availability to expect and see have conditions, seen and overall improvement. mentioned,

assumes the range full expectation will over XX%. several that not believe of year the our be secured do margin will more supply forecast worsen. remain margin the XXXX, for we our on chain will supply Accordingly, somewhat, and take And will for that in we to years. – improves fiscal revenue that ease the reflects to that but the Our gross years gross supply costs new elevated. X we With have XX% wins last as outlook dynamics respect logistics XXXX

in tax continue estimate to to in advance operating our order and of I takes taxable fiscal average we in immediate business and investing million in expense, into adjusted per $XXX best of we X.X% range higher areas. our having during increased range Our ‘XX. rate million, term from to last key gross point operating are income rate for in Therefore, intend million. that growth and we out quarter year. between adjusted expect expand position market to $XXX an fiscal expense in using our the ‘XX XX% deliver XXXX, a to of locations the strategically $XXX million XX.X% to adjusted low-XXs $XXX The expect rate In tax outlook. year’s operating our expense our adjusted margin rate as addressable and will million increase $XXX the more fiscal on revenue QX consideration

macroeconomic in in demand, secular been a our year, network a conditions. to quarters strong will bandwidth in expand prioritize to we network investing time this remain the demand addressable CapEx as by including address strategy long-term we intersect And the compelled and customers Looking over confident in be continued those long drivers, believe our coming we demand positive position of market, be customer to continue our years. investments. growth to which will period has over beyond We unaffected next

normalized to several in grow combination specifically, over All expect growth the period the of and supply that, over linear, supply. for footprint to take we single-digits said the and strong not with next next industry will growth well share particularly you last given this outsized positions revenue us time revenue chain decade. deliver years revenue during growth our more the our mid in More approximately conditions, we over gain years. improvement predominantly fiscal we intend ‘XX to be the as by expectations have market That in in driven percentages X

in environment. our the and more strong conditions, expectations and fiscal assumption normal market fiscal are we continued definition business are dependent for macro confident by upon position. growth are leading of revenue dynamics ‘XX which Our an ‘XX on Nevertheless, demand based more

has And our deliver for the XX% gross that from we and sturdy the our been increase we account we take is through sell-side the financial will for to challenging that to ‘XX believe from and service chain will improve this. market In it several Katherine, we Ciena us does customer expect That continue industry. revenue profitability. ‘XX, now expect will customers. throughout the to growth XX% that in while been is XX% bandwidth of margin believe move never we year. With to Ciena currently For better a X-year reason, the next the XX% improve. will our chain enable We Demand plus. has continue results we expect technology fiscal range rate the for and supply years to supply will year because next adjusted Demand the take a as Furthermore, in range at to will conditions, that has which and that, annual demand analysts. we best over XX% position that that mid-XXs growing reflect XXXX. rates customers will improve to relationships better strong into of capacity questions from closing,

Operator

[Operator Instructions]

Gregg Lampf

of also Q&A technical a issue the line. We’re aware with

to setters you be resending way. the a to link to cell We’re for able access that

Operator

from comes with question Marshall Morgan first Our Meta Stanley.

Your is line open.

Unidentified Analyst

being, a Hi, second half quarter, this loosen as from the in on maybe any results. macro conversations seen I Congratulations around supply with customers to hesitation chain to [indiscernible] first level, with Morgan you changes you’ve a or And on have up any Stanley. the maybe is seen any have just customer moved bit conversations, and vendors the guess question that maybe purchasing other high just generally of maybe patterns? incremental at

Gary Smith

I to we don’t haven’t. no, The part second the that? why answer is So question of take your

– the faster can growth that from continue that in across orders the very And outsized different strong still across We in about XX% see, that’s our year. that’s very think in a as comments, geographies, applications, secular to the you characteristics it, demand that across get order received them customers segments. we evidenced the we we And the earlier order got about for view of across demand the year. point And strong than demand. dynamics all a in indicator of talked we’ve board, demand customer a we’re we around of. it aware the want lot equipment to When

demand. seeing Scott, not of customer chain comment across So terms any do any specifically? now to stuff the change on piece the in right want supply of you

Scott McFeely

the we also particularly of the we quarter. those saw chain the in more board, was supply And across constrained important half Gary second that supply supply. was it, but mentioned expecting side, stuff components we more components than the were In got of

those have And significantly open mentioned bigger We month in so investments past faster, we’ve more our finished Jim a components procuring as in around market those the And think well. our in in shipment about given ever. biggest success month the October. into play the broker manufacturing came also that can goods turn we of talked capacity into that I up building

Unidentified Analyst

Got it.

how any to about then increases on Or we or of how should in maybe idea the expect Okay. maybe that? just the follow-up sequentially? quarter quantifying a trend was? an helpful. uptick expect, Anything we QX? just on That’s just And we to very sequentially much should And how price should quick a that benefit think

Jim Moylan

ton of a We seeing effect of not Still in price that it. QX. increase not see did

in a we look single-digit is And without just encompassed As giving it’s our in say number, into ranges. that there. backlog, it guide. It’s our percentages fully the I’ll

Unidentified Analyst

Okay. Thank you.

Gary Smith

Thank you.

Operator

Thank you.

Our next Cowen. comes question Silverstein with from Paul

Your line open. is

Paul Silverstein

responses One, the still you, competitors to Jim, were I you to due inability referring obviously to Infinera gains extent I’m made questions. gains. two issue. hear competitive a going the Thanks. competitive ask being – of it inability have but listened Gary, to question from call, has They because doesn’t trust big supply previous about deliver your call about you during to comments your an sound your constraints. did it’s and issue. one I your to clearly the that question the comments, of But been like to what related The

other your of be commentary, The specific question, I like related doesn’t the as well, Tier to ask seem Xs it it a want Corning, to weakness, but given again, CommScope’s but AT&T, lot from [indiscernible] you’re you to other a sound perhaps but like question. non-issue, which comments, sounds seeing

Gary Smith

supply in for we demand from we of sharing accounts the sort demand the well. me are is QX they performance any are Paul. speaks obviously If our kind they we’re to get then any of I take same going our are as taking get with and at itself. And and in order and I in of of expect first whipsawing who Overall, moment account. given lot the which built there been mean, others, let overall, think new one that, can. part try for with strong and a of gains, year. share Listen, Look, I very also the the volatility backlog really guidance into would say, time

And have is has. do share that at the our orders, customers gain Ciena to? question, technology voted. they which part So want of Take what scale, and migrate in our is towards you to continue best

Jim Moylan

and for good. outlook major is of order our Our is good, volume customers all our

sign We’re of any our major seeing any in not or AT&T of weakness customers.

Paul Silverstein

gain going deliver, share telling to inability clear, it’s something Gary, just that’s commentary, Xs situations you certain not or to the you’re not because Alright. have in be of among share to And back is… lost us you if think Tier

Gary Smith

any have we’re not We’ve this. major if customers these seeing someone moment than one during demand And characteristics we given into think time that that shipped are engagement with lost in that, we whatsoever customers. the transitory there and is particular more

Jim Moylan

overall. Just talking Paul, a see did same by that that lost small whatever in that it of will get strong we we years. see back we coming number demand the the clear share in over to is the about. any that quarter, though, confident and quarters be have relatively account, overshadowed And been has number the dynamics Gary But I’m we probably might cancellations

Paul Silverstein

And in not you they segment? just From guys strategic players not major – investor the from suggest a the looking that follow-up, here web-scale web-scale, are back concern now, health for lot set particular. but what are seeing web-scale, my commentary the a Alright. downstream. They of certainly of been obviously [indiscernible]. coming is on Obviously, there about various

Gary Smith

both terms over strong was order in of intake. and terms in very a billion. revenue well performance, had we So $X It of

to we’re the year. significantly that’s FY them we we combination did about We’re we orders we’ve with and orders backlog in last of than revenue more got other that work GCN get. continuing expect to to in that in And a as shift ‘XX,

we their various continue between varies there. see they overall, as pretty networks. players strong out focus it on to So But the demand building

Jim Moylan

are I so much customers, with that developed going we strategic what’s driving industry. the say have web-scale on of relationship a over more much few also those and in our who past years deeper

about the we we’re very center to conditions. we move fact much And And of by that so able just hopefully, will as data some by excited be time. than with stuff engaged through plain more we’re you tell them

Paul Silverstein

but back I ask is those nothing. me deals For which can could be. acquisition thing? clarification was in a to Tibit identical as to acquisition as contain Guys, remember if on there revenue, XXXX, nothing your And us to two correct for one left your of employees, I’m continue of who wrong,

That and any copper I deal? environment But DSL-based lessons very Maybe recognize The different. a years is learned a is XX Now answer. was very a that market incredibly This solution. that different plus optical. from you is that’s were ago. than company you’re just the different

Gary Smith

I you Well, that, Paul. question think answered on the

I think you’re absolutely right.

– scale. we within context very company. different We’ve And have. stuff that relationships complementary the different nature and the that that the much got much of we I have greater routing around. because a all wrap switching think We’re technology can And the we it is is customer

We’re now and and the complement have that already the we space that those Benu on excellent the we’ve relationships developed really largest it player And by now got. in. been quite a portfolio that to an bringing we’re with matured. provides think Tibit, large way in And

Jim Moylan

to Paul, it’s XX And clear, years, so… approaching be

Paul Silverstein

Thanks.

Gary Smith

the we ready are Katherine, next question. for

Operator

Chatterjee next with comes Samik Our from JPMorgan. question

Your line is open.

Samik Chatterjee

pressures you can understand outlook maybe through sort you’re like down. and perspective bit outlook can going are revenue, margin, here. time. But expecting, don’t with maybe a Thanks with most sort growth puts help product of the a a have should gross margin margin revenue your also sized of with and supply of new me to because sort if takes my at the any sound logistics leverage particularly shipping it a bit from the the more us sounds pressures, start the like of and I know Great. taking out gross that of that gross had Jim, more question. walk providing, if I the for couple, does I you you’re

I number. higher So we a Thank expected takes, have walk and would puts have me a you. Maybe and through the follow-up.

Jim Moylan

early we gross Typically, systems do of fill are our capacity, with less early of When the line fully systems sort margins. projects just than customers It a and works. line get have their do in margins. higher helps way continuum the products, in big or conditions margin those or modems, parts laying business mix the network. down cards is of of gross at loaded The we we lower that driver we’re our which margin. Yes. we’re the through That’s putting of

So expectation way ship year that’s XXXX, mix we’ve systems. of had shift the our it pretty comment or made over talking some works. in toward our is That’s the that we that we’re that This why past significantly will line wins to new on about the year. our starting

that’s to of margin. our and ‘XX. something they in cost exception What But in like it’s how us the gross something So that’s impact maybe think will are our to we’ve that going said still that in of is that’s We although going out, less there, comes margin, make totally gross that, that, on year. what’s a that we going XXX ease us manufacturer. that percentage terms costs I’ll last are do expectation. in the point effects. outsourced we And and going terms see our probably like points margin cost And finally, little but to will be it the or basis

part margin. per And our of helps is in have fixed mostly variable. of and we unit the when We biggest have varies a gross that so volume. some, our cost and our is get cost variable our volumes. structure do cost per lot But We don’t

Samik Chatterjee

of upside I of to expecting of ask to and terms sort when that generally Thank you can about above And the even rate, And there run the being what’s average supply trying embedded at the come that upside or and to follow-up, in guide? what sort what’s number understand Is for sort talked from? XQ, look fiscal you’re guide improvement from if market? supply? million my in it. – that for and north the of go downside we your predictability more of $XXX you’re you your in Because buy could as $X XQ open can embedded ‘XX sort billion. revenue of more I’m from able be of you. to about just suppliers, Got

Scott McFeely

Yes, Samik.

So more to what the seeing today People in first rearview bit in and they the gradually. reliably delivering us delivering more and better environment are of getting Things all, period-over-period. are to we’re starting a components with their mirror. commitments, are little just

you’re in that guide. seeing in You QX our saw and that results, our QX

their terms commitments us, forward, in more into Looking forward us that’s they are going our as well, to committing components and to of guide. factored

alternative to addition past sources, faster you about a that in we view redesigning customers. in can into us to to we’ve such benefit in a as balanced try manufacturing will a turn for to that, have terms perspective the we And taken variability the things of ‘XX. up going products we that open supply finished mitigation up aperture and land in talked where that therefore, those of activities we’ve give components we ‘XX. All In finished that to account revenue of, control the think bunch design well from as of our building we’re of seen the a a learnings and capacity goods

Jim Moylan

chain that supply not assume dynamics Specifically, worsen. we do

current we encounter to And in believe R&D any we commitments. new deliver all will not substantial largely expect supply cannot we’ve their component do suppliers the that done on work our Specifically, mitigate, decommits group. we that given

Gary Smith

for We next Samik. question, questions. Katherine. appreciate Thanks, the the Ready

Operator

from Alex & with comes Company. question next Henderson Needham Our

Alex Henderson

Great. Thanks.

the of in ‘XX. up billion shipments. First the underneath service is – backlog, you’ve mix your talked business, the for is in about Can additional which but doesn’t bit to question surface show is assumptions you related that also about talk $X.X little a but on backlog

about talk guide? versus So in assumed the growth in can you the service product

Jim Moylan

just get for the Alex, to in product related backlog, our are services orders, Well, we orders clear. we get and services. be When

it at in because billion look meaningful is to growth, see services business, The past maintenance, and implementation $X.X amount more services. have probably comes the We the we includes on our that expect systems, of average motives you than which the our which did many we on have implementation. in will services. will expect with – I demand we backlog. cases, advanced various we do we have and we believe a of stronger strong line if probably we services, pieces see we have So year, deployment, of advanced then a lot higher-than-average in

the that think but The So faster product. parts portfolio of those are than maintenance, grow our grow, we average. in line we probably think the will will with services

Alex Henderson

So the services for then rate? gauge a just single-digit would year. mix to rate double-digit be a or trying I’m growth your the growth

Jim Moylan

probably digits. be would I don’t overall, be double yes, Yes. we double we – think digit I’m will sorry,

Alex Henderson

Right is around probably answer. XX% the right

second I for backlog you of in the I to growth, billion your XX% take question off is is base. million enormous If have number. $X.X an ‘XX $XXX that’s The relative backlog.

backlog doesn’t backlog is So going $X year I know, billion how much down? of and end ‘XX do will continued if And still, at backlog you next the ‘XX don’t that say, year, into think the even? the outsized work the imply

Jim Moylan

Very to going going hard I good, predict next case. to certainly to to is expect can our be that backlog though. the where year. be It’s be

during year what the our at of backlog our this will customer and how course, behavior depend change year. times lead the upon end like, deliveries Our is of

good. specific that predict to going hard on backlog, So it’s be but just it’s number to

our XX% grow we we’re previously to somewhat in ‘XX, higher. next Now long-term lot for XX% a and average fiscal the years, not over than said growth higher which but X implies going higher ‘XX stated to the

Alex Henderson

Thank Great. you.

Gary Smith

question. ready Alex. we the are for Thanks, next Katherine,

Operator

with Notter Jefferies. comes Our next from question George

open. is line Your

George Notter

Hi, cost in wondering kind expectations and very the also expectations what you And I much. also with Benu a are they those structure the improvement Great piece the then for what Tibit for comes for year. revenue about if are of Thanks. here. curious and about curious was guess the I’m guys. full acquisitions. significant for acquisitions. I Thanks chain supply of your see then January to

Gary Smith

Yes. on until We revenue. large to of in sort expect don’t the close Tibit quarter. this is Benu of not terms of And towards end

So really nothing significant in QX.

our some we both those, than the through move of from we revenue. couple a percentage but As less of it’s of will year, see points

will that the solutions to will two we market. out attempt it help our position PON in as what acquisitions do, of those PON build However, and us our combination

as of as million $XX And it’s far the next OpEx it. are million in to we sort OpEx, So, excited the very year. of by $XX

George Notter

it. Got

not year, – full or per For is assume. quarter, I that the that’s

Jim Moylan

Yes. Full year.

George Notter

Great. makes out a curiosity for guys year? of you the number commitment got do then it. That the have Okay, And of sense. purchase end

Jim Moylan

I don’t right it that. you, We will to now, have I will but that get George. get you

George Notter

Fair enough. it. I appreciate guys. Thanks Okay.

Gary Smith

Thanks George.

Operator

One moment.

comes from Raymond James. next Our question Simon Leopold with

Your is line open.

Simon Leopold

Great. Thanks for the taking question.

Just metrics Gary, here. remained maybe billion. you over that some backlog the clarification quick $X first, a of on said

to be that quarter, down the normalization think But so to we I And about understandable. backlog, sort of certainly have I $X.X last part talked working billion. begin a roughly whole you assume want And verify you come that to of process, $XXX backlog that to able assume metric to did million by year-over-year. quarter Is this I down I are orders down share? were $XXX million. got

Gary Smith

million. about down It’s $XXX Yes.

are billion you went billion. to about right, So, $X.X from about $X.X

You are normalize as Jim saying, right, would time. I over should – was this

we are think have the are and have of all We to run continue a to we growth while the going to the than lead question, traditionally. we even with seeing for longer size that backlog, are I going seen this business of times we – previous are to not with kind given

in QX. despite of range, midpoint QX that QX. So, us statistic, another build of of a I have I our on give in start so very to QX, off are in the we sort far backlog XXX, And the we backlog. sort of to in orders you strong upped to fact, expect expect on interesting about guidance fact we will still the sort have in

very seeing quarter we are strong order We in. the that already current in are flows

Simon Leopold

of my seems if wanted it I recall, market. X% have was it Thanks. I was and of XXXX, operations there. evident I got And substantive terms a subsequently. has changed on very to just slowed thoughts down could mobile see It revenue elaborate India question, on I the think, over you know you infrastructure think suppliers. more I as your India in then for that some

region. elaborate Thank If you. next from X that X you over year could what you the expect years to

Gary Smith

behind take years. big for is it’s for us. the I bullish India, commitments well we a has guess your of next to have everybody very market through XG through growth. now for of think question of one positioned share advantage very with and market It’s made whole going couple well a are as been And has – the gone And number we in some I sure. sort cycle cycles, what’s that that India

I low where see relative show India, numbers. to fairly a beginning are in You to number the that up think off it’s been.

We are is when XX% XX% quarter up a about XX% year-on-year about change. year-on-year growth. And total in to

Ciena to expect beginning see for that growth X So, the year next driver to for to absolutely. X years, I an that be you back. outsized would are come

Simon Leopold

margin. negative but great talk it margin, operating have gross impact RAN neutral about a margin, your vendors revenue, to does because to on dilutive the then And all

You as means are I a understand what in make to profitability a want to sure from perspective well. different it you business. just folks

Gary Smith

they way the build generally yes, terms put speaking, margin. is we their will project little line quickly out out, but which quite do tend bit systems in of And that, to builds, they they a see of Generally capacity. lower

mean our ebb it’s overall margins. But speaking, It generally margins speaking, flow of with So, quarter-to-quarter I there. our not and generally to dilutive it’s may overall consistent whatever. sort

Simon Leopold

I Great. Thank that. appreciate you. really

Jim Moylan

waiting we the George’s question got purchasing question, answer for next are I $X.X it’s commitments, While to billion. the about

Gregg Lampf

waiting next are the once question we ready. for are you Katherine,

Operator

moment. One

question Evercore with ISI. next from Amit Our comes Daryanani

line Your open. is

Amit Daryanani

to my fiscal see robust, fairly and question we congrats. about verticals? starts to my a different off is think going about Maybe slower, little taking to that bit XX% start top the you guidance, obviously as just XX% for what’s growth maybe across you And ‘XX with you can do growth? Thanks talk versus think line how which

Gary Smith

all specifically view I year, would not about is demand. ‘XX, and really it’s expect our I – balanced supply FY mean, next

caveat, the that would as I So, demand pretty a with strong say board. across

been highlight, guide very the of think I I strong our have in year. terms revenue would for GCMs,

overall I So, scalers. from web very strong expect the

I talked got about growth one, also we the year. highlight I growth see XX% think Switching of in space America. – just sort to this we geographies, certain strong to cable North in expect India, would expect I to strong. be I relative routing, to

was that of Some new talked non-organic. we But space, as of wins we that are about. lot seeing in a

Those and would mind. different that so. the we I think of are geographies are the that year So, next to ones hot be top is come going or think there various for applications

Jim Moylan

has has long again will rate to happens just And seen at a been out we that outsized whatever point demand for continues what overall, – been have rates, time. long, in that grow by That’s bandwidth growth we unaffected the really XX%-plus. That globally for macroeconomic environment.

effects based or take our customers’ to immaterial. experience to any our for So, that ability products respect business their us are CapEx the their from past outlook year on assumes with in our

Amit Daryanani

degree, start think you how That’s follow-up. allocation helpful, into about free guess really should to trend ‘XX has next some hopefully at levels How and flow this and lower? just capital sort really inventory up we see would generation the a fiscal to think I for Just will understanding helpful any peak, that to And do you cash ‘XX? on expanding that. flow improve evolving cash be a parameters to in Maybe year. that, of,

Jim Moylan

Yes.

be we it we are this inventory to acquisition too, hundred expect We decline year. we years. That in are expect a to just expect is flow Generally I cash spend don’t an down, as mean position not amount so ship that are wrong. subsequent speaking, partly than free we hope inventory wrong. level more would sharply of of will could we see come of to going going to enormous our million ship now. couple We But to as on far not because Tibit. going we our in or ‘XX

number I So, mode be years. the have past just without free are today, not going can in we say in we that giving in, cash to flow been that a generation

course, free cash been. of have going to not it’s big as but will just We as it’s flow be

Amit Daryanani

you. Prefect. Thank

Gregg Lampf

ready Katherine, next Thank for you. question.

Operator

Citi. Our next question comes from Jim Suva with

open. is line Your

Jim Suva

for a seasonality, I would the it’s your have I I we for a bit about seasonality? about assume But ‘XX, seasonality and assume COVID, of little fiscal supply can guidance Given you relevant? kind since would long seasonality time fiscal that with the less could and comment strong backlog seasonality. ‘XX? normal backlog mean comment been you makes

Gary Smith

would Jim, mean – is the answer really to yes, that Yes. I I that.

typically, It’s relevant. flows seeing we order right be in it lower. QX that it in even now. are the is And think would I interesting less that we are stronger

So, think before the and I because think take supply able demand over the of make chain, all out. And it’s further thrown while air. the it is and of COVID sure a dynamics been the of to get security bed kind back are down think up those in of kind going of have I to and to people whipsaw want the that even if they again, they frankly, are in because they supply queue that I

to terms of of and in to FY I about So, all about of is. ebbs us in uncharted It can flows sort it’s mean about quarters. ‘XX, – simplify The It’s as piece. whole sort seasonality for it, really think That’s just of cause territory any really the what ship all supply. various it’s going supply. the the be I we and

Jim Moylan

of in little long time. take than higher is which XX%, period midpoint year, the you for the experienced have we what If a the

So, we order components to fast that much and the so how all not is typical can pattern. just customers, sort It’s of proves get out what seasonal deliver about Gary saying.

Jim Suva

upside about the the came in the is, went follow-up And really, from backlog late mentioned my then then to call, quarter. you earlier you billion. to And quarter mentioned $X.X in $X.X that billion the

You got outsized of growth. October, a fantastic month

in progress the we So, quarters or for we on about we the because is faster see sorry, it I to work-down think work-down that backlog ahead fair that say inventory of actually quarter, backlog as the of a the kind an – that backlog? $XXX cadence should could was million month outsized in how in am have

Gary Smith

sort think coming guide honest. it’s I QX. QX. think of of what actually for our I and XXX. morning our this to we backlog have revenue in think we are would QX. to why is midpoint Even with though that, we coming very be you out add to going that’s up be have our just out backlog we that, was in for of shared QX, we upped I think I midpoint predict XXX. – about shared shipment still And are seeing think difficult I And go with to us going Even

we times characteristics testament across to A, long. the a lead improving, the chain just the still strong it’s are think I seeing are B, So, supply is demand and board, that but

Jim Suva

the impressive. for Well, appreciate that’s Really clarifications. Thanks very it.

Gary Smith

Thanks Jim. you. Thank

Gregg Lampf

question Katherine, next ready please. for the

Operator

One Okay. moment.

MKM Catharine Our Partners. next question with from is Trebnick

open. is line Your

Catharine Trebnick

question. Thanks into you two these describe go for me. the are for the acquisitions? my that looking looks then to Excellent And It print. markets at Can just more with but thank like clarify you. trying are new you you taking specifically market, regional target

Scott McFeely

one metro which from solution to talked broadband next-generation talk cases expansion. is acquisitions a our about our to the we of portfolio, of I two TAM part edge access the and as you part use will of perspective, have Catherine, our key

our lots anybody the access is So, There market. target of next-generation activity. would building be solutions fiber

looking speaks Of And your there are those course, their funding fiber rural build-outs both also as that attacking the to Tier some broadband that world well. are for Xs but at we Tier architecture of spaces. X opportunity, are around their

Catharine Trebnick

And Thank then market? you. addressable how much does your this total lift

Scott McFeely

had metro basically go next-generation edge TAM. we We doubled, expanded TAM were stronger that securing portfolio that the really – a solution we is set to had announced already after had our and that part with This focus expansion talked and on of about a indicated past. our almost in

Catharine Trebnick

Alright. Thank you.

Gary Smith

Catherine thanks.

Gregg Lampf

Operator, for question. next ready are we

Operator

Yes, one moment.

Our from Rosenblatt Securities. Genovese Mike with question comes

Your line open. is

Mike Genovese

that improvement? it really Is a wanted Thanks supply, Was strength. all that lot. Great. but than more or is I price you a coming margin to clarify modems, on the more it at mix supply for only there the not just better chain gross was this towards quarter before? reported, reasonable

Jim Moylan

costs some We are and combination mostly we paid. call Mostly improvement of costs, in that which from did It’s premium a mix. expectations we what mix. our, logistics the see costs exception

Mike Genovese

for revenue year, think fair? is this for full I year. got for margin this that but outlook for and full want just mean year outlook a I [ph] gross really year, this year, didn’t a the should hear then I consistently to I quickly, And we the ‘XX, Okay. for model XX.X,

Jim Moylan

and said We year for for to – full QX. the year XX in average XX the low-XXs for

Mike Genovese

I guess them lot that somebody asked. question any I will I been commentary, since a just apologize. let already ask missed

very thanks So, much.

Gary Smith

Thanks Mike.

Gregg Lampf

ready one. Katherine, we to are another

Operator

question Vogt next from comes UBS. with David Our

open. is line Your

David Vogt

‘XX take longer have the mean slightly have of through a business Great. normalized view I strength sort Thanks little and that go your around before bit. business know the I maybe of danced I fiscal guys and ‘XX, I we we kind as I dynamic the me business and is run want growth business? ‘XX it through question, sort end look are back about your high at but back at your let’s of pull think X-year model. your think I for CAGR, COVID, that ‘XX, X% mid right guidance, your maybe from, grown a in. of term better ‘XX which a forward the to we suggest for at say, a back with would backlog would plan to it is If to kind way of overall and squeezing normalizes, the to backlog and the consistent of

Jim Moylan

going before. we for last what a in than say our But the rate growth to XX% growth are the – just XX% you over years. we I next higher long-term the the you to we to X years is of years going for of now. years, good rates are X we X XX% that and are thinking the annual average of guide, if and X% market for called project X% number it do say do X I way our we bit to for outsized going pretty was a a have great then next said this, years, Remember, would rate midpoint think are deconstruct ‘XX, growth that’s actually been about believe to have because which the we significantly past has we very roiled the actually growth our have

for the and So, places. are I but that seen, also U.S. we the strong not is in think – subsidies have now, going that growth we is broadband and fundamental other just business have the the that

David Vogt

sort in-period how you versus that? backlog maybe And about But just thinking underpins ‘XX talked know I with a backlog can from you about the predict. have are to just you quick perspective share us of what difficult being ‘XX, a Right. follow-up. orders and

Jim Moylan

orders will We is ‘XX backlog, that the ‘XX, year to ‘XX more much dependent years. got next to following deliver have over The just in and get have ‘XX. we the the upon frankly, is come parts.

So, The attacking outlook orders it’s ‘XX, have assume ‘XX, didn’t with going and and that we we – returns. move I guide. was I good early And the that’s TAM our we we as expanding. good are when is is and that underpins something about our that thing ‘XX mention to are talking through

David Vogt

guys. Great. Thank you much. very Congrats

Gary Smith

you. Thank

Gregg Lampf

you. you We the Thank New happy all and and us We everyone David Year. holiday, today. appreciate thank you for speak with happy opportunity to wish joining you,

you next to weeks. the forward We good a over are Have you. looking day. all with week two Thank connecting or

Operator

for call. This Thank you participating. concludes today’s conference

You may now disconnect.

Ciena (CIEN) 8 Dec 222022 Q4 Earnings call transcript