Earnings call transcript Q2 2023

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Operator

Good morning, everyone, and welcome to the Ciena Fiscal Second Quarter 2023 Financial Results Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please also note today's event is being recorded.

At this time, I'd like to turn the floor over to Gregg Lampf, Vice President of Investor Relations. ahead. go please Sir,

Gregg Lampf

Good results welcome conference Jamie. fiscal Ciena's second quarter call. morning, you, to and XXXX Thank

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

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

comments our drivers on our a Our to current market outlook. business as views speak performance, our financial today recent well our dynamics of discussion and of as

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

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

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

XX-Q Ciena update call, no in information, our whether June conference and result XX-K new the the expect otherwise. the also in factors or this discussed context in filing, the detailed future assumes statements Xth. to we filing should in by file forward-looking Our a to recent events which as SEC of obligation of information be our upcoming viewed most risk

to limit ask one one though As Q&A much as today, possible you always, we that follow-up. will allow yourselves we question for as and

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

Gary Smith

outstanding fiscal and billion, Thanks, Gregg, year-over-year good higher-than-expected including results, an morning, revenue XX.X%. and $X.XX nearly adjusted of quarter quarterly second of XX% increase we reported Today, gross margin everyone. of

Our results margin $X.XX. adjusted included quarterly XX.X% well operating of of as EPS profitability with and adjusted strong very metrics

cash We $XXX better-than-expected in us product more than the QX. supply to operations more faster enabled XXXX. customers in also quarters. generated indeed second anticipated, million for which with largely in driven recent we of This the from significantly half quarter to improving performed first Overall, and the in ship revenue was respect fiscal chain to by

you to enabled understand down, the supply dynamic, by And need customers supply. advanced longer to chain our have secure supply chain help lead the customers lead improve to times times year-to-date. XX% Consequently, this than place no orders magnitude to and more to of come as improves us improvements

a As in QX. than and as result, expected, revenue orders lower were

this and clearly now beginning outstrip some Consequently, is order moving near-term and are customer one driving in environment to a and behavior. supply that shipment to We one supply flow transitionary kind of orders in vastly from is are into dynamics shift where where come a an ordering balance. period,

to In Previously, orders. American provider re-profile align certain cloud And service we've customers our to they of their of clear, similar we some recent as by their really spend canceling orders be our behavior discussed provider had are customers with not North customers. pushouts to begun budgets. by see weeks, large

basis. cuts, and And rather a the budgets existing it our into They scheduling capabilities. to align historical result quarters with a subsequent at timing. XXXX within absolute CapEx purely backlog their is and are their expect of is Therefore, better to existing double matter pushing logistical an of that operating fiscal this we not is with exit capabilities. It some least continue orders one levels to is on of CapEx

durability a environment way a and, to do more that in drivers result strength we and none of of shorter-term of to transitionary course, transitional will supply of spend. dynamics wider annual the industry reflection aligned the business. transition Jim outcomes year stress a as demand as the balanced is of rather, discuss, of period, the this they However, reflect the in potential any demand range underlying our CapEx But are our I also a fiscal supply-and-order revenue XXXX. expect would back for that

Overall, it of are meet has mindful we're our for bandwidth can nature, having many And for with difficult as done uncertainty, in of again addressing persists through growing which strategic we are how conversations networks. by demands fundamental consistently macro macroeconomic their very years, conditions. the including more they encouraged customers, are we once whilst demand

automation. The These increasing this need and adoption rollouts from key demand strong drivers are behind cloud are broadband very and more XG continued durable. access and growing range the for to

COVID all drivers even the supply challenges to of few arguably fact, past are were and the and strong demand today. years these prior In of stronger chain

widely of for and to is cloud of with us. the driver Generative to evident in prove dynamics. and be course, over increasingly AI could AI be course, providers bandwidth service these alike a surging opportunities, creating This and new And interest existing time for on providers of platforms, demand which transformative expected also top potential recent of are introduction

and submarine and demand network technologies With metro the our increase haul. key We, this And continue the to many of future-proof underlying lead offer these for portfolio, long providers our Critical technology service course, traditional architectures supporting further. technologies leader that are we where deliver DCI, today. and across even of to cloud DWDM and both providers. we are undisputed optimal

also the very third-party only opportunity and platforms our optical first make and and a particularly terabit to solution becoming us, across next available we first half the in for solutions. of plans the it available X, X.X in integrate front WaveLogic in routing given the about With to range are their of year, technology and switching excited of use

our TAM with towards differentiation been eye accretive and an we've into adding diversification expansion markets. faster-growing Importantly, to

Our center to target over data coherent including in TAM years inside come. the will the optical expansion emerging the plugs in components, opportunity and

And already support next-gen of routing and new are edge this another driving the conversations broadband as applications engagements seen, about and Vyatta, to Benu you've arena, our are and acquisitions In opportunities Tibit access, virtual customer metro expansion. TAM of PON. focus technologies including in the and

aim this significant from the converged customers our share. and expansion game-changing we the platform, routers, architecture market announced family An around come platform routing generated product of we disrupt of the edge the world year. optimally this capture for purpose-built Additionally, interest wave which an industry-first router metro, online has will coherent designed to new as

XX in And as these billion we XXXX XX total opportunities and more the than portfolio, a from several new to billion believe reminder, our grows combining next years. markets existing with market over something like addressable our

really for to Moving to performance customer that quarter and products. from illustrate some the demand speak our quick our highlights the

added shipped our E, On in total we count modems side, optical, shipment in QX customer of had XX,XXX. customers the bringing XXX. portfolio date another X for there XX record And Extreme, our we new to quarter to bringing WaveLogic X to total QX for WaveLogic in

wins Benu And for and the from switching, quarter, secured revenue acquisition. network our the broadband year-over-year. XX% increased during new routing In we quarterly gateway new

revenue segments the customer a This sales very to including of total year-over-year, and particularly performance in with respect cloud XX% up reflects provider revenue our the quarter. XX% regions, service strong and customer only QX. in With providers, was was non-telco XX%

that year our in XX% Direct comprised 'XX. this this And cloud period-over-period fact, above average, leadership to in corporate will was expect provider customer also segment. share we growth and continue fiscal of which cloud market revenue position is revenue grew with direct with the total and up providers cloud year-over-year the revenue provider reinforce critical half in the XX% of XX% quarter. And first

continue up service largely QX, Pacific outside In demand We in of $XX consistent the drive by driven in to in million, from XX% growth to revenue particular, providers was US. India, year-over-year that XX% which also continued strong up was year-over-year. about reflecting growth revenue was Asia QX market. in This

strong coming as summary, order and are In demand and durable. very is flow into providing proving balance, supply

are market-leading technologies, that positioned new releases leadership our and with including expand set a We advance our opportunities. well incredibly of platform

are to Jim? we additional With QX results. to on the more that provide financial I detail Jim on will turn what it speak to going over

James Moylan

quarter ability to our was Good particularly We toward the given outstanding Total to Gary. everyone. morning, reflects margin due product XX.X% mix. $X.XX expected the improvements deliveries, gross Adjusted quarter more than delivered second results. revenue financial product in a fiscal Thanks, ship which in QX the of billion, quarter. component favorable in end was

reflecting areas and in operating investment coherent around of investment aimed adjusted particularly continued was expansion. and expense our $XXX R&D, QX WaveLogic at several different million, technology TAM innovation

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

in million In from addition, $XXX in QX cash EBITDA operations. was we Adjusted $XXX generated million.

with the $X.X approximately billion ended investments. cash finally, And we in quarter and

As environment to the QX. $XX came continues inventory improve, down million levels from operating

drove We the to of as allow consistent levels generation level our year, expect return supply inventory will to the we disruptions. through to move reducing chain before us continue the cash which we

any repurchase not quarter. second did We in shares our fiscal

to and will to in sheet stockholders shares $XXX will repurchase year. we quarter our to begin We capital during that to return approximately again this we this leverage fiscal continue balance million expect

guidance. to now Turning

dynamics. our including that we quarter, to those to presentation, key I'm and outlook assumptions demand As related with about last supply the reflects in provide detail earnings

we This their in flow As a more push Gary some move supply currently days. an out are towards with order are in each we is balance driving mentioned, where as period to customers transition shipment and requested environment other.

that are a to our range 'XX to year. for of of outlook we these reflects revenue potential range of wider you As just growth XX%, broadening been I'll previous a of to XX% the remind all outcomes. result the phenomena, XX% had XX% range fiscal our which

will We margin adjusted XX%. XX% range that the be continue to believe for year in 'XX to our fiscal of gross

opportunities OpEx expect be we than higher we to respect continue for expansion. to TAM it last for slightly invest approximately as see year, billion, we projected the now to $X.XX fiscal to With

to fiscal deliver adjusted XXs in $X the gross in expect low quarter, we third margin to billion For and range revenue range. of the a billion $X.XX

Finally, approximately expense adjusted million. we $XXX expect be quarter the to operating in

this continue rate At share. will and to market of higher we deliver take growth, growth than significantly revenue

stronger, never relationships been demand by industry. the characteristics the has backed strong of best set customer and in business Our

addressable markets our other future to markets time. are positioned expand growth We over in opportunities for well

Of and solutions bring WaveLogic stemming over made to acquisitions note, we products the years. of couple last as we've new market, the from X, including we expect tailwinds several WaveRouter

and confident our are services We future demand for in networking products, software. in incredibly the business and

as made move published stakeholders sustainability. our provides and report. a company to announce recently details But we programs to questions, a our report discussion sustainability would comprehensive the that we we This new our and to sustainability our great progress before I have on like commitment of

If a will you'd the our copy. report, like Sustainability pages and welcome or to is send it the to PDF of IR you website e-mail available our on we read you're team,

the Jamie, now analysts. we take from will sell-side questions

Operator

Ladies we'll Leopold session. your with and gentlemen, at this Please question. James. begin first [Operator Instructions] question ahead question-and-answer Our from comes Raymond from go Simon time, the

Simon Leopold

taking Great. announcement. the out Thanks with WaveRouter the want for to question. I start

not looking to that You expect a next availability for to hints think, sense talked recognition and you to of I'd year. how when but model? as should you're contributions I appreciate we for get general to year. like of I'm weaving revenue how that about, I guiding into the think this about just 'XX, about to guess think that about from I sort product think fiscal some

Scott McFeely

Yes, Simon, morning. it's Scott. Good

First an sort was MPLS of with that Congress. the World you aligned have of all, announcement

we available got the base customer of the with on that. at announcement lots all, press from of tremendous show and reception First the

a of I will remind that family. is WaveRouting broader actually part our you it

it's of out capability So a continuation set. that filling

later Revenue on coming. You XXXX. Obviously, the was were we product start is of bang knew this flowing the expectations would general this availability in year.

overall three-year historically. we So in growth you gave was there. our that it our was rate part That of thinking

Simon Leopold

of follow-up. is. just get small Thanks. as should I business quick India X% know the looks an progress for you. of a we It of revenue. to historically, peaked base, Great. on where X% the it kind quarter. a India think the year? was Thank like or And balance about cadence it Love of this around revenue revenue the How on update the X% of

Gary Smith

get continue would as Simon, half it second we expect strong, I 'XX. to and be the in both through to

a one big large the think I of not a is number rest to to XG across cycle-based, industry, there I rollout the think India to a -- one particularly think three that's happen through number is which share there's going over extension. And of And have I opposed market the of years. as next we going cycle and carriers.

for three very enthusiastic about next to we're the that So market one years.

expansion larger as also, some in well. XG, growth, of putting into the of seeing but out of both broadband again, rollout We're the areas

be I tough of rest So because very our think growing India as What to too, the a percentage about market. cloud the tell players. business can the bullish well, that we're of is revenues, our including

are via players in that playing market. I the fastest-growing carriers India. would also right India cloud directly a part world the The to It's big Internet the submarine both also in obviously in and the market it elements into now. say

Simon Leopold

Great. Thank you.

Gary Smith

Thanks, Simon.

Operator

next your question question. go comes from Please Tim Our from with Barclays. Long ahead

Tim Long

Thank you. I Yes, could. two, if

And get use It Gary, sense fill to you backlog little a book-to-bill other had the related down bit drawdown can like a in the the order a to color just bit of of way us can half give on follow-up. was a or so that, we're how fungibility that backlog kind margin looks we little balance? I Jim just First, maybe to working maybe I so quarter, more And on bit, little second that there's backlog. lowered holes. guess, in then the no of a

James Moylan

roughly It's of the sort end [Technical our at the roughly million. we this year about will at $XXX Difficulty]. Backlog said of be end went down the Tim. our backlog that Yes, Remember, double historical of year. backlog by

to expect customers in a to expect we so we continue longer mainly remember, times gear. So because are backlog. advanced and have lead And did order that's no down, much decline

the in industry. in general is this the of all with So keeping situation

Tim Long

margin, you obviously, just know then could on shifts. of lot the you And Okay. mix there's a gross the Great. --

or gain network I think the you. new kind some some margin from you which would you you talked Thank over back through But can walk us chain, had coming, is moving the year construction about and that et balance lower. supply cetera, of next parts logistics, how so? as

James Moylan

well dynamics, we logistics gross chain we higher roughly the components said X% or last million $XXX to year, that were costs, $XXX hit supply so meaning costs, thought as that brokers the buy year we the as to On cost last year. exception pay to million the last margin

points to we down going gross said year, sort This XXX that's of margin. that something in to or like come that, basis

going in getting levels, of better. to year, are next costs not over think single-digit conditions those going to millions all historical So which those it's be were return time, but I'm exception sure what essentially the are we dollars. to

might will years. year, happen, it coming happen to over not going next that's the So happen all but

single -- but in say other terms I'd the low swings out in the gross to lower our been gross those put we new been other past, systems, always bandwidth is demand, Typically that which product The for mix. deliver capacity thing gross of the component are driver the margins line historically capacity are when margin. margins. in of has largest That's

two margin, add we systems, gross that those the the capacity, are and higher modems determines, as margin. large And of our mix part, adding to gross those in it's

higher helps. and little to a and be so overall, routing tends software course, Of switching that

that as add gross of over margin. our our grow percentage think to those time, we business will a As

year mix having We impacting that heavy of we're systems, and this this our is also gross that particularly a year. line margin said

those even working get of together to maybe we we the the gross for all this back XX% are produce year. in XX% So to better. we'll mid-XXs, that Over margin expect think time, to things

Tim Long

Thanks, Jim.

James Moylan

Okay, thank you.

Operator

with ahead your from question Please next question. comes Daryanani Evercore. go Amit from Our

Amit Daryanani

was are about, maybe the Thanks range about you I pushouts you're And outcomes deliveries for talked the with, -- seeing broader its of it think you guess back I taking of kind way my talking to extent talk are American about you folks question. start of it half. do in that pushouts? geos seeing Or Or where of could other that well? these risk North elsewhere? to maybe the seeing as you're you think spreads submarkets with you it delivery Is that there's providers. service or other a

Gary Smith

It's early cloud the Yes. players with specific in American the earlier as Thanks, that I fairly it very I to is Xs. And ability. Amit. remarks, really, saw Tier where think, said we the on, North

given did chain were supply not in the Tier of We a North players and the position two that place that American example. particularly X, players We both Those internationally, see challenges. in really did forward sets in dynamic, larger Tier or orders customers, America. of X for to see cloud North lot not Tier a phenomena Xs,

So we two really think those it's groups. isolated to

year. we on, cloud saw this now their revenues cloud earlier players of that still seeing notwithstanding ones, The the that, reprofiled that's and strength you're and all out. the And increasing the rolling strength, you're seeing

this Tier So American really X North players. is

just It's not I And a supply chain the is of out. at confluence The equipment, stuff been technology them. challenges say suddenly and of coming general but elements. all things. this of would ameliorated, And industry. to once broader our a of couple sort It's they're kind have of coming all

dealing alignment aperture these are budgets, the with have both and And they that absorption. logistical to carriers deployment and

So the it's with that we saw out. this understandable, balancing much the same cloud as players they're

a We are and haven't around effect we cancellations one of also It's I conversations really had around would kind with any of macroeconomic not be whiplash demand. caution. this seeing being them. the say, really supply expected to

Amit Daryanani

that more go lot just extended you what out as maybe I this rates Got growth thought, really this does a $XX And end than fiscal essentially revenues, into just you? follow be maybe you million, Kind the but into So you just still little That's on is Do imply years? this thereabout pushout if does $XXX magnitude going basis. flow from let's 'XX to guess, the something just this of way 'XX? into but is say, steady a it. So million, a up about helpful. the smoother kind maybe think is something I think, that growth can I for just talk duration? up with bit. lower the of just the I that's about will And flow with

James Moylan

We way, some our anything Well, customers, and I think to see change for because us, numbers 'XX is suggest we clearly, I the some 'XX. from for the that strong now, wouldn't I for right very TAM. our opportunity -- is of this change we do wouldn't by the you 'XX. wouldn't demand call expanded your to of be take moving 'XX. to have going that to

not year. the the going about that it's to going that's don't think year good to this of I a projecting deliver call be I'm we to sort your right take wouldn't number way to just I -- today. So add and -- whatever it it. But you're think

Gary Smith

your it think normally I to next But into going would year. point, we're if do Amit, And backlog to if dynamic what that visibility with sort play we through, give enter the year should greater our double levels still of that us -- be.

a So the more to scheduling. we're normalized year this 'XX shipment. and do But this visibility a delivery as will as be going better I into start get -- have and and of order around transitionary to think dynamics result into think I things period of set then we exit get more into we balance, think I

Amit Daryanani

Got much. it. very Thank you

Operator

Company. Alex & comes from go ahead question from next question. Please Henderson Our Needham with your

Alex Henderson

All right. Thank so you much.

just stabilize than were And normal probably from to be a normal you're you it's going of different that prior supply backlog going a think think around? little longer historical. to couple is how you So I the where that do What pressures? the clarifications. chain quick is to

James Moylan

depend exact respect to making prediction their critical to times of customer visible how demand with is backlog because is variables. and One they it where much of times to going terms and have upon second, hard to us. an up, our lead want is behavior our make will lead security in to two it's what are where Well, end

revenue, many third back to was year's for go a historically, Difficulty] the third. [Technical backlog roughly you years a of year the our roughly If coming

to as and Now expected for came and chain up revenue XX% -- extended of revenue and extended supply times, something this orders, of massive XX% situation, 'XX into we for revenue 'XX. we our our lead orders it like expected had went

be way back to to because might times revenue. were in down, go and expected our as that short down lead all the us of they that quite But go We past orders. it's towards as going the not advanced XX% customers think not might choose may it give

going the hard at backlog year it's have normal. to to a as than back higher will to end situation totally probably know. we're So this of gets we something But the approaching

Alex Henderson

you when almost I about systems talked optical And a the of also assume sell that transmission And larger But case sales line you percentage into sales year this of optical turns optical than then future systems -- additional line your with being so invariably, the that, components. normal. that's backlog.

should about something once installed, that additional that backlog? capacity talk you additional the whether these once ROADMs optical in coming delivered, that for Or see once those with the the to put we high-margin that can systems are wide So expect line is we is start they're transceivers? to up orders in in they're

James Moylan

to are get right. You exactly systems. put orders for the higher we We of time, out tend line do period a which, during capacity after

happen. does that yes, So,

As to far consists is of as the whether The it mean, that is. capacity backlog going come add. some But coming is customer it set over of and to it not. line a the systems will bulk bulk orders years. both that's of the us the of in I give of now,

Alex Henderson

in that's transceivers? from order time is that -- the orders time comes is opportunity? lag new lag? that Is that or it new for there 'XX installed that a the order So And a is implies what the to

Gary Smith

tremendously between varies It customers.

capacity in deployments. to it then that. cables that Some with large out in tends layered be small initial customers place a of amount gets line after the systems Submarine higher

from lot For terrestrial tends also to more day example, But their approach. generalizing really and one, put to capacity there a to to varied tend out varies here, capacity it customer customer where they quite be it. less from

in lot kind business the the is all we're future of a of our laying build-outs with news track lot new of this of good from world. think I a around

mix by does but encouraged the vary. we're very builds there, So that the on new are going

Alex Henderson

all. Thank you

James Moylan

Thank you.

Gary Smith

Thanks, Alex.

Operator

Please question. Our go from George next Notter comes ahead with from your Jefferies. question

George Notter

about much. guess ask I lead times. I wanted very Thanks to product there. Hi,

also, about they're a the possibility I'm ordering? then perspective? times? time big is coming those down And guys been customers bit. been buffers? they've curious just and just a where lead inventory And they there. they now? off you they're Where think talk quite you are there historically? viewpoint are buffers the working mentioned Can have Where that I Thanks. up here, now building excess what's the that building over Or is on

Scott McFeely

Yes, George.

the with if times, we broad you a lead portfolio. resonate On the obviously, have fact very

So mileage normally weeks. we may to product. from But vary year, bit into XX general, the a going what said in product were our lead around times

As we as continue year. said by that half in and that cut expect through than would improve of the more the go script, we've year-to-date, we to to rest we the

Gary Smith

second excess add -- George, One, inventory, I'd I on a about place on North of is around cloud we're couple the what American the players Xs. Tier of to talking the that. couple really, I'd comments think a question

move aggressive think fairly I began to to they it's position were securing -- out, times both fair lead they really orders. were when a around strong to say in future

the like tough or sort particular excess able period a and that that. you tell. of inventory But of together not time with to the challenged. the down budget a comes to all clearly, and Now is Scott of kind logistical they're about, significantly, our talked one up point all equipment and turning when that of absorb to of all in that, truck that both hit view not, from it's absorb of come in we're at Whether same as view point times their ability call lead from

be And from part think, the through I of and frankly, times But supply re-profiling that here. on with visibility going the with But pretty of we're of, view. players. whiplash now is we're given that normalization Xs. I have that sort come to profile rescheduling saw with re-profiling cloud chain down. that we gone seeing the process expected has good we've of And So think a kind that's got point it's Tier lead that the the

George Notter

your your out times of longer just Are lead curiosity? still than competitors,

James Moylan

and and middle ahead We way down others. We serve. We [Technical fairly to of that. competitors lead not not in right Difficulty] customers play to prioritize rule, By don't But they we their this. times tend can competitors are could think if Difficulty] or the customers tend can any [Technical to going certain do it choose shift the long but circumstances general as it choose appear prioritize shorter narrow, so. that do or to a limited

Gary Smith

sort underline growth, that just of Well, is at range. the bottom even revenue look you the I our to think our other of end point,

XX% I an and of piece. that's size any that doing growth. kind player took know You optical don't other scale our of

So we're clearly taking market share.

George Notter

you Thank very Okay. much.

Gary Smith

Thanks, George.

Operator

comes question your Please with next go Chatterjee from Samik JPMorgan. our And question. ahead from

Samik Chatterjee

visibility in. to And can quarter. the order the XXX sort have I in maybe for XXX largely of questions. more last hi. the orders of Yes, my then when rough share order think the bit about you can coming Is terms your and the math with guess I taking in Thanks becomes I a moderating start if quarter to about of as what the orders, follow-up. going have indicates million. lead But start there Just been think, When stabilize million more consistent you -- basis? any function I times just were it's on times insights a trends duration of orders the terms sequential -- the forward? if a of do stabilized a book the early in lead

James Moylan

the most just that comments next than for quarters, run likely. say that the of on we our the math revenue thing you Well, two a do first lower if each bit will be expect backlog, orders I'd is around

just quarters, the if the start of less next couple you than year, we knows, in take our rough of advance might approach do think who Now be our to math end view. the sometimes order will orders customers But as that and over revenue. the change so that we

Now that go think on will as bandwidth is year, we recover. can't grow. precisely. to that for date into continuing give next But you orders demand a underlying we We

It of our lead conversations the with supply times patterns to gone our customers We've availability sometime change. will more very begin ordering orders, market towards and of to and our year with grow. all through back of time those things a through to have and terms in environment backlog. their enormous a All tumultuous respect that and show gone will next stable get continue

Samik Chatterjee

if that if And Got ask in provider of seeing a follow-up, of bit seeing on Or my sort more of Thank of is it. the last service complete seeing And of that more are with can a timing capacity America. you're I scalers it you you. you web greater it delays pushout Okay. more a them? to I to you North can much had that issue of downsizing from dig a compare you issues for looking to mean, that quarter? projects is related much they're into the highlighted of it how sort how the deploy? to you're magnitude,

Gary Smith

a would that X quickly, It other not stuff like this deploy industries all a North industry, and with. largely fairly coming and Tier more their absorb to given technology logistics that's of they just chain larger number deal point. deal of say resolving supply about It's at is American but that players. really seems it's the ability I the and with across our with

and all them point at of of elements. actually both challenging and be obviously seeing that still products, supply kit, those time. they're view, but point absorb their in from And going for of a to various need one view, the chain, year-over-year of any a so a across ability to point and all they given is to because schedule view, deployment really And it's up budget high having they're their point logistic a manage equipment that, whole influx of

your drew fact, But of if what line depending to through pretty look you you look us. right And X at steady looking in healthy growth North on very assumptions if year, end with of still that, carriers you even are, pre-COVID growth. year. this growth good the the you're And the American you're you within at even Tier look seeing a if through rescheduling, this all very

going saying grow than up cloud And players, corporate to obviously, our with average whatever the end well. we faster is we're actually as

just They're the with environment. healthy this a it's period and on dealing dynamics. supply So demand transitional

Samik Chatterjee

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

Gary Smith

Samik. you, Thank

Operator

your with Vogt And our UBS. from next question comes go David Please from question. ahead

David Vogt

near-term and a a question taking then my for longer-term guys maybe Thanks had I question. Great. question.

announced I to midway you going think were the through make quarter. the that, quarter, obviously, you

of by also of the partners affected heard in some improvements drove quarter Jim But that variable You say I of in components -- upside. in really I numbers. their late variability think your some weren't sort the

that us So you then the a and well. about, maybe also we we're would back be mean think, 'XX, say, normalized tracking does in give year this can fiscal the where linearity out share. quarter, from longer period? I ability I I'll the mean mean relatively would perspective? think the -- would third trying was guess, the talk take in expect to a I help your perspective, industry more understand strong that And the optical to the a the is I to above month? second And that's average get the just just I'm in take quarter longer-term 'XX to that's of a cadence how let's imagine that year, growth Jim heard no well. the as call Thanks. right, you If fiscal in transitionary one in it, upside long-term as to From I

James Moylan

as capacity us which The we thing supply is volatility I'll Yes. you, remind affected been most are degree as the experienced components the and in and particularly are others, and that those That of David, to volume. deliver and of highest ability components the typically well modems, constraints on you, in delivery of our units components. variability has the higher significant constraints supply

bit time now point to when I have But now quarters. on components And come mean still components That we we're deliveries ordered. order timing, lead timing getting that and we approaching in normal. where is we or that volumes that say the expected was is in the to of relative are those extended. a of of for six I the time dates, happened the the last a volumes seven true times not and What's the any

would recent we in But month It still than come in. the -- modem came these quarter, get the had in what as in, less did actually in quarter. we our what terms this was of of most last to experience we components an estimate where

suppliers And to expect as of that because, delivering We upside, are so you. that order. be a and volumes bit to per consequently, we honest we lead -- a drove component their I upside in don't these recur the that and with now said, revenue a margin and times

I'd what say that's quarter. about the So

Gary Smith

for visibility in first guide We're backlog, about very 'XX. way that. But of around too David, the with your obviously, obviously the good in North as question to early terms go America a strong 'XX, into for a feel we of to given give it's and to earlier, players part us 'XX. cloud said positive we're Jim dynamics going seeing, that

demand good the pipeline got WaveLogic lot we're coming We've for stuff we've X. That's 'XX. that's sure. And products technology new coming obviously, around and got et into of market, PON all a engagement through. cetera, WaveRouter, and of seeing very for

feel going in we strong So a that to year do be it's 'XX.

David Vogt

All guys. right. Thanks,

Gary Smith

Thanks, David.

Operator

question comes go Bank Tal Please Our from your with America. next of Liani from question. ahead

Tal Liani

the is question And Thank is we're between cancellation of -- where of line the you're differences seeing Hey, good risk of you're border same? morning. in and that order? can Are second of Given seeing trends cloud a are the are backlog? the the the is, you. them? seeing What of in cancellation the pushouts, us pushout you trends seeing cable? Or the pushouts, give different service versus providers versus these each you terms Thanks. in one trends what with all the

James Moylan

well. We're the the us. Hey, Tal. take line anymore. and probably cancellation There's not that between and a chime that they I'll pushout. seeing in Gary stab it, away order means clear take will Cancellation a a as from at

seen As it a really last of cancellations. haven't was you'll of at end in of recall, And we trickle. the way but year, did we a that much see bit the

saying is wanted What -- gear we're date. want a they're seeing at they they and later pushouts. want but the it they What it is

I'd what We're to. cancel have that's if it. They as the not want it clear They wanted seeing these they So say say. placed, they at pushed they're to this, opportunity It's they've a already all. I'd needs their looking what do and the not certainly orders question at also gear. very line, And out. it. They didn't

Gary Smith

'XX, segmentation, Tal, good visibility of bit in the the They're terms saw in We've to the projects. there, we're happen in with half of involved little And think players through. I and and earlier. got for and second their this all re-profiled a phenomenon cloud we playing first the half

recent North American players as to them large point. them. there more times would bit of the of there seeing And as talk players larger the about I a improved I one is to When with well. lead phenomenon a some of we've the in well, include cable in with now would actually we're Xs, as American your Tier phenomenon include larger North them. I same sort

Tal Liani

Got it. Thank you.

Gary Smith

Tal. Thanks,

Operator

Securities. from Michael question Rosenblatt ahead comes from next Please your with Genovese our And question. go

Michael Genovese

Great. Thanks lot. a

to First backlog at that question, of check over just this thought of I was $X the wanted double math. I billion XQ. end backlog some

$XXX about the can't So been if whether I earlier gave. it came didn't that was it million, have down should $X.X number billion? by just -- you I And hear

James Moylan

number Yes, that's the we gave.

Michael Genovese

Okay. Perfect.

it So did disappear. none of

So that's good.

what little to carrier, could So real bit carriers, I'm just of particularly talk you think then, strategy you terms success types you'll the there? broadband geographies question have with in more tier fiber And I of a what most guess of is home, interested us what that? and is, about in the to my

Scott McFeely

to the I'll chasing or sort clear wedge is a other legacy-gig XX-gig, and PON strategy broadband Mike, marketplace, after, of the there. piece of go in as PON next-generation So the specifically technologies our above, the not technology on opportunity next-generation say, and

So our of acquisitions motivation Benu. that Tibit the and for was

at actually to their are traction, In municipality approach. examples building chasing out footprint, very versus of are it access of Tier of DOCSIS fiber world we the but X that cable terms the of smaller today board looking service terms beyond market providers when the the that broadband existing broad in business that some opportunities, are the codes broadband have types seeing their also across they of go a

of in broad a interception technology. it it's So sort that sort sense, pretty of is an next-generation brush but of

Gary Smith

exactly, lot And Scott places a world. around in the that are to lot in of the parts various seeing Mike, we of really only thing a having described, add is, that to broadband the different as sort countries I'd of similar different world. of There's

a is opportunity. global really it So

Michael Genovese

you. Thank Great.

Gary Smith

Mike. Thanks,

Operator

from comes question next Please our from Marshall Morgan your Meta ahead question. And go Stanley. with

Meta Marshall

of is there just the more -- as get refreshes? they markets feel Great. And higher kind or trends that Just maintenance maybe new regions far on of And of purchases sense you've traffic Generative starts Thanks. pushouts? any of lower any traffic there a as architectures some question and have me. makeup what others. enough trying maybe specific kind or to Any like speed more speed for are they change within out getting whether Maybe just the a they're the so than are of to seen trends kind then just or orders center? the the cloud Thanks. pushed patterns second AI the data of to changes

Gary Smith

part and point logistical going it's arrive. take a purely that, to were Meta, They're budget view sort orders. of point and a ability really from the It's to first just any of of placed say, deal CapEx a point exactly both frame, it's with of not view. all arriving time when part about of of a architectural they specific view, tight their why don't in particular very I network. from know They all that. they forward the didn't to would I

cetera. warehousing, deployment, et Think

So And no to of that specific or to projects. but their it's haul. they're It's PON things or of working, certain metro certain not there's projects any really long they're prioritize trying that. all impacting commonality and

looked through whiplash. result think It's logistical I high purely the any as the a sort carriers. we've a budget the of of level issue of

really and around actual the re-profiling rescheduling. no there's that elements refined they're So firm

James Moylan

no change to certainly incredibly it's Generative to an coming There's about going world. it's play, believe exciting technology. And We doubt it. with the AI

will part going rub at or world certainly -- is grow astounding seen date, behavior I onto effect will It change and we on Now, that will, data our the any are compute the can't business to the growing the for that's that inside But And us. with orders of demands say off customer time. first because to though. we've rates. center, over

Meta Marshall

Great. Thank you.

Gary Smith

Thank you, Meta.

Operator

Capital. next our with from comes question And your ahead Mesniaeff Please Greg question. go WestPark from

Greg Mesniaeff

on base new specifically? included product quickly been I be touch of you or any in your business, burner. wondering guess if pushed just including my was or if offerings, WaveLogic Blue kind software can X? Thank the can that's I reincorporated you back of for repurposed of technology taking to your that some Planet And Thanks. question.

Gary Smith

XX sort Thanks, the over too we around our last the much chain well. I to talked understand, Greg. No, of supply or which continues haven't challenges do so, months business, given all software

it our can various of We products applications then pretty top which are taking all really customers on much taking, whole major of MCP, in got that. put putting automation of world around strategy we've and we elements like now that where the

systems and We're services putting micro the across line portfolio. systems into intelligent also that architecture our as well in most parlaying line we're the automation the automation type So world.

much as And automation so our we very key thread portfolio. see a all throughout of

Scott McFeely

in example Wave reuse, a attributes customer our of to very manage we've announced the Routing that family, technology if domain. look what one able of key our is specific network in be you a And multilayer of at to that

provide family is our actually multilayer key which the for block able into a you're that Planet it's our have to with Blue recognize and rollout There's technology portfolio, key that the used MCP platform the customers in to administration, convergence. be portfolio, stumbling if integrated we familiar that, around which part of the to

Greg Mesniaeff

time line, Thank US replacement both Huawei you. the elsewhere quick And world? Can update us Thanks. a and in in follow-up. an the you give on the

Gary Smith

continues networks. in now say, would US, didn't roll I have out, they particularly, lot long-haul a Greg, the It's to Yes, small. of it relative

You've with playing of stuff, broadband We're some relatively so small. that's got of through. customers are but most involved again, that ours,

is installed the base. think transport side, in it takes was to take, I next probably that one I play going Europe, for these even and carriers infrastructure Obviously, embedded -- we're out. a that's In that think transport still expensive more But to larger play through. equipment to longer transport the a longer network as share on a take -- years. winning of And nontrivial our fair thing that's very of to well. out three than is

continues Huawei whole So journey that replacement. on the

to but a case over than parts a happened, longer two be finish to period. quickly. to up, the very it of month and an going sort a world, happened it's in that is year of I got other being much little tail happened Europe, India that. point, In more think, XX

Greg Mesniaeff

Thank you.

Gary Smith

Thanks, Greg.

James Moylan

Thanks, Greg.

Greg Mesniaeff

you. Thank

Operator

And ahead our Please your Kang comes Riley. go B. with question. question from from next Dave

Dave Kang

Thank morning. you. Good

or XX%? year First, did of just CAGR a reiterate next three to clarification is XX% reconfirm you that

James Moylan

We to anything haven't great a recently. going We it's next said be about year year. think

We haven't changed for years. about our anything views the coming

Gary Smith

CAGR operate typically would update fiscal this long-term year. of -- at the end our We

Dave Kang

shipments. Got it. What recent of And your backlog then regarding immediate your current backlog you before most in is believe, said was I for quarters, mix the now?

James Moylan

day, that For immediate shipments is asked? you what

Dave Kang

yeah. Yeah,

James Moylan

this, we have of people's chain with kind That want a they about of and changed to we is amount delivery four them to times the supply The lead historically, works. was hold. Well, six weeks. to disruptions just-in-time views on Yeah. operated the customers what ordering our inventory said pattern by the the to eight of way business

guardedly to it sure. going way down it just-in-time pattern. is as where a to back not probably are what revert times ordering to not terms as going were. Lead not behavior And to necessarily customer because all was closer get that say I'd the of I'm was, they in low

So that's what's on. going

in our of amount backlog, orders are which 'XX deliveries. a We for fair have

our Now early still to demands we most are lead their with of our customers deliveries, backlog are, because today. give but those 'XX of those have most And visibility longer, want in cases, to those outside than time. us

just-in-time I might that And on. will get down model. think used closer to not going the to it what's that old to model we It that's back So operate on. revert

Dave Kang

you. Thank it. Got

Gregg Lampf

We Thank you this we to road morning the We've the over our end us reached time. of several and appreciate forward joining everybody on next look of you, seeing Dave. few weeks. the

we a talk months. great summer, have you see, couple a For of in those and to we'll again don't

Operator

joining. We Ladies presentation. and conference gentlemen call conclude for and will that today's thank you

now disconnect may You your lines.

Ciena (CIEN) 6 Jun 232023 Q2 Earnings call transcript