CIEN - Earnings call 1 2024 | Ciena Corporation

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Operator

Good day, and welcome to the Ciena's Fiscal First Quarter 2024 Financial Results Conference Call. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Gregg Lampf, Vice President of Investor Relations. Please go ahead.

Gregg Lampf

Thank you, Dave. Good morning, and welcome to Ciena's 2024 Fiscal First Quarter Conference Call.

On the call today is Gary Smith, President and CEO; and James Moylan, CFO. is us Adviser, Q&A. Executive McFeely, also for with Scott

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

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

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

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

events whether which result and Ciena update context this XX-Q, new in today. call, as forward-looking XX-K obligation the to risk be of the Our otherwise. future our detailed of discussed viewed the factors our should the also a in no information, recent statements in most filed conference or assumes be information SEC will with

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

to of the that, at over to I'll turn many sell As Investor it we later Meetings We month. forward be hosting OFC seeing Gary. in side look San you this will for Group a reminder, Diego. With

Gary Smith

morning, Thanks, everyone. Gregg, and good

the margin release $X.XX strong fiscal from gross quarter revenue press seen results, XX.X%. today, reported of first As you've adjusted of including and we billion

Our operating and included EPS strong QX metrics, profitability XX.X% of of quarterly $X.XX. adjusted performance adjusted very also with margin

we cash durable, increasing bandwidth network flow additional The and free we remain of we quarter. business and result. drivers demand our Additionally, very on And capturing as focused strong, share. traffic and million $XXX within believe remain a generated in the market growing is incredibly

design were, QX segment. providers. Orders example, players cloud deals revenue quarter access. Fundamental year-over-year XXXG ambitions are market, significant from our were win continue all major cloud in fact, providers In taking up in leadership in new we secure for expand we relationship had and and is adoption the we with of the to Optical metro our this for to plan by providers Specifically, advantage particularly expansion growth our selected extend RLS addressable bandwidth the of cloud growth cloud to and these to provider, and global broadband QX, our in a trends, routing our as also of were also with as that, a vendor of their their of ZR+ a $XXX they in major this expanded provider year. future we for relationships direct our cloud its Reflecting QX, XX% primary pluggables non-telco rapidly and very on based to later XX% We customers up both of architecture quarter, the grow year-over-year, and large revenue with total these our on revenue XX% platform. global million recently cloud accounted in revenues. provider networks. shipping over taking in was cloud And which for begin in

great how providers, becomes we discussion as our a driver a traffic broadening engagement around our very including for cloud So, AI of clear growing us. leading and it been is leverage that can we've with innovation, opportunity

market to center plus centers out AI incredibly XX% interconnect, flows are about and positioned of we begin data benefit data when in well traffic as come built In are fact, more those to share with centers. data

We unlikely whole as the will application to XXXX for satisfy space. market inside critical based are This we rapidly that providers we position next-generation continue And them relationships. existing very have this belief our momentum pluggables really in is strong developing family, expand data the new technologies our on important our exemplifies requirements this long-term confidence to with strong us. a also cloud as and center, solutions a increasing we for with for are these have the

of not here in these than it many taking and is of levels today, and to new in We high and from the longer is This orders industry financial inventory. last However, to deploying at by magnitude order customers, and fiscal from increase their the specifically, And our those their flow, site sit we we determined very anticipated, the to the access to performance that from begin materializing expected. absorption same quarter of in time, of limiting largely is readiness provider see equipment, is we to we absorb clear our inventories. commentary placement in Provider volumes XXXX service Service difficulties QX. would of installing including were significantly order for segment these customers part as normalization the orders North existing and our expected America. More in due fiber, customers which timing particularly be our as

world, providers macroeconomic order In are addition, contributing almost in seeing lower-than-expected entirely are caution other and to parts certain concerns international service being driven by from that some geographies, of predominantly volumes in largely we the Europe.

we to grow expect mid- customers are longer business to underlying to from want that providers ability over And the the durability patterns we in more occur continue our term. will gradually discussions the our order to how emphasize to view share service our Jim clear, we next with but in industry few and quarters. And view and speak these expect shortly a about demand current is Our the as based of our now I customers to dynamics to impact we in recovery and be that confident this on take temporary. the drivers over outlook

really key submarine from fundamental QX undisputed domain, our strength illustrate Optical, several continue virtually that performance these fact, and there to leader including we the metro, DWM, of remain haul. long highlights DCI, across are and demand drivers. In every In share take the

During Quarterly in the QX, the reflecting count than total a Xe we line as added had shipped XX for new total $XXX XXX. WaveLogic date, have to customer platform, WaveLogic to million bringing with XX WaveLogic to we've XXX,XXX total RLS customers reconfigurable gained ZR+ our for or in customers XX. Extreme, quarter X modems. WaveServer revenue quarter customers And with growth now a year-over-year. a we more nearly customers. our for total record year-over-year well new doubled system in in QX bringing XX% and And XXXZR revenue, more than our the XX of and X Nano, new quarter, X pluggables,

orders terabit Looking Extreme, solution, summer. will Optical, already we're the which X ahead available in and become for this only taking WaveLogic generally X.X industry's first

ZR, fact, latter X,XXX for organic XXXX. In already such expand X,XXX in TAM our WaveLogic X and had both series combination of gig wins, strategy investments, markets. and Southern and Routing products platforms. the And faster-growing of X our to family, In HXXX as next-generation where into the growth & inorganic announced these to calendar we Nano, of we've pluggables Cross we've double-digit been feature our Switching, in we our will QX, year-over-year half making Vocus. continue execute Further, revenue

globe around as Our more the continues we and than ATXXX metro gain customers have traction we now routing XX our platform. coherent for to scale capabilities. And this

we We building for build notably highlights good including Software to are with which XX% our quarter address additional portfolio, of growth over form Services, factors continue Platform with a and range to applications wider time. Other router portfolio another revenue X% momentum year-over-year platform, sequentially. of and QX include, very this for wave

this strong We Services in also quarter a and our delivered our in most through our driven because growth Global role provider in deployment, was first really strong XX% quarter. it some near-term we helping and challenges. In by service year-over-year summary, visibility customers their our absorption another performance installation notable illustrates is work for saw fiscal and of revenue which business,

leadership technology to Our and has improve. position continue better been will never

transform demand We ahead business the outlook, and positioning that well remain over digitally in for monetize helping provider AI opportunities And results, recently, them and the engagements it Jim. dynamics, I'll the Jim, and the execution in faster. Our customer current and more context you, Thank details of as our quarter's bandwidth, their on operations. what remain service very our of long-term in provide referenced networks turn meet strategy. With rise that, growing the I infrastructure earlier. them focused as particularly will the on order operations their who of the to network it for confident to means

James Moylan

everyone. morning, Good Gary. Thanks,

gross fiscal $X.XX delivered operating Adjusted reflecting we a due $XXX quarter QX was revenue expense in bit adjusted stated, million, Gary As QX results. very margin strong financial favorable lower a first XX.X%, was delays was to projects lower Total product including mix. certain adjusted operating and margin strong million EPS net QX, incentive $XX measures, sales income of of compensation. XX.X%, in respect results, of With profitability to and internal we adjusted delivered $X.XX. in adjusted billion.

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

the and repurchased million Finally, for we from billion ended down approximately approximately the investments. shares $XX with levels XXX,XXX Inventory during in cash we QX quarter $X.X and came million $XX quarter.

$XXX million total target the We the are to of during continuing repurchase year.

to imminent, decades reinforce points. want signs year demand to a for drivers fundamental very Most of demand AI including Bandwidth importantly, shows XX% of strong. few no grown we slowing. demand remain growth to As applications guidance, turn bandwidth in at our XX% I with the per and business, has

with expansion center with across continue gain us in business and Optical and our We in to position network provider relationships and continue and customers Routing providers domains. engagements and deep with Switching And well opportunities connection build-outs. to infrastructure data both our service cloud share grow their

shortages uncertainty, are come builds customers. in of result remain and which a effects are industry of we times, whiplash huge on about getting inventory by things our in supply chains, this lead of by down a networking of components, better. response period as inventory orders working and the However, elongated gear They caused customers key has by

However, of we is of work in industry America inventory, and anticipated and levels placement through the high this is X in it North longer these to their taking many than orders. new impacting Tier service providers for

European related service from increased seeing providers are certain to we concerns. macro caution Additionally,

is and and largely this of competitors recent in consistent suppliers what our reporting with have All been weeks months. customers,

adjusted improvement these adjusting believe orders to that guidance quarters. Taking dynamics these to to factors 'XX, gross are into margins are $X.X X% from growth fiscal previous billion, $X.X be XXXX. to of with it few by in fiscal currently billion, expect to With range now revenue elements for we X% down some annual our of and expect fiscal variability to certain to continue temporary a be of our respect fiscal see over We the over for continue expect in the range in consideration, we next to We of XXXX. XXXX quarter. expectations mid-XXs all

leadership intend to and adjusted markets key For we investing expense, expand our growth in to to strategically position key operating areas. in our both market advance continue our addressable

operating the $XXX deliver taking planning outlook revenue current for to range, into in $XXX in to quarter million margin mix account to product in operating given expense QX, year quarter of year, low million $XXX and expected to million, $XXX fiscal to now our million revenue respect percentage are $XXX lower range we gross down and the quarter. With million. XX the previous adjusted guidance in million expect approximately $XXX However, volumes from for to our of of million $XXX 'XX, per we expense per adjusted average a

are updating our targets. financial X-year Finally, we

duration XX% of of rebalancing a rate of the and consumption, a growth, our was and year to As well our and revenue historical X%. fiscal supply X% the over reminder, above of XXXX given severity growth outsized

reasons, is revenue today same will fiscal than XXXX outlook Our growth rate lower the be our that rate. substantially the historical for

in year X% digits year, a our that continues market mid-single Given low XX% now ensure as to percentage, -- represents headwinds challenges this view, to CAGR gains. In from annual growing $X.X rate. ensure revised continued baseline growth rate. near-term of into single low we years. believe billion, expected grow demand demand supply using at the will continue though will recent well the AI, they've to our to in X% long-term revenue which Bandwidth fiscal a customers of historical seen chain outlook that the to revenue And XX% least summary, the at, some recover industry drivers that, growth market Underlying to share is best rate updated experiencing as Ciena's $X that this billion future. our include

to providers Our the deep well with new service leading address of growing extremely well evolving and technology and our position portfolio relationships our us cloud priorities both providers focus as to our on as network markets customers. address

growing share over We the now our expect turn to and over continue market call for term. Dave, long analysts to to growth deliver let's profitable Q&A. the

Operator

JPMorgan. [Operator Instructions] Samik Chatterjee The first question with comes from

Samik Chatterjee

the a those follow-up. of for any Maybe QX like that the the order the lot both the telco if first verticals worse color between bit were least, But seeing? X appear you're for have mean, Because you there, color I a magnitude one, can more probably on telco guide of order sequential terms a patterns seeing, of more expecting. And at and side. it I does than sequential were on in trends the the any orders scale on order ask color the from the commentary I just trends there? you're web

James Moylan

Yes.

work this to We've to and QX, of they for respect about fiber, just our to for slowly is longer quarter longer the relatively to their all that patterns to sorts through would their came let which to with dynamics X.X ordering for normalize the through happening at in years. heard time year issues, expected was that at are is guide. the QX. it causing all was with to would There their gone inventories. site Samik, last we with take our by a historically and Just accumulated that the What's low guide they we our here. the working based on But That premise premise us. me service everything X of inventory our respect over taking labor to is and them our plan providers a try are readiness, respect improving. faster had is for order through where and be them too, work inventory describe this But view Tier rate have begin for through

getting would Let clear down our to not be the we enable it guide. they guide level inventory working but think at they're now We expect me that QX the do better. full reach are us in QX make year things that are though that higher orders and do our going and to

Europe them expect clearly, seeing lower happening. for that's Europe, macro strong, situation what's is we're from So orders the not but In the it's the lower and at see really just in year. and to edges orders

Gary Smith

up your saw with to of the cloud, point Samik, in on sort that we numbers the contrast the year-over-year. cloud, were you QX, XX% which

to solid We kind that not have growth grown very of the year. expect going throughout we're strong we've there the tremendously see but year. throughout XX-odd that and see to Obviously, We're flows last web a percent to continue be going year good in in scale. growth order to

Samik Chatterjee

your comments my for quarter. And clarify, it. long-term prior Jim, guide growth just Got I Okay. about follow-up, if can the

to I I reiterating didn't that -- X% in 'XX previous guide be guide guide to capture of didn't trying for to I you're to were what seemed that like exactly you imply it provided? updated 'XX you sort the long-term but fiscal the think exactly was X%,

James Moylan

Yes.

that if fiscal you saying doing us, and as you If now said X-year slightly of to lower in we you and We're over off you're 'XX forecast assume for implied about a of rate was years. the X% beginning 'XX, a think growth with the later the take X% base starting in rate higher to at rate a perhaps X growth should a your said -- what year, which years, we growth X%. that should X%

trying better we that. guide. than it But any. hope We now. be. that it's Now for purpose, could like 'XX will not be guess for to guide modeling good We well right as a think We're sounds a as

Operator

question comes Evercore. next with Amit from Daryanani The

Amit Daryanani

QX I about you can guide the don't get growth I confidence? low mid-teens of are gives at an the guess in you And steep point is talk year of that kind this, of that half. to telco of you you for And implies orders a the extension these maybe offered just telco materialize the risk half way well? the to just more guide? if given growth end customers? like and you start the implying maybe customers updated expect, the back back at for very sequential you then have with QX, do of the Can almost you the sort the ramp the think this that from of as dynamic downtick how than think Or the I what

Gary Smith

yes, clearly into we we'd step that actually it's function QX. in half Amit, start Yes. the second thought a

said. of Jim sort are seeing event. the orders as is a This We not binary

are a we orders. some the equipment service these inventory going have down, gradual absorption, the And partnerships confidence. guys, deep obviously, sort provider increase as That and of seeing seeing in are us progress and installing the We with well. we gives in we're of

So where into we in particularly we America, it. -- have North insight

I budgets think that have haven't position now budgets and we're in other changed. released better their their people is a the dynamic really

think most of we've greater what changed not amongst into I carriers this for is CapEx planning absolutely those of their seen, the As major most at insight is and people But all, installations. intent got year timing is the there. now and have

a best as of it's not now budgets As we better Amit into been change the guide. before. that's we're where we've the you than released, the visibility reflected if anticipated And we early turned had have function, step did, March, sitting as we year, do a it we've in in much the have and will,

Amit Daryanani

of there's if And now? That's narrative numbers just and it. much AI not continues now. you opportunity that extremely then driving perform some cloud you if folks. follow to into impacting benefit AI do it's demand your see some still really has cloud for an AI helpful. the future right come but trend AI Or element more I'd time up, just wonder have to could the to a if you I Got of I -- understand what's if of numbers love is right the already? think well

Gary Smith

seeing now would offerings, that's with the there -- various AI I we're et out not GPT, say really some Gemini, there. cetera, traffic is the

an but function. is generating traffic appreciable not that obviously some So step

all And really then our will right which monetization, that's broader monetize release know to the these the to They're for come in then think investing AI. as compute. dimensions flow they how into all massively is understanding how I with we guys about that of figuring out now network.

seeing we're growth. basically what business So usual is cloud just as

are you think I seeing acceleration that. an of

SaaS do well we're sort You've gauge seeing very seen the another of that. companies robust. as I And of think

we you're up network You any was anticipating seeing all think the saw cloud. numbers function year, of that step massively guys we're were it I these deployments AI and don't with that yet. in last in really those virtually

Operator

The Liani Bank next Tal question of from comes America. with

Tal Liani

that Are what your know carriers, talk How that their of in cyclical else? less. we're cyclical? it's inventory. decline When replaced seeing to downturn to any confidence you're providers parts be spending, permanent talk you -- in will spending more structural, they this that in you there be is here that have desire is just something absorption really could recover that Or do your the about a could we do comments, service about not spend of talking that down structurally their by

Gary Smith

America, spend up major absorb question separate provider, focused It's really not -- with of on is of is builds. I monetization all there's the their about think out. is intent. would want I a impact there that anticipated. they with America. a around on. access and major many we're their mean CapEx, a have very believe belief, spend around think it's it. in the their intent think the and say obviously personal super more. to there event XG. think Their I and sort one do want I was is build. to good And focused actually would reticence a I for Obviously, that I what the I They catch service think they're that that it issue do more to that do North carriers infrastructure structural. there's world in, own this structural Tal, network a Yes. and I that transmission that is not do North my been build-out which curtailing in on absorption. the And not will I

I think comments XG. Europe, So would my little in bit think a issue, I notwithstanding do there's differently not I on. think it, total to about a structural

I think they some inherent challenges there. structural have

carriers You have in XXX Europe.

to makes You I countries no a, of have hugely influential in some is kinds model seeing which certain And American Europe. economy bit economy a do they in to think economic tiny jurisdictions downturn in think Germany, North than those with you're And more like the continues that, the key where a carriers, the challenges are I well. sense. multiple of receptive do

there associated sensitive So are, news. challenges. economic issues and piece But some not European I the that's to new more structural the Tal, they with think are

James Moylan

going In networks. India, them the year. long to going year sort India a their to we think, a for time. great is out of is for be right. still going year build continue to up We're to with but place this within us last be India going big a flattish We They're to and had

Gary Smith

we're seeing And either Asia that uncertainty. in of any that Pacific, sort not of

James Moylan

our is has And that very business would grow one is for driver to for say, at rapid the grown bandwidth. The rates. demand Tal, I thing continues and

are the the that manage changed building people has to demand toward really, cloud the who Now providers. somewhat structure networks,

buying weren't a you They're part significant very If that go of be from possible any over it shift, If network service the gear. is ago, that any expand shift there back, It's they could would provider providers. that, cloud years today. time. to buying ten

Gary Smith

haul. Certainly in the long

James Moylan

Yes. Yes.

Operator

Simon Raymond Next question comes from James. with Leopold

Jeffrey Koche

Simon. for Jeff is This in Koche

displacement really can in weakening this in hoping as quarter, or as like strength comments reconciles with out well that just swaps well the there? weeks, maybe macro-outlook it's Huawei maybe your going And was like Europe you maybe the the India. how I hash So It opportunities? on sounds

James Moylan

I'll deal the with part. first Yes,

It doesn't of necessarily type deliver region the reflects report regional customer. reflect which equipment. into the we Our

service big for in into Europe the opportunity driven not us. by in providers an thing, Huawei -- there's deliveries the were providers, ahead The the cloud still Europe. So jump

to situation They whole the Now necessarily out didn't the with Huawei supply And to wanted really to they gear. build benefit want chain had because actually status was service quo. a providers stuff. and COVID stick

dynamic And did last years. The well and of dependence desires we in pretty last already, chain supply We're so reduce of for once Europe. think and But the not the few all Huawei. And Huawei of particular, particular, in over we combination X in of a economies desire think upon of X it everything general, get some some to else has Nordics, Western years, has reasons, this it's the we substitution Huawei, seeing in going happened those places over to in through themselves abated. Southern their in China that events their will places continue. in in

Jeffrey Koche

it. Appreciate Great. Great.

help when For Maybe follow-up, that how we just for what lot understand opportunity of been be a you think technology. around sizing us timing and are -- of for there can my or can getting you like there's about guys? you effective the it rather be intra-data the noise, center coherent effective, and opportunity will buzz cost the that cost

Scott McFeely

forefront, that of think as the and themselves the inside will the the between of the rates flow as to A replay they're GPUs the of used WAN to forced a because it as is increased lot like in the network center. techniques part that brought constraints data way power, increase to were coherent distances about

are the models to in leaders XXXX be sort in the being on is you're the have opportunities WAN. a there, things probably leader to multiple there, technology sort I generation, the space the are in of Coherent been in, key over at will of we've the use business going get beyond, that the same next we market different of looking the But than in coherent, think which to some adjacent technologies the market. From generations. perspective, consumption our timing and quite working fundamental that system And

Jeffrey Koche

Yes. Great.

there XXXX. you $XX that coherent? I like billion forecast datacom put Is out think be Coherent transceivers has by a that a could percentage for could put would be

Scott McFeely

to crystal Yes. of of early obviously is possibly At size then generation a this here that think at talking about long where coming saws I little that technology, There's still the the existing technology, And from it trying of you intercept a -- slices that can. ball. you're substitute try obviously off. a as technology point, we're you're bit is it's life if to think, the trying to off, extend as to I how of

James Moylan

Just to to be major those products of development track R&D we providers. clear, with we do our have in data And talking a map. center kinds road are develop

So it. of shift if we're on top And hope. we're be it, and to stay part going of the right when we occurs, to going a

Operator

comes next Meta Marshall The from question Morgan Stanley. with

Meta Marshall

center as maybe little into of builds dig I data those past, of know of some to spend for with they cloud Wanted the telco actually helped that bit. customers. in Europe a some kind European spend was kind indirect of

to just of if to or there on about of indirect kind then kind so any question. part? any kind sense wanted if the the commentary is kind And weakness of that's any due of a power constraints data a of, I that out And just the on maybe of seeing indirect kind just you're And building of of portion? as centers in just we're hearing follow-up get

as you down across -- work the inventory helpful? on to kind would be Just of plan year Jim, how levels much

Gary Smith

they've the think service the some shift opposed impacted over And obviously, that years, where taking sort the been few type and as used of particularly capacity the direct of been couple has us carrier. wholesalers. fiber. cloud I dark providers, particularly wholesale And they a has going of come through to direct a Meta, providers years Increasingly, in last Europe. in there the

have and you Europe. think international I most of So case in in That's issues other jurisdictions rest dynamic, the where regulatory got not you've seen that particularly the it.

countries as more much is such has impacted But the wholesale the of it's India. into in that capacity do somewhat hyperscalers. think hybrid some of So in other a I Europe now direct

James Moylan

inventory we On year, Meta, we were reduce and going our we said that improve this and will. level question, to the inventory

to million so are $XX this QX bit than to our expect QX. the we're on by as rate probably as Because As going get we you our lower rest system well, low And lower down demand we match to to as the be we're our our inventory year. forecast, saw, is inventory in the going and year, material said confident we not of a into would. inventory down we going a we we've of slowed reduced bit take

by it hundred And a because But couple QX of we it or quickly bit going breaking of is we were that. million, for the little think. million to other get grow I think down would $XXX by hand, drive But I by might I million. late we on the react least I like us, it a we something hundred a and said year think can't down it inventory think the to at get situation will couple for down in we'll enough.

Operator

The next George Notter question with Jefferies. comes from

George Notter

where customers? lead bleed short, to inventory curious right you bit taking wondering leading product a some off, product I'm the I excess that's versus times of guess your are lead times little can are longer about talk quite buffer dynamic, about stocks if at that lead to times now. and I'm just

Scott McFeely

a much times. broad think as at patterns. quite getting reality of rate of impact back sort have George, than of an our back there lead that very order that are not have we to yet behavior single lead times times, times have is, approaching it, sort getting lead times customers. to portfolio, pre-pandemic terms lead of And executing a but But through so to I better to wanted that. executed lead a does our customer we've approaching We're terms in on XX-week if vary. you -- number QX, The we published we in

As it they they're to lead place not if going don't lead to need -- XX-week time. them place they with time, XX-week with

George Notter

Got then -- range I'm weeks it. what And pre-pandemic normal XX were also lead sorry, times or?

Scott McFeely

it for portfolio for mid-single In digits weeks. the us, was

Gary Smith

product Depending on the line.

George Notter

Got it.

customers? it a issue that the concentrated inventories issue -- -- do across mostly And America. are you Or it sounds more of around Is customer is Okay. it's the is think it case North the broad-based America? North handful like is

Gary Smith

say or this it North is not It's conversation. but America. examples meaningful would X to I super they're one internationally

but But it's across of of and larger equipment. where chain think this out it's carriers obviously North to dynamic, America, sort amounts and we of got piece. now other in Who the whole America. it you've turning North tried I the of ahead Tier challenge are shared mainly is supply with enormous the mainly get Xs most up vendors

I orders It's than to ship we're the to bunch until time the move of why the we the mean, causing sort all your anticipated. that's about of an prior a kind year. XX% the and are last and binary orders turning think just service we capacity earlier stress trucks together, point, with at through lead see providers. deployment. did event. to those we The the longer think think would availability, to with super And you I other they seeing not put same we We're I taken vendors year than system we and more that. absorption. They collectively challenges we not in improvements just is particularly equipment seeing want are are. the up. of it's inventories down. It's them up path is we -- in seeing logical all step anticipate. And improving around back facets their storage, This all and in et function, -- various And of it's coming increase including to that are people, down being the like fiber logistics, what cetera, or reduced as times a I

James Moylan

we're providers providers... but clear, telecom be MSO in this service to service context, to not referring just And

Gary Smith

include I'd too. cable in Yes, there,

James Moylan

Yes.

Operator

Next from Michael Securities. Genovese question Rosenblatt comes with

Michael Genovese

but what up these up mostly bit provider the availability. of service what American talking understand North to about I'm you speed flesh with a comment I means. last to because fiber wanted you're with struggling to question challenges on little follow the out kind that I that Could more? come on

Scott McFeely

people down everybody time. Michael, the are the more or by lighting market putting you North new a in routes are customers in I construction it think announced, has American takes exasperated well. and America process put the as the as ground fiber labor there North is equipment And when big appreciate process can to even of this fibers, those have builds probably -- the procuring though intentions majority of new fibers, like consumptions and there's

is access getting So to tension the there. taking longer. is Timing fiber,

finally that trying and had then longer do. anticipated that fiber it. characterization we they're with delayed taking through just to of doing construction the volume is than through the Going working They're

taking Our quite happening. it is anticipated It's you is visibility can and our just longer the on to installation help than going substantially, see that and it we period-over-period services, where year. up into we customers can is our

Michael Genovese

my in you've then seems And mean share next guess high for competitive of the level just DCI, like very I environment market Great. it a question, maintained I Okay. DCI.

recently competitors has become the DCI, in Or you how of has at ZR competitive are important, changed market? the As all? in different if set finding environment more a

Scott McFeely

I it, views all. guess, I X not business impacted impact has Yes, think, ZR of at different our the

DCI. results, In a DCI for wave, QX and all part, can or quarters most massive you record fact, for that's in WaveServer all see the XXXX

not our the with So up is have year web last people like XXXX. -- it's clearly XX% impacting our as scale impacted may for some year-on-year, business business for

a different data center various that flavors big of again, is So of part inter-connect.

clearly you'll you gain that the year. not do last I think market those fact, share the include in impact having -- and So we there. size, GCNs And with math negative a the do

very still competitors of in terms investing of go a In you that of end into it's these At key the a the models. from to consumption sort start number day, that pluggable perspective, number plugs. are of yes, ZR get folks different technologies of the limited the

that know, some that believer technologies. together. time for own probably you philosophy don't we from own You a are firm have as I'm the you're And to if perspective, core a all not technologies, those put different to and But you some take key various world. play will our long trying out. of and them control ecosystems destiny, that own

James Moylan

web-scale be And market we companies. XX% globally roughly just clear, with share have to

about than a higher be that, it bit then If gets is to which out in just you China, entirely Huawei does, which take that.

So we're us plus. to second XX% very probably point level, remain want comfortable for But with because our to share from position and a hard gain we we'll take going this source. think they share that at all it's

Operator

question Henderson comes Needham. Alex with from Next

Alex Henderson

between a lock we but service January the the bit because hoping talk in mix quarter actually could quarter is that a quarter-to-quarter providers. service was product was most significantly and realize bit it service 'XX was in expectations. about down quite little I I typically up down a for the quarter the January

In pointed systems. will they shift not terms line was of transceivers, you to which install out that a there but mix,

meaningfully the off? on start what's period? give opposed shipped does at and roll 'XX? out what, range? is to half you that as product going And installation out the shipments? the the And some assuming of imply million sales does off under-shipment increase Can this looking you're XX%, us And an to it that -- new are the that been after year something down, would XX% I'm systems to line million play at, installation service that? of quarter-to-quarter. fourth some point get that to of which the first we the to So $XXX therefore, continues So in course as be then to through $XXX what, how service, the churning fall over into quarter guidance to in Does

James Moylan

Let Alex. me context a here, give little

Really, businesses. are services business. You do. is one have that and X that about Those X it's to we is things installation. think the One maintenance

The X bulk our to We product as services expense grow of some consulting-type products. with maintenance other have because make takes type up grow the those our maintenance almost practices sales everybody but it. is essentially going and advanced

piece. one that's So

implementation not one all. On fits it's the size side,

a For most we U.S., don't larger in of do the installation. of carriers the ton

started In they installation. levels. Asia, a to like South tried their Europe, sometimes a lot America, in of have have through past, lot them. to do do didn't places Now we work in But we inventory of as the we installation for

So services where U.S., our we're customers sales and are. continue in love I implementation related is to trying here we that help say what think, our and our And going to this do. Scott? to business, that's be, I'd to our to mix more we'd big the expanding love

Scott McFeely

dominant the That's right. you're dynamic, Jim, Yes.

installation I there's geography, pieces by of varies in and it there. The it it, think nuances services some by portfolio. varies

our on portfolio, installation a Switching example. of So lot historically, done services and we Routing haven't for

As we'll those and to get solution to us to installation. continue as sets are, more our sophisticated customers do more look

a is In coming from. third-party over of on of installation And the it revenue to parts in bit In geographically. world, some do do parts, going those ourselves. change mix they do quite partners we to there's parts the customers services some some themselves, where world, that's it. of the to the Mixed time. And -- turned that varies

major that a also time. to not busy grow of at team rate to growth our or their it. it's our is we But expand to We to continue and that, to to for addition In over trying business the is our company. grown offers service hope services customers, think above going piece service the

Alex Henderson

are in $XXX majority the in product Just $XXX because is we the quarter million, though, side? the April lockdown. the January be and up services of of to clear, be the seasonal case, the quarter, quarter-to-quarter which normally the to something first million, expecting sequentially decline that, Are between lower it swing in the like

James Moylan

expect dynamics will of show It's we think give would slices this I is talked always it because the individual that we our very grow risky well. overall to of to because what in that services of in about as QX, we try growth business. likely business, will our

I QX. have grow So just for number product but you a think I grow will will like the don't probably revenue it in

Operator

The with next David question Vogt UBS. comes from

David Vogt

Maybe mentioned just and I help Jim, orders. us backlog where it roughly think into exited billion. Maybe, you you was digging back the around $X.X quarter, backlog can last quarter? understand

like kind And going terms trying growth an so to trajectory? figure And rate a what I how what to the in the forward? order we're out in 'XX look of of And follow-up. deregulate is orders have

James Moylan

billion. QX at -- Our we in $X.X ended backlog backlog

And We we is sort going backlog and last we our approach that calculate in can the all for So year of ordering down speaking, software. billion. lead and the to about of to been or means past mean consists that in of of years, backlog said $X QX. to the our prior been come had to you what craziness approaching $X.X That's to ending our the which that it's orders we are levels about and the quarter coming up the billion year's has X track what makes times Because past, historical what which XX% year. so expect traditionally like probably full I those of of levels services to going $X level of customer behaviors products are were that's XX% billion generally revenue. a historically.

David Vogt

Great.

but it's like if for how you wrong case, I SP what that X% coming but that in just I rate kind orders 'XX, somewhere to year those here your just right? of triangulate that's if doing we maybe math give to would 'XX. And know target year? imply does guide that Are the up the math would order be doing 'XX didn't on trying yet, so XX% the back early we next to just to relative that maybe in to have provided? XX% And 'XX that I'm it comment growth extrapolate into imply a you get full X% to multiyear

James Moylan

business, was than and X%, ran XX%, it we've whether disruption of say at number like what would Rather this, in that we it a our that. for above chain a you whether typically stuff, a sort fraction supply orders some next number long in and for all prior revenue, to long, was given COVID year which some growth our the had is year, orders healthy I time rate a give

that's for now, So to we which a be, our at to right revenue quarter. year. that example, through levels X.Xx as by it we to catch quarters possibly we're have varies X.XXx expect for what catch-up couple next some and not next volumes means those up some move But order our do year, we the and have of

Gary Smith

time the piece lead And that's a function well. as of obviously

So gets ever normalized, the it -- the typically world be year. our ahead of the revenues slightly if for would

into to from having challenges I that some bumpiness be view. a get an may of magnitude billion, in I point for give of mean, that. as orders order around close we backlog the there we're Now to example, were you $X think our 'XX, just

Operator

Roy with comes question from Stifel. Next Ruben

Ruben Roy

and sort growth rates et the and of trying around order of being with cloud. commentary Gary, I of just created rates are some through on center, outside had the a AI you data mentioned that up. the the GPs, not the yet to work the order yet cetera, then impacts of traffic follow-up seeing And traffic just by increasing

So, specific is am those how mostly sustainability business, you case, cloud that's the I of of right that assuming DCI orders DCI? can to a long haul? for sort sort talk business the thinking that if the in of And you're around about cloud

Gary Smith

Yes.

I we sort think you talk about long to, as these. mix than a When of amongst it's them more metro of around haul hyperscalers and a tend these generic and think grouping. we all

it think they're You all models, business search, et services. Azure their very be about be different, cloud, it cetera, type

piece of And the cables it. So, different submarine rest metro networks and therefore, are as of including very all well. actually the their the and

point. global very across -- X,XXX networks use simple is So complicated resilience, full large, very there. they are in now center et that configuration cetera, with not They to are data point connectivity, these just

fully So blown networks. they intelligent are

edge the you flowing monetize, or to go the they're traffic that data to out of center go forms, enterprise have be to them WAN. And to the they data center to in applications to when So, dump needs the pass They be to go And also instantiation you edge has and it stuff the there the you're a model It's at across to to good network are, it to not of the point that to This month. or a down has to general consumers their consumers. have various your it view, connectivity. maintain locally, the of for Ruben, now get point, compute to center. around needs is that to whatever connectivity opportunity The just coming devices network. data on model is it. AI the talk from obviously maintain right

the the hasn't of investing that has that investment come application that. and in compute all monetization data -- of center out excited has not and the they're the massive yet. amounts -- we're network in sort of about but obviously but investment That the So of we're opportunity, yet flowed to

Scott McFeely

do the the is piece, dynamic the is cloud because AI required distribute about do got one other guess to platforms. of data The their when providers impact that. amounts the And need more traffic more of and compute you you've massive with talking that, geographical And to further distribution. WAN to having together. compute the the going network of that's Every power centers, them what, to on on mean

to network. AI So another to dynamic that's part more be have the gear. going going influence the networking starts classic more I'll an of just on, transport transport, be say, to as That's

surprise, today add, also terms It's yes, I it's but their core campus/metro, DCI, I'd with Gary, submarine terrestrial and it's across our it's portfolio their portfolio, modems our Coherent of well. as they It's want where line their Services folks. it's networks. however And think our are -- Portfolio we Software these it. networks and instantiate it's Transport to it's it's systems, in some people's to

of broad So it's that set segment in quite solutions were those a -- in that with.

Ruben Roy

lower the helpful Jim, you margins. I quick I the for sneak given maintaining next and but volumes detail, me. how gross lower the really mid-XXs year, for one just really just did sort out missed in of appreciate or guys. Jim gross several Can this mix over linearity margins a full you of talk for I have That's play revenue. through think the can might quarters? -- on you

James Moylan

not average volume mix the we'll in It year. to was that. the as to get we'll in because strong for good I bit and lower we're going we back going we to and have volume in a But they're that's started think start, expected XX.X%. be mid-XXs the year like and Yes, a said, a full QX, We the at QX. I think something that

Gregg Lampf

Ruben, a today. joining forward everyone day. for OFC. Thank good us at you, appreciate and and your Thank thank everybody, have to seeing attention, look you, you, and we Great. We

Operator

for has conference concluded. you Thank The presentation. now attending today's

may now disconnect. You

Ciena (CIEN) 7 Mar 242024 Q1 Earnings call transcript