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Ciena (CIEN) Beats Q3 Earnings Estimates on Record Revenues
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Ciena Corp. (CIEN - Free Report) reported healthy third-quarter fiscal 2021 (ended Jul 31, 2021) results, wherein both the top and bottom lines beat the Zacks Consensus Estimate.
The Hanover, MD-based networking systems and services company’s share price increased 2.9% on Sep 2, closing the session at $58.51.
Net Income
On a GAAP basis, net income for the reported quarter was $238.2 million or $1.52 per share compared with $142.3 million or 91 cents per share in the prior-year quarter. Despite a lower operating income, net income increased primarily due to a $124.2 million tax benefit related to an internal transfer of non-U.S. intangible assets.
Adjusted net income was $144.9 million or 92 cents per share compared with $166.4 million or $1.06 per share in the year-ago quarter. The bottom line beat the Zacks Consensus Estimate by 13 cents, delivering a surprise of 16.5%.
Ciena Corporation Price, Consensus and EPS Surprise
Quarterly total revenues inched up 1.2% year over year to a record $988.1 million, which was well above the high-end of the company’s guidance. The top line surpassed the consensus estimate of $969 million.
With a strong order flow and an increased backlog, the performance reflects a combination of Ciena’s increasingly differentiated position in the marketplace and a strong demand environment. The company had three 10%-plus customers that represented 37.5% of the total revenues.
At the same time, the COVID-led challenges remain dynamic around the globe along with the industry-wide supply-chain constraints.
Region-wise, revenues in the Americas were $692.8 million, down 2.9% year over year. Revenues in Europe, Middle East and Africa were $189.2 million, up from $162.5 million. Revenues for the Asia Pacific totaled $106.1 million, up 5.2%.
Segmental Results
Total revenues in Networking Platforms decreased 2.5% year over year to $782.6 million. Platform Software and Services revenues were $56.9 million compared with $46.4 million in the prior-year quarter. Blue Planet Automation Software and Services revenues increased from $11.3 million to $16.6 million. Total revenues in Global Services were $132 million, up 13.1%.
Other Details
The adjusted gross margin was 48.5% compared with 48.2% in the year-ago quarter. Adjusted operating expenses were $290.4 million, up from $251.2 million. Operating income declined to $148.5 million from $188 million.
Adjusted operating income decreased to $189.2 million from $219.3 million. Adjusted operating margin came in at 19.1% compared with 22.4% in the prior-year quarter. Adjusted EBITDA was $213.7 million, down from $241.1 million.
In the reported quarter, Ciena repurchased 0.5 million shares for $26 million.
Notable Development
Ciena inked a deal with AT&T (T - Free Report) to acquire its Vyatta virtual routing and switching technology for an undisclosed amount.
The buyout reflects Ciena’s investment in its Routing and Switching roadmap to address the growing market opportunity to transform the edge, including 5G networks and cloud environment. The key technologies and expertise will serve to expand and accelerate Ciena’s Adaptive IP solution set.
The company plans to integrate the team of engineering specialists into its Routing and Switching R&D organization. The addition of the Vyatta talent and assets to its Routing and Switching business will extend Ciena’s success in helping customers create virtualized networks and deploy features faster and cost-effectively across 5G, enterprise and cloud use cases.
The acquisition of the Vyatta talent and certain intellectual property is expected to close by the end of the calendar year.
Cash Flow & Liquidity
In the first nine months of fiscal 2021, Ciena generated $286.8 million in cash from operating activities compared with $306.4 million in the prior-year period.
As of Jul 31, 2021, the company had $1,230.4 million in cash and cash equivalents, and $671.9 million of long-term debt.
Q4 Outlook
For the fiscal fourth quarter, Ciena expects revenues of $1-$1.04 billion. Adjusted gross margin is estimated between 45% and 47%. Adjusted operating expenses are likely to be between $295 million and $305 million.
Image: Bigstock
Ciena (CIEN) Beats Q3 Earnings Estimates on Record Revenues
Ciena Corp. (CIEN - Free Report) reported healthy third-quarter fiscal 2021 (ended Jul 31, 2021) results, wherein both the top and bottom lines beat the Zacks Consensus Estimate.
The Hanover, MD-based networking systems and services company’s share price increased 2.9% on Sep 2, closing the session at $58.51.
Net Income
On a GAAP basis, net income for the reported quarter was $238.2 million or $1.52 per share compared with $142.3 million or 91 cents per share in the prior-year quarter. Despite a lower operating income, net income increased primarily due to a $124.2 million tax benefit related to an internal transfer of non-U.S. intangible assets.
Adjusted net income was $144.9 million or 92 cents per share compared with $166.4 million or $1.06 per share in the year-ago quarter. The bottom line beat the Zacks Consensus Estimate by 13 cents, delivering a surprise of 16.5%.
Ciena Corporation Price, Consensus and EPS Surprise
Ciena Corporation price-consensus-eps-surprise-chart | Ciena Corporation Quote
Revenues
Quarterly total revenues inched up 1.2% year over year to a record $988.1 million, which was well above the high-end of the company’s guidance. The top line surpassed the consensus estimate of $969 million.
With a strong order flow and an increased backlog, the performance reflects a combination of Ciena’s increasingly differentiated position in the marketplace and a strong demand environment. The company had three 10%-plus customers that represented 37.5% of the total revenues.
At the same time, the COVID-led challenges remain dynamic around the globe along with the industry-wide supply-chain constraints.
Region-wise, revenues in the Americas were $692.8 million, down 2.9% year over year. Revenues in Europe, Middle East and Africa were $189.2 million, up from $162.5 million. Revenues for the Asia Pacific totaled $106.1 million, up 5.2%.
Segmental Results
Total revenues in Networking Platforms decreased 2.5% year over year to $782.6 million. Platform Software and Services revenues were $56.9 million compared with $46.4 million in the prior-year quarter. Blue Planet Automation Software and Services revenues increased from $11.3 million to $16.6 million. Total revenues in Global Services were $132 million, up 13.1%.
Other Details
The adjusted gross margin was 48.5% compared with 48.2% in the year-ago quarter. Adjusted operating expenses were $290.4 million, up from $251.2 million. Operating income declined to $148.5 million from $188 million.
Adjusted operating income decreased to $189.2 million from $219.3 million. Adjusted operating margin came in at 19.1% compared with 22.4% in the prior-year quarter. Adjusted EBITDA was $213.7 million, down from $241.1 million.
In the reported quarter, Ciena repurchased 0.5 million shares for $26 million.
Notable Development
Ciena inked a deal with AT&T (T - Free Report) to acquire its Vyatta virtual routing and switching technology for an undisclosed amount.
The buyout reflects Ciena’s investment in its Routing and Switching roadmap to address the growing market opportunity to transform the edge, including 5G networks and cloud environment. The key technologies and expertise will serve to expand and accelerate Ciena’s Adaptive IP solution set.
The company plans to integrate the team of engineering specialists into its Routing and Switching R&D organization. The addition of the Vyatta talent and assets to its Routing and Switching business will extend Ciena’s success in helping customers create virtualized networks and deploy features faster and cost-effectively across 5G, enterprise and cloud use cases.
The acquisition of the Vyatta talent and certain intellectual property is expected to close by the end of the calendar year.
Cash Flow & Liquidity
In the first nine months of fiscal 2021, Ciena generated $286.8 million in cash from operating activities compared with $306.4 million in the prior-year period.
As of Jul 31, 2021, the company had $1,230.4 million in cash and cash equivalents, and $671.9 million of long-term debt.
Q4 Outlook
For the fiscal fourth quarter, Ciena expects revenues of $1-$1.04 billion. Adjusted gross margin is estimated between 45% and 47%. Adjusted operating expenses are likely to be between $295 million and $305 million.
Zacks Rank & Other Stocks to Consider
Ciena currently carries a Zacks Rank #2 (Buy).
A couple of other top-ranked stocks in the broader industry are Clearfield, Inc. (CLFD - Free Report) , currently sporting a Zacks Rank #1 (Strong Buy), and InterDigital, Inc. (IDCC - Free Report) , carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Clearfield delivered a trailing four-quarter earnings surprise of 49%, on average.
InterDigital pulled off a trailing four-quarter earnings surprise of 536%, on average.