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Ciena (CIEN) Q2 Earnings Top Estimates, Revenues Decline Y/Y
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Ciena Corporation (CIEN - Free Report) reported second-quarter fiscal 2024 (ended Apr 27) results, wherein its adjusted earnings per share (EPS) of 27 cents beat the Zacks Consensus Estimate of 15 cents. Earnings deteriorated 63.5% year over year.
Total revenues were down 19.6% year over year to $910.8 million in the reported quarter. However, the top line surpassed the Zacks Consensus Estimate by 1.6%.
The year-over-year performance downtick was driven by a slower-than-expected recovery of order volumes from service providers who are still working through large inventory absorption. Additionally, macroeconomic concerns, especially internationally, remain persistent.
As a result, management tweaked its fiscal year guidance. For fiscal 2024, management now anticipates revenues of $4 billion compared with fiscal 2023 revenues of $4.38 billion. The company had previously projected revenues in the range of $4-$4.3 billion.
Ciena Corporation Price, Consensus and EPS Surprise
The adjusted gross margin is expected to be in the mid-40% range. Adjusted operating expenses are anticipated to be $340-$345 million per quarter.
Nonetheless, demand for bandwidth remained strong owing to higher cloud adoption and the proliferation of AI technology use cases. Consequently, it is driving up network traffic and is expected to continue growing at a strong rate, added Ciena.
Segment Results
Total revenues in Networking Platforms (74.2% of total revenues) decreased 26% year over year to $676.3 million. We expected the metric to be $695.3 million.
Platform Software and Services’ revenues (9.4%) totaled $85.4 million, up 23.1% from the prior year. We projected the metric to be $66.2 million.
Blue Planet Automation Software and Services’ revenues (1.6%) decreased 30% to $14.4 million. We anticipated the metric to be $14.5 million.
Total revenues in Global Services (14.8%) were $134.7 million, up 5.4% year over year. Our estimate for segmental revenues was $119.7 million.
Region-wise, revenues in the Americas were $662.9 million, down 16.6% year over year. Europe, the Middle East and Africa generated $155.8 million in revenues, down 10.1% from the prior-year levels. Revenues in the Asia Pacific totaled $92.1 million, down 44.1% from the year-earlier figure.
Non-telco customer revenues represented 46% of total revenues in the fiscal second quarter. A 10%-plus customer represented 13.8% of the top line in the reported quarter.
In the quarter under review, CIEN added 20 new customers for WaveLogic 5 Extreme, bringing the total customer count to 290.
Reconfigurable line systems revenues grew 12% year over year with seven new customers in the reported quarter.
WaveLogic 6 Extreme is gaining traction and remains on track to be available in a few months, added the company. So far, it had secured orders from 14 customers for WaveLogic 6 Extreme.
Other Details
Non-GAAP adjusted gross margin was 43.5% compared with 43.7% a year ago. Adjusted operating expenses were $333.9 million, down 1.2% from the prior-year levels.
Non-GAAP adjusted operating margin was 6.8% compared with 13.8% in the year-earlier quarter. Non-GAAP adjusted EBITDA decreased 52.5% year over year to $85.8 million.
Cash Flow & Liquidity
For the quarter that ended on Apr 27, 2024, Ciena’s net cash generated from operating activities was $58.5 million compared with $230 million in the prior-year quarter.
As of Apr 27, the company had $1.42 billion in cash and investments and $1,540.7 million of net long-term debt.
In the reported quarter, CIEN repurchased about 1.1 million shares worth $57 million.
Guidance
For the third quarter of fiscal 2024, management expects revenues in the range of $880-$960 million. The adjusted gross margin is estimated in the low to mid 40% range. Adjusted operating expenses are projected to be $345 million.
CIEN plans to repurchase its shares worth $250 million in fiscal 2024.
The Zacks Consensus Estimate for BMI’s 2024 EPS is pegged at $3.89, up 9.9% in the past 60 days. BMI’s earnings beat the Zacks Consensus Estimate in each of the last four quarters, the average surprise being 12.7%. The long-term earnings growth rate is 15.6%. Shares of BMI have risen 24.1% in the past year.
The Zacks Consensus Estimate for Arista Network’s 2024 EPS is pegged at $7.92, up 6.2% in the past 60 days. The long-term earnings growth rate is 15.7%. ANET’s earnings beat the Zacks Consensus Estimate in each of the last four quarters, the average surprise being 15.4%. Shares of ANET have gained 83.1% in the past year.
The Zacks Consensus Estimate for NVIDIA’s fiscal 2025 EPS has increased 12% in the past 60 days to $26.84. NVDA earnings beat the Zacks Consensus Estimate in all the last four quarters, the average surprise being 18.4%. Shares of NVDA have risen 213.4% in the past year.
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Ciena (CIEN) Q2 Earnings Top Estimates, Revenues Decline Y/Y
Ciena Corporation (CIEN - Free Report) reported second-quarter fiscal 2024 (ended Apr 27) results, wherein its adjusted earnings per share (EPS) of 27 cents beat the Zacks Consensus Estimate of 15 cents. Earnings deteriorated 63.5% year over year.
Total revenues were down 19.6% year over year to $910.8 million in the reported quarter. However, the top line surpassed the Zacks Consensus Estimate by 1.6%.
The year-over-year performance downtick was driven by a slower-than-expected recovery of order volumes from service providers who are still working through large inventory absorption. Additionally, macroeconomic concerns, especially internationally, remain persistent.
As a result, management tweaked its fiscal year guidance. For fiscal 2024, management now anticipates revenues of $4 billion compared with fiscal 2023 revenues of $4.38 billion. The company had previously projected revenues in the range of $4-$4.3 billion.
Ciena Corporation Price, Consensus and EPS Surprise
Ciena Corporation price-consensus-eps-surprise-chart | Ciena Corporation Quote
The adjusted gross margin is expected to be in the mid-40% range. Adjusted operating expenses are anticipated to be $340-$345 million per quarter.
Nonetheless, demand for bandwidth remained strong owing to higher cloud adoption and the proliferation of AI technology use cases. Consequently, it is driving up network traffic and is expected to continue growing at a strong rate, added Ciena.
Segment Results
Total revenues in Networking Platforms (74.2% of total revenues) decreased 26% year over year to $676.3 million. We expected the metric to be $695.3 million.
Platform Software and Services’ revenues (9.4%) totaled $85.4 million, up 23.1% from the prior year. We projected the metric to be $66.2 million.
Blue Planet Automation Software and Services’ revenues (1.6%) decreased 30% to $14.4 million. We anticipated the metric to be $14.5 million.
Total revenues in Global Services (14.8%) were $134.7 million, up 5.4% year over year. Our estimate for segmental revenues was $119.7 million.
Region-wise, revenues in the Americas were $662.9 million, down 16.6% year over year. Europe, the Middle East and Africa generated $155.8 million in revenues, down 10.1% from the prior-year levels. Revenues in the Asia Pacific totaled $92.1 million, down 44.1% from the year-earlier figure.
Non-telco customer revenues represented 46% of total revenues in the fiscal second quarter. A 10%-plus customer represented 13.8% of the top line in the reported quarter.
In the quarter under review, CIEN added 20 new customers for WaveLogic 5 Extreme, bringing the total customer count to 290.
Reconfigurable line systems revenues grew 12% year over year with seven new customers in the reported quarter.
WaveLogic 6 Extreme is gaining traction and remains on track to be available in a few months, added the company. So far, it had secured orders from 14 customers for WaveLogic 6 Extreme.
Other Details
Non-GAAP adjusted gross margin was 43.5% compared with 43.7% a year ago. Adjusted operating expenses were $333.9 million, down 1.2% from the prior-year levels.
Non-GAAP adjusted operating margin was 6.8% compared with 13.8% in the year-earlier quarter. Non-GAAP adjusted EBITDA decreased 52.5% year over year to $85.8 million.
Cash Flow & Liquidity
For the quarter that ended on Apr 27, 2024, Ciena’s net cash generated from operating activities was $58.5 million compared with $230 million in the prior-year quarter.
As of Apr 27, the company had $1.42 billion in cash and investments and $1,540.7 million of net long-term debt.
In the reported quarter, CIEN repurchased about 1.1 million shares worth $57 million.
Guidance
For the third quarter of fiscal 2024, management expects revenues in the range of $880-$960 million. The adjusted gross margin is estimated in the low to mid 40% range. Adjusted operating expenses are projected to be $345 million.
CIEN plans to repurchase its shares worth $250 million in fiscal 2024.
Zacks Rank
At present, Ciena carries a Zacks Rank #4 (Sell).
Stocks to Consider
Some better-ranked stocks worth consideration in the broader technology space are Badger Meter (BMI - Free Report) , Arista Networks (ANET - Free Report) and NVIDIA Corporation (NVDA - Free Report) , sporting a Zacks Rank #1 (Strong Buy) each. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for BMI’s 2024 EPS is pegged at $3.89, up 9.9% in the past 60 days. BMI’s earnings beat the Zacks Consensus Estimate in each of the last four quarters, the average surprise being 12.7%. The long-term earnings growth rate is 15.6%. Shares of BMI have risen 24.1% in the past year.
The Zacks Consensus Estimate for Arista Network’s 2024 EPS is pegged at $7.92, up 6.2% in the past 60 days. The long-term earnings growth rate is 15.7%. ANET’s earnings beat the Zacks Consensus Estimate in each of the last four quarters, the average surprise being 15.4%. Shares of ANET have gained 83.1% in the past year.
The Zacks Consensus Estimate for NVIDIA’s fiscal 2025 EPS has increased 12% in the past 60 days to $26.84. NVDA earnings beat the Zacks Consensus Estimate in all the last four quarters, the average surprise being 18.4%. Shares of NVDA have risen 213.4% in the past year.