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Ciena (CIEN) Up 24.5% Since Last Earnings Report: Can It Continue?
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A month has gone by since the last earnings report for Ciena (CIEN - Free Report) . Shares have added about 24.5% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Ciena due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Ciena Q3 Earnings Top Estimates
Ciena reported third-quarter fiscal 2024 (ended July 27) adjusted earnings per share (EPS) of 35 cents, which beat the Zacks Consensus Estimate of 26 cents. Earnings plunged 40.7% year over year.
Total revenues were down 11.8% year over year to $942.3 million in the reported quarter. However, the top line surpassed the Zacks Consensus Estimate by 1.4%.
A slower-than-expected recovery of order volumes from international service providers drove the year-over-year decrease. This includes cautious purchase behavior from European service providers due to macroeconomic and geopolitical turmoil in the region. However, management highlighted the expansion of its service business in India, South Asia, Germany, Scandinavia and North America in the fiscal third quarter.
Continued momentum with cloud and AI infrastructure is a plus. Direct Cloud Provider revenues went up 9% sequentially, driven by new customer wins from major cloud providers across terrestrial, submarine and coherent pluggable applications.
Segment Results
Total revenues in Networking Platforms (74.2% of total revenues) decreased 17.4% year over year to $699.5 million. We expected the metric to be $693.5 million.
Platform Software and Services’ revenues (8.9%) totaled $83.2 million, up 5.5% from the prior year. We projected the metric to be $79.7 million.
Blue Planet Automation Software and Services’ revenues (2.7%) rose 97% to $25.8 million. We anticipated the metric to be $25.1 million.
Total revenues in Global Services (14.2%) were $133.8 million, up 3.5% year over year. Our estimate for segmental revenues was $126.2 million.
Region-wise, revenues in the Americas were $718.6 million, down 4.1% year over year. Europe, the Middle East and Africa generated $135 million in revenues, down 11.6% from the prior-year levels. Revenues in the Asia Pacific totaled $88.7 million, down 46.4%.
Non-telco customer revenues represented 46% of total revenues in the fiscal third quarter. Two 10%-plus customers represented 26.6% of the top line in the reported quarter. In the quarter under review, Ciena added 12 new customers for WaveLogic 5 Extreme, bringing the total customer count to more than 300.
WaveLogic 6 Extreme is picking up pace, and management expects to witness top-line growth in the fiscal fourth quarter on increased adoption. So far, it has secured orders from 23 customers for WaveLogic 6 Extreme.
Other Details
Non-GAAP adjusted gross margin was 43.7% compared with 42.7% a year ago. Adjusted operating expenses were $336 million, up 2.5%.
Non-GAAP adjusted operating margin was 8% compared with 12% in the year-earlier quarter. Non-GAAP adjusted EBITDA decreased 34.9% to $98.5 million.
Cash Flow & Liquidity
For the quarter that ended on July 27, 2024, Ciena’s net cash used in operating activities was $159.4 million against $9 million net cash generated in the prior-year quarter.
As of July 27, the company had $1.2 billion in cash and investments and $1,538.3 million of net long-term debt.
In the reported quarter, Ciena repurchased about 600,000 shares worth $29 million. It plans to buy back a total of $250 million in shares by the end of fiscal 2024.
Guidance
For the fourth quarter of fiscal 2024, management expects revenues in the range of $1,060- $1,140 million. The adjusted gross margin is estimated in the low to mid 40% range. Adjusted operating expenses are projected to be $350 million.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month.
The consensus estimate has shifted -18.63% due to these changes.
VGM Scores
At this time, Ciena has a subpar Growth Score of D, though it is lagging a bit on the Momentum Score front with an F. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Ciena has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Ciena (CIEN) Up 24.5% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for Ciena (CIEN - Free Report) . Shares have added about 24.5% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Ciena due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Ciena Q3 Earnings Top Estimates
Ciena reported third-quarter fiscal 2024 (ended July 27) adjusted earnings per share (EPS) of 35 cents, which beat the Zacks Consensus Estimate of 26 cents. Earnings plunged 40.7% year over year.
Total revenues were down 11.8% year over year to $942.3 million in the reported quarter. However, the top line surpassed the Zacks Consensus Estimate by 1.4%.
A slower-than-expected recovery of order volumes from international service providers drove the year-over-year decrease. This includes cautious purchase behavior from European service providers due to macroeconomic and geopolitical turmoil in the region. However, management highlighted the expansion of its service business in India, South Asia, Germany, Scandinavia and North America in the fiscal third quarter.
Continued momentum with cloud and AI infrastructure is a plus. Direct Cloud Provider revenues went up 9% sequentially, driven by new customer wins from major cloud providers across terrestrial, submarine and coherent pluggable applications.
Segment Results
Total revenues in Networking Platforms (74.2% of total revenues) decreased 17.4% year over year to $699.5 million. We expected the metric to be $693.5 million.
Platform Software and Services’ revenues (8.9%) totaled $83.2 million, up 5.5% from the prior year. We projected the metric to be $79.7 million.
Blue Planet Automation Software and Services’ revenues (2.7%) rose 97% to $25.8 million. We anticipated the metric to be $25.1 million.
Total revenues in Global Services (14.2%) were $133.8 million, up 3.5% year over year. Our estimate for segmental revenues was $126.2 million.
Region-wise, revenues in the Americas were $718.6 million, down 4.1% year over year. Europe, the Middle East and Africa generated $135 million in revenues, down 11.6% from the prior-year levels. Revenues in the Asia Pacific totaled $88.7 million, down 46.4%.
Non-telco customer revenues represented 46% of total revenues in the fiscal third quarter. Two 10%-plus customers represented 26.6% of the top line in the reported quarter. In the quarter under review, Ciena added 12 new customers for WaveLogic 5 Extreme, bringing the total customer count to more than 300.
WaveLogic 6 Extreme is picking up pace, and management expects to witness top-line growth in the fiscal fourth quarter on increased adoption. So far, it has secured orders from 23 customers for WaveLogic 6 Extreme.
Other Details
Non-GAAP adjusted gross margin was 43.7% compared with 42.7% a year ago. Adjusted operating expenses were $336 million, up 2.5%.
Non-GAAP adjusted operating margin was 8% compared with 12% in the year-earlier quarter. Non-GAAP adjusted EBITDA decreased 34.9% to $98.5 million.
Cash Flow & Liquidity
For the quarter that ended on July 27, 2024, Ciena’s net cash used in operating activities was $159.4 million against $9 million net cash generated in the prior-year quarter.
As of July 27, the company had $1.2 billion in cash and investments and $1,538.3 million of net long-term debt.
In the reported quarter, Ciena repurchased about 600,000 shares worth $29 million. It plans to buy back a total of $250 million in shares by the end of fiscal 2024.
Guidance
For the fourth quarter of fiscal 2024, management expects revenues in the range of $1,060- $1,140 million. The adjusted gross margin is estimated in the low to mid 40% range. Adjusted operating expenses are projected to be $350 million.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month.
The consensus estimate has shifted -18.63% due to these changes.
VGM Scores
At this time, Ciena has a subpar Growth Score of D, though it is lagging a bit on the Momentum Score front with an F. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Ciena has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.