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Ciena Corporation (CIEN - Free Report) reported fourth-quarter fiscal 2024 (ended Nov. 2) results, wherein adjusted earnings per share (EPS) of 54 cents missed the Zacks Consensus Estimate of 66 cents. Also, the bottom line declined 28% year over year.
Stay up-to-date with all quarterly releases: See ZacksEarnings Calendar.
Quarterly total revenues dipped 0.5% year over year to $1,124.1 million. The top line, however, surpassed the Zacks Consensus Estimate of $1,105 million, driven by robust demand for its solutions in cloud and artificial intelligence (AI)-driven markets. As the demand for bandwidth accelerates, driven by cloud and AI, Ciena is uniquely positioned to unlock opportunities for growth and profitability.
Management remained confident in its ability to capitalize on favorable industry dynamics and introduced a fresh set of long-term targets covering fiscal 2025 to fiscal 2027. Cloud providers are expected to invest heavily in capital expenditures to enhance AI networks as demand grows, while service provider order patterns are likely to improve, with inventory levels returning to normal and aligning with actual consumption. Owing to these, CIEN projects an average annual revenue growth of 8% to 11% over the next three years, up from the prior target of 6% to 8%.
It aims to boost operating leverage with higher margins and controlled operating expenses growth, targeting a 15–16% adjusted operating margin by fiscal 2027. Ciena expects an annual free cash flow of 55–60% of adjusted operating income over the next three years.
Following the earnings announcement and improved long-term growth targets, shares of CIEN jumped 15.5% on Dec. 12 and closed trading at $84.52. Shares went up 1.8% in the pre-market trading on Dec. 13. In the past year, shares have gained 89.6% compared with the sub-industry’s growth of 63.4%.
Image Source: Zacks Investment Research
Segment Results
Total revenues in Networking Platforms (76.4% of total revenues) decreased 2% year over year to $859 million. We expected the metric to be $828.5 million.
Platform Software and Services’ revenues (8.9%) totaled $99.6 million, up 21.3% from the prior year. We projected the metric to be $90.6 million.
Blue Planet Automation Software and Services’ revenues (2.1%) grew 17.5% to $23.5 million. We suggested the metric to be $21.9 million.
Total revenues in Global Services (12.6%) were $142 million, down 5.6% year over year. Our estimate for segmental revenues was $161.7 million.
Ciena Corporation Price, Consensus and EPS Surprise
Region-wise, revenues in the Americas were $852.2 million, up 6.3% year over year. Europe, the Middle East and Africa generated $150.7 million in revenues, down 8.2% from the prior-year levels. Revenues in the Asia Pacific totaled $121.2 million, down 26.1%.
Non-telco customer revenues represented 48% of total revenues in the fiscal fourth quarter. Two 10%-plus customers represented 31.2% and 25.1% of the top line in the reported quarter. In the quarter under review, CIEN added 29 new customers for WaveLogic 5 Nano 400G coherent pluggables, bringing the total customer count to more than 150.
Other Details
Non-GAAP adjusted gross margin was 41.6% compared with 43.7% a year ago. Adjusted operating expenses were $355 million, up 5.1%.
Non-GAAP adjusted operating margin was 10% compared with 13.8% in the year-earlier quarter. Non-GAAP adjusted EBITDA decreased 23.6% to $136.7 million.
Cash Flow & Liquidity
For the quarter that ended on Nov. 2, 2024, CIEN’s net cash flow from operating activities was $349.3 million compared with $195.5 million in the prior-year period.
As of Nov. 2, the company had $1.33 billion in cash and investments and $1,533 million of net long-term debt.
In the reported quarter, CIEN repurchased about 2.1 million shares worth $132 million.
Guidance
For the first quarter of fiscal 2025, management expects revenues in the range of $1.01-$1.09 billion. The adjusted gross margin is estimated in the low-40% range. Adjusted operating expenses are projected to be nearly $350 million.
For fiscal 2025, management anticipates revenue growth in the range of 8-11%. The adjusted gross margin is envisioned in the 42-44% band. Adjusted operating expenses are suggested to be an average of $350-$360 million per quarter.
Pure Storage (PSTG - Free Report) reported third-quarter fiscal 2025 non-GAAP EPS of 50 cents, which beat the Zacks Consensus Estimate by 16.3%. The company reported non-GAAP EPS of 50 cents in the prior-year quarter.
Shares of PSTG gained 72.5% in the past year.
NetApp, Inc. (NTAP - Free Report) reported second-quarter fiscal 2025 non-GAAP earnings of $1.87 per share, which beat the Zacks Consensus Estimate by 4.5% and jumped 18.4% year over year. The bottom line also surpassed the company’s guided range of $1.73-$1.83.
Shares of NTAP gained 38.5% in the past year.
Woodward, Inc. (WWD - Free Report) reported fourth-quarter fiscal 2024 adjusted net earnings per share of $1.41, which jumped 6% year over year and beat the Zacks Consensus Estimate by 15.6%.
Shares of WWD have gained 29.6% in the past year.
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CIEN's Q4 Earnings Lag, Sales Beat, Stock Rallies 15% on Solid View
Ciena Corporation (CIEN - Free Report) reported fourth-quarter fiscal 2024 (ended Nov. 2) results, wherein adjusted earnings per share (EPS) of 54 cents missed the Zacks Consensus Estimate of 66 cents. Also, the bottom line declined 28% year over year.
Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.
Quarterly total revenues dipped 0.5% year over year to $1,124.1 million. The top line, however, surpassed the Zacks Consensus Estimate of $1,105 million, driven by robust demand for its solutions in cloud and artificial intelligence (AI)-driven markets. As the demand for bandwidth accelerates, driven by cloud and AI, Ciena is uniquely positioned to unlock opportunities for growth and profitability.
Management remained confident in its ability to capitalize on favorable industry dynamics and introduced a fresh set of long-term targets covering fiscal 2025 to fiscal 2027. Cloud providers are expected to invest heavily in capital expenditures to enhance AI networks as demand grows, while service provider order patterns are likely to improve, with inventory levels returning to normal and aligning with actual consumption. Owing to these, CIEN projects an average annual revenue growth of 8% to 11% over the next three years, up from the prior target of 6% to 8%.
It aims to boost operating leverage with higher margins and controlled operating expenses growth, targeting a 15–16% adjusted operating margin by fiscal 2027. Ciena expects an annual free cash flow of 55–60% of adjusted operating income over the next three years.
Following the earnings announcement and improved long-term growth targets, shares of CIEN jumped 15.5% on Dec. 12 and closed trading at $84.52. Shares went up 1.8% in the pre-market trading on Dec. 13. In the past year, shares have gained 89.6% compared with the sub-industry’s growth of 63.4%.
Image Source: Zacks Investment Research
Segment Results
Total revenues in Networking Platforms (76.4% of total revenues) decreased 2% year over year to $859 million. We expected the metric to be $828.5 million.
Platform Software and Services’ revenues (8.9%) totaled $99.6 million, up 21.3% from the prior year. We projected the metric to be $90.6 million.
Blue Planet Automation Software and Services’ revenues (2.1%) grew 17.5% to $23.5 million. We suggested the metric to be $21.9 million.
Total revenues in Global Services (12.6%) were $142 million, down 5.6% year over year. Our estimate for segmental revenues was $161.7 million.
Ciena Corporation Price, Consensus and EPS Surprise
Ciena Corporation price-consensus-eps-surprise-chart | Ciena Corporation Quote
Region-wise, revenues in the Americas were $852.2 million, up 6.3% year over year. Europe, the Middle East and Africa generated $150.7 million in revenues, down 8.2% from the prior-year levels. Revenues in the Asia Pacific totaled $121.2 million, down 26.1%.
Non-telco customer revenues represented 48% of total revenues in the fiscal fourth quarter. Two 10%-plus customers represented 31.2% and 25.1% of the top line in the reported quarter. In the quarter under review, CIEN added 29 new customers for WaveLogic 5 Nano 400G coherent pluggables, bringing the total customer count to more than 150.
Other Details
Non-GAAP adjusted gross margin was 41.6% compared with 43.7% a year ago. Adjusted operating expenses were $355 million, up 5.1%.
Non-GAAP adjusted operating margin was 10% compared with 13.8% in the year-earlier quarter. Non-GAAP adjusted EBITDA decreased 23.6% to $136.7 million.
Cash Flow & Liquidity
For the quarter that ended on Nov. 2, 2024, CIEN’s net cash flow from operating activities was $349.3 million compared with $195.5 million in the prior-year period.
As of Nov. 2, the company had $1.33 billion in cash and investments and $1,533 million of net long-term debt.
In the reported quarter, CIEN repurchased about 2.1 million shares worth $132 million.
Guidance
For the first quarter of fiscal 2025, management expects revenues in the range of $1.01-$1.09 billion. The adjusted gross margin is estimated in the low-40% range. Adjusted operating expenses are projected to be nearly $350 million.
For fiscal 2025, management anticipates revenue growth in the range of 8-11%. The adjusted gross margin is envisioned in the 42-44% band. Adjusted operating expenses are suggested to be an average of $350-$360 million per quarter.
CIEN’s Zacks Rank
Ciena currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Companies
Pure Storage (PSTG - Free Report) reported third-quarter fiscal 2025 non-GAAP EPS of 50 cents, which beat the Zacks Consensus Estimate by 16.3%. The company reported non-GAAP EPS of 50 cents in the prior-year quarter.
Shares of PSTG gained 72.5% in the past year.
NetApp, Inc. (NTAP - Free Report) reported second-quarter fiscal 2025 non-GAAP earnings of $1.87 per share, which beat the Zacks Consensus Estimate by 4.5% and jumped 18.4% year over year. The bottom line also surpassed the company’s guided range of $1.73-$1.83.
Shares of NTAP gained 38.5% in the past year.
Woodward, Inc. (WWD - Free Report) reported fourth-quarter fiscal 2024 adjusted net earnings per share of $1.41, which jumped 6% year over year and beat the Zacks Consensus Estimate by 15.6%.
Shares of WWD have gained 29.6% in the past year.