10-KPeriod: FY2017

CIENA CORP Annual Report, Year Ended Oct 31, 2017

Filed December 22, 2017For Securities:CIEN

Summary

Ciena Corporation (CIEN) reported a strong fiscal year 2017, with revenue growing by 7.7% to $2.8 billion. This growth was primarily driven by increased sales in its Networking Platforms segment, particularly in Converged Packet Optical and Packet Networking products, and a significant expansion in the Asia-Pacific region. The company also experienced substantial growth in its Software and Software-Related Services segment. A notable event for fiscal year 2017 was the reversal of a significant deferred tax asset valuation allowance, which resulted in a substantial net income of $1.26 billion. Despite increased operating expenses, including investments in R&D and IT, Ciena maintained effective internal controls and demonstrated a healthy cash flow from operations.

Financial Highlights

32 data points
Beta

Revenue

$2.80B

44.5% Gross Margin

Net Income

$1.26B

45.0% Net Margin

EPS (Diluted)

$7.53

Free Cash Flow

$140.28M

Financial Statements
Beta
Revenue$2.80B
Cost of Revenue$1.56B
Gross Profit$1.25B
R&D Expenses$475.33M
Operating Expenses$1.03B
Operating Income$214.72M
Interest Expense$55.85M
Net Income$1.26B
EPS (Basic)$8.89
EPS (Diluted)$7.53
Shares Outstanding (Basic)142.00M
Shares Outstanding (Diluted)169.92M

Key Highlights

  • 1Revenue increased by 7.7% to $2.8 billion in fiscal year 2017, compared to $2.6 billion in fiscal year 2016, driven by strong performance in Networking Platforms.
  • 2Net income surged to $1.26 billion ($8.89 per basic share) in fiscal 2017, significantly boosted by a $1.1 billion non-cash deferred tax asset valuation allowance reversal.
  • 3The Asia-Pacific region showed substantial revenue growth of 54.2%, indicating successful geographic diversification efforts.
  • 4The Software and Software-Related Services segment experienced robust growth of 28.8%, highlighting Ciena's expanding software capabilities.
  • 5AT&T and Verizon remained significant customers, accounting for 16.0% and 10.3% of revenue respectively in fiscal 2017.
  • 6The company ended fiscal 2017 with a strong liquidity position, including $969.4 million in cash, cash equivalents, and investments.
  • 7Ciena's Board of Directors authorized a $300 million share repurchase program through the end of fiscal 2020.

Frequently Asked Questions

Ciena reported a significant increase in revenue to $2.8 billion in fiscal year 2017, a 7.7% rise from the previous year. Net income also saw a dramatic increase to $1.26 billion, largely due to a $1.1 billion deferred tax asset valuation allowance reversal. This indicates a robust financial year for the company, driven by growth in its core networking platforms and expanding software offerings.

The Networking Platforms segment was the primary driver of revenue growth, with notable increases in Converged Packet Optical and Packet Networking products. The Asia-Pacific region also showed significant growth, indicating successful market expansion. Additionally, the Software and Software-Related Services segment demonstrated strong growth, reflecting Ciena's strategic focus on software solutions.

The reversal of a $1.1 billion deferred tax asset valuation allowance in fiscal year 2017 significantly boosted Ciena's net income for the year. This reversal indicates that the company's management now believes it is more likely than not that they will realize the benefit of their U.S. deferred tax assets, a positive signal about the company's future profitability and tax planning.

Ciena's strategy focuses on promoting choice and openness in network technologies, extending its technology leadership, leveraging its Blue Planet software for automated networks, capturing merchant modem business, and increasing diversification. The company is investing in R&D to enhance its packet-optical and packet networking solutions, particularly in areas like coherent modem technology, and developing software for network management, automation, and control. They are also actively pursuing growth in new customer segments and geographies.