01—Abstract
Summary
Summary of the 10-Q filed March 12, 2015. Cited figures are marked; the original filing is the authoritative source.
Ciena Corporation reported a net loss of $18.8 milliona for the quarter ended January 31, 2015, a widening from the $15.9 million loss in the same period of the prior year.
Revenue saw a slight decrease of 0.9% to $529.2 millionb, impacted by unfavorable foreign currency exchange rates and a decline in the Optical Transport segment, though offset by growth in Converged Packet Optical and Software and Services. The company's gross margin improved to 43.5% from 42.3% year-over-year, driven by product cost reductions and lower warranty expenses, as well as improved service gross margins.
However, operating expenses increased due to higher restructuring costs associated with a global workforce reduction of approximately 125 employees. Despite these challenges, Ciena maintained a strong liquidity position with over $598 millionc in cash and cash equivalents and short-term investments at the end of the quarter.
02—Key points
Key Highlights
- Net loss widened to $18.8 million from $15.9 million year-over-year.
- Total revenue slightly decreased by 0.9% to $529.2 million.
- Gross margin improved to 43.5% from 42.3%, driven by cost reductions and improved service margins.
- Operating expenses increased due to $8.1 million in restructuring costs related to a workforce reduction.
- The Converged Packet Optical segment showed revenue growth, while the Optical Transport segment experienced a significant decline.
- Cash from operations turned positive at $22.1 million for the quarter, compared to a use of cash in the prior year's comparable period.
- The company maintained a strong liquidity position with $598.7 million in cash and cash equivalents.
03—One dollar
Follow one dollar
For each $1.00 of revenue in Q1 FY2015, Ciena Corp lost $0.04.
- Revenue$529.2M100.0%
- Cost of revenue−$298.9M56.5%
- Gross profit$230.3M43.5%
- Operating costs−$226.1M42.7%
- Operating income$4.2M0.8%
- Interest, other & tax−$22.9M4.3%
- Net income−$18.8M3.5%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2015filed March 12, 2015Financial Statements
Q1 FY2015 against Q1 FY2014
| Line item | Q1 FY2015Q1 FY2014 | Change |
|---|---|---|
| Revenue | $529.16M$533.70M | −0.9% |
| Cost of Revenue | $298.87M$307.85M | −2.9% |
| Gross Profit | $230.29M$225.85M | +2.0% |
| R&D Expenses | $100.76M$101.50M | −0.7% |
| Operating Expenses | $226.13M$222.50M | +1.6% |
| Operating Income | $4.17M$3.35M | +24.1% |
| Interest Expense | $13.66M$11.03M | +23.9% |
| Net Income | -$18.78M-$15.94M | −17.8% |
| EPS (Basic) | $-0.17$-0.15 | −13.3% |
| EPS (Diluted) | $-0.17$-0.15 | −13.3% |
| Shares Outstanding (Basic) | 107.77M104.50M | +3.1% |
| Shares Outstanding (Diluted) | 107.77M104.50M | +3.1% |
05—Questions
Frequently Asked Questions
What were the main drivers of Ciena's revenue performance this quarter?
Revenue was relatively flat, decreasing by 0.9% to $529.2 million. While the Converged Packet Optical and Software & Services segments saw revenue growth, this was offset by a significant decline in the Optical Transport segment and a slight decrease in Packet Networking. Unfavorable foreign currency exchange rates also had a negative impact on reported revenue.
Why did Ciena's net loss increase compared to the prior year's quarter?
The increase in net loss was primarily driven by higher restructuring costs of $8.1 million related to a workforce reduction of approximately 125 employees, and increased interest and other expenses, partially offset by an improvement in gross profit.
What is Ciena's current liquidity position?
Ciena maintained a strong liquidity position, with cash and cash equivalents and short-term investments totaling approximately $743.9 million as of January 31, 2015. The company believes these resources will be sufficient to meet its working capital needs and other liquidity requirements for at least the next 12 months.
How did the AT&T Domain 2.0 program impact Ciena's financial results?
The commercial arrangement with AT&T for its Domain 2.0 supplier program, entered into in Q4 FY2014, had an adverse impact on gross margin in that quarter (approximately 4.0%) and a lesser impact in Q1 FY2015 (less than 1.0%). The company expects this impact to subside for the remainder of fiscal 2015 and believes it can be offset by ongoing product cost reductions.
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