01—Abstract
Summary
Summary of the 10-Q filed June 12, 2019. Cited figures are marked; the original filing is the authoritative source.
Ciena Corporation reported strong financial performance for the second quarter and first half of fiscal year 2019, demonstrating significant revenue growth and improved profitability.
Total revenue for the quarter increased by 18.5% year-over-year to $865.0 milliona, driven primarily by robust demand in the Networking Platforms segment, particularly for its Converged Packet Optical products. This growth was also supported by significant increases in Global Services, notably installation and deployment. The company also saw substantial expansion in its Blue Planet Automation Software and Services.
Profitability saw a significant boost, with gross profit increasing by 27.7% year-over-year to $374.7 millionb, resulting in a gross margin of 43.3%, up from 40.2% in the prior year. Income from operations surged by 163% to $80.3 million. Diluted earnings per share improved to $0.33 from $0.09 in the same period last year.
The company's strategic focus on innovation and diversification continues to pay off, with growth across multiple geographic regions and segments, despite some regional softness in APAC and EMEA. Ciena maintains a solid liquidity position, with $818.5 millionc in cash, cash equivalents, and investments as of April 30, 2019.
02—Key points
Key Highlights
- Total revenue for the quarter grew 18.5% year-over-year to $865.0 million, driven by strong demand in Networking Platforms and Global Services.
- Gross profit increased by 27.7% to $374.7 million, leading to an improved gross margin of 43.3% (up from 40.2% in Q2 2018).
- Income from operations saw a substantial increase of 163% to $80.3 million, indicating strong operational leverage.
- Diluted earnings per share improved significantly to $0.33 from $0.09 in the prior year's second quarter.
- Networking Platforms revenue rose 17.8%, with Converged Packet Optical products showing robust growth, boosted by sales to major service providers and web-scale companies.
- Global Services revenue increased by 20.9%, driven by installation, deployment, and maintenance support services.
- The company ended the quarter with $818.5 million in cash, cash equivalents, and investments, providing ample liquidity.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q2 FY2019, Ciena Corp kept $0.06.
- Revenue$865.0M100.0%
- Cost of revenue−$490.3M56.7%
- Gross profit$374.7M43.3%
- Operating costs−$294.4M34.0%
- Operating income$80.3M9.3%
- Interest, other & tax−$27.6M3.2%
- Net income$52.7M6.1%
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2019filed June 12, 2019Financial Statements
Q2 FY2019 against Q2 FY2018
| Line item | Q2 FY2019Q2 FY2018 | Change |
|---|---|---|
| Revenue | $865.01M$729.98M | +18.5% |
| Cost of Revenue | $490.33M$436.67M | +12.3% |
| Gross Profit | $374.68M$293.31M | +27.7% |
| R&D Expenses | $137.97M$116.92M | +18.0% |
| Operating Expenses | $294.36M$261.24M | +12.7% |
| Operating Income | $80.32M$32.07M | +150.5% |
| Interest Expense | $9.47M$13.03M | −27.3% |
| Net Income | $52.74M$13.86M | +280.6% |
| EPS (Basic) | $0.34$0.10 | +240.0% |
| EPS (Diluted) | $0.33$0.09 | +266.7% |
| Shares Outstanding (Basic) | 156.17M143.97M | +8.5% |
| Shares Outstanding (Diluted) | 158.29M147.97M | +7.0% |
05—Questions
Frequently Asked Questions
What drove the significant revenue growth in the second quarter?
Revenue growth was primarily driven by strong demand in the Networking Platforms segment, particularly for Converged Packet Optical products, as well as increases in Global Services, especially installation and deployment. Growth in the Blue Planet Automation Software and Services also contributed positively.
How did Ciena's profitability change compared to the previous year?
Profitability improved significantly. Gross profit increased by 27.7% year-over-year, and gross margin expanded to 43.3% from 40.2%. Income from operations surged by 163%, reflecting improved operational efficiency and revenue growth.
What is the current financial health and liquidity position of Ciena?
Ciena maintains a strong liquidity position, with total cash, cash equivalents, and investments amounting to $818.5 million as of April 30, 2019. This healthy balance provides ample resources to fund operations and strategic initiatives.
Are there any notable changes in Ciena's accounting policies?
Ciena adopted ASC 606, Revenue from Contracts with Customers, using the modified retrospective method. This change impacted revenue recognition timing for certain services, generally resulting in earlier recognition of revenue compared to prior practices, with a positive, albeit not material, impact on net income for the period.
06—Continue