10-QPeriod: Q1 FY2021

CIENA CORP Quarterly Report for Q1 Ended Jan 30, 2021

Filed March 10, 2021For Securities:CIEN

Summary

Ciena Corporation (CIEN) reported its first quarter fiscal year 2021 results, with total revenue of $757.1 million, a decrease of 9.1% year-over-year. This decline was primarily driven by a significant drop in Networking Platforms revenue, particularly in Converged Packet Optical products. Despite the revenue decrease, Ciena managed to improve its gross margin to 47.3% from 44.5% in the prior year period, benefiting from a favorable product and customer mix, partly attributed to the ongoing impact of the COVID-19 pandemic on business dynamics. Operating expenses were down 3.6%, mainly due to reduced selling and marketing costs related to travel restrictions. Net income for the quarter was $55.3 million, or $0.35 per diluted share, compared to $62.3 million, or $0.40 per diluted share, in the prior year quarter.

Financial Highlights

53 data points
Beta

Revenue

$757.13M

47.3% Gross Margin

Net Income

$55.35M

7.3% Net Margin

EPS (Diluted)

$0.35

Total Assets

$4.19B

Cash & Equivalents

$1.03B

Free Cash Flow

-$28.19M

Financial Statements
Beta
Revenue$757.13M
Cost of Revenue$399.24M
Gross Profit$357.89M
R&D Expenses$132.74M
Operating Expenses$282.10M
Operating Income$75.80M
Interest Expense$7.36M
Net Income$55.35M
EPS (Basic)$0.36
EPS (Diluted)$0.35
Shares Outstanding (Basic)155.17M
Shares Outstanding (Diluted)156.58M

Key Highlights

  • 1Total revenue declined 9.1% year-over-year to $757.1 million, largely due to an 13.4% decrease in Converged Packet Optical product sales.
  • 2Gross margin improved to 47.3% from 44.5% in the prior year quarter, driven by a favorable customer and product mix, which the company noted was partly a short-term effect of COVID-19 dynamics.
  • 3Operating expenses decreased by 3.6% to $282.1 million, with significant reductions in selling and marketing costs due to COVID-19 related travel restrictions.
  • 4Net income decreased to $55.3 million ($0.35 per diluted share) from $62.3 million ($0.40 per diluted share) in the prior year quarter.
  • 5The company maintained a strong liquidity position with $1.3 billion in cash, cash equivalents, and investments as of January 30, 2021.
  • 6Ciena reinstituted its stock repurchase program in Q1 FY2021, repurchasing $13.2 million during the quarter, with approximately $262.2 million remaining authorized funds.

Frequently Asked Questions

The primary driver for the revenue decline was a decrease in sales within the Networking Platforms segment, particularly a 13.4% reduction in Converged Packet Optical products. This was partially offset by increases in Global Services and Blue Planet Automation Software and Services.

Ciena's gross margin improved to 47.3% from 44.5% year-over-year. This was attributed to a more favorable mix of customers and products, which the company indicated was partly a short-term benefit resulting from the ongoing COVID-19 pandemic impacting sales dynamics, leading to a higher proportion of existing business versus new projects.

Ciena expects the cautious spending environment and disruptions in services fulfillment due to COVID-19 to persist through at least the second quarter of fiscal 2021. Restrictions on travel and customer interactions continue to affect sales and marketing activities, and delays in customer projects are impacting revenue. While the company has seen short-term benefits to gross margins, it anticipates margins to reduce from current elevated levels as the impact of the pandemic on new business lessens.

Ciena ended the quarter with $1.3 billion in cash, cash equivalents, and investments, indicating a strong liquidity position. The company also has an undrawn $300 million ABL Credit Facility. Interest expense decreased year-over-year due to lower LIBOR rates impacting its 2025 Term Loan. The company repurchased $13.2 million in stock during the quarter as it reinstituted its share repurchase program.