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Ciena (CIEN) Misses Q4 Earnings Estimates, Beats on Revenues
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Ciena Corporation (CIEN - Free Report) reported mixed fourth-quarter fiscal 2021 (ended Oct 30, 2021) results, wherein the bottom line missed the Zacks Consensus Estimate, but the top line beat the same.
Strong order flow and robust demand dynamics despite continued supply chain constraints boost its growth momentum. Also, strong balance sheet and cash generation expectations increased the return of capital to shareholders.
The Hanover, MD-based networking systems and services company’s share price skyrocketed 15.6% on Dec 9, closing the session at $71.93.
Net Income
On a GAAP basis, net income in the reported quarter was $103.5 million or 66 cents per share compared with $65 million or 42 cents per share in the prior-year quarter. The year-over-year increase was primarily driven by solid top-line expansion.
Adjusted net income was $132.7 million or 85 cents per share compared with $94.5 million or 60 cents per share in the year-ago quarter. The bottom line missed the Zacks Consensus Estimate by a penny.
In fiscal 2021, GAAP net income was $500.2 million or $3.19 per share compared with $361.3 million or $2.32 per share in fiscal 2020. Non-GAAP net income in the same period came in at $456.5 million or $2.91 per share compared with $460.1 million or $2.95 per share in the prior fiscal year.
Ciena Corporation Price, Consensus and EPS Surprise
Quarterly total revenues soared 25.7% year over year to a record $1,041.5 million, well above the company’s guidance. The top line surpassed the consensus estimate of $1,031 million. Ciena secured a dozen new contracts in the reported quarter, including significant multi-year deals with two of the largest U.S. Tier 1 service providers.
With a strong order flow and an increased backlog, the performance reflects a combination of Ciena’s increasingly differentiated position in the marketplace and a robust demand environment. The company had one 10%-plus customer, representing 12.9% and 12.4% of the total revenues in the fiscal fourth quarter and fiscal 2021, respectively.
At the same time, higher demand for bandwidth and automation across the globe remains challenged by the industry-wide supply-chain constraints stemming from the COVID-19 pandemic.
Region-wise, revenues in the Americas were $748.7 million, up 40.8% year over year. Revenues in Europe, the Middle East and Africa were $170.8 million, up from $157.6 million. Revenues in the Asia Pacific totaled $122 million, down 12.4%.
In fiscal 2021, revenues increased 2.5% year over year to $3,620.7 million.
Segment Results
Total revenues in Networking Platforms rallied 30.5% year over year to $828.8 million. Platform Software and Services revenues were $66.1 million compared with $54.5 million in the prior-year quarter. Blue Planet Automation Software and Services revenues decreased from $20.9 million to $19.8 million. Total revenues in Global Services were $126.8 million, up 7.6%.
Other Details
Adjusted gross margin was 46.3% compared with 49.5% in the year-ago quarter. Adjusted operating expenses were $307.1 million, up from $278.9 million. Operating income increased to $137.4 million from $93.5 million.
Adjusted operating income increased to $175 million from $130.9 million. Adjusted operating margin came in at 16.8% compared with 15.8% in the prior-year quarter. Adjusted EBITDA was $199.2 million, up from $154.5 million.
In the reported quarter, Ciena repurchased nearly 0.5 million shares for $26.7 million. The board approved a new arrangement to repurchase up to $1 billion of common stock. As part of this new authorization, Ciena intends to enter into a $250 million accelerated share repurchase program. The final settlement is anticipated to be completed in the second quarter of fiscal 2022.
Notable Developments
Ciena has closed the deal with AT&T Inc. (T - Free Report) to acquire its Vyatta virtual routing and switching technology. The buyout reflects Ciena’s investment in its Routing and Switching roadmap to address the growing market opportunity to transform the edge, including 5G networks and cloud environment.
The key technologies and expertise gained from AT&T’s Vyatta will expand and reinforce Ciena’s Adaptive IP capabilities. The company plans to integrate the team of engineering specialists into its Routing and Switching R&D organization. The addition of the Vyatta talent and assets to its Routing and Switching business will extend Ciena’s success in helping customers create virtualized networks and deploy features faster and cost-effectively across 5G, enterprise and cloud use cases.
Also, Ciena collaborated with Samsung to integrate its next-gen MCP domain controller and services and xHaul solutions with the latter’s 5G core and RAN equipment to support global 5G networks.
Cash Flow & Liquidity
In fiscal 2021, Ciena generated $541.6 million of net cash from operating activities compared with $493.7 million in fiscal 2020.
As of Oct 30, the company had $1,422.5 million in cash and cash equivalents with $670.4 million of net long-term debt compared with the respective tallies of $1,088.6 million and $676.4 million a year ago.
Q1 2022 and Fiscal 2022 Outlook
Driven by strong order flow and continued bandwidth demand, management believes that Ciena will witness outsized revenue growth in the upcoming fiscal. For the fiscal first quarter, the company expects revenues of $870-$910 million. Adjusted gross margin is estimated between 43% and 46%. Adjusted operating expenses are estimated to be nearly $290 million.
For fiscal 2022, Ciena expects revenues to grow in the range of 11-13%. Adjusted gross margin is estimated between 43% and 46%. Adjusted operating expenses are expected to nearly $300 million on average per quarter. Adjusted operating margin is likely to be between 15% and 16%.
The company has also provided business outlook for the long run. It anticipates approximately 6% to 8% annual growth in revenues beginning in 2023. Adjusted operating margin is likely to be in the band of 17-18% for 2024. Adjusted earnings per share are expected to grow at an annual rate of 10% over the next three years.
Harmonic, Inc. (HLIT - Free Report) is a better-ranked stock in the broader industry, carrying a Zacks Rank #2 (Buy). The consensus estimate for current-year earnings has been revised 23.1% upward over the past 60 days.
Harmonic delivered a trailing four-quarter earnings surprise of 61.1%, on average. The stock has appreciated 54.5% in the past year. HLIT has a long-term earnings growth expectation of 15%.
Qualcomm Incorporated (QCOM - Free Report) also has a Zacks Rank #2. The consensus estimate for current-year earnings has been revised 14.1% upward over the past 60 days.
Qualcomm delivered a trailing four-quarter earnings surprise of 11.2%, on average. It has gained 26.3% in the past year. QCOM has a long-term earnings growth expectation of 15.3%.
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Ciena (CIEN) Misses Q4 Earnings Estimates, Beats on Revenues
Ciena Corporation (CIEN - Free Report) reported mixed fourth-quarter fiscal 2021 (ended Oct 30, 2021) results, wherein the bottom line missed the Zacks Consensus Estimate, but the top line beat the same.
Strong order flow and robust demand dynamics despite continued supply chain constraints boost its growth momentum. Also, strong balance sheet and cash generation expectations increased the return of capital to shareholders.
The Hanover, MD-based networking systems and services company’s share price skyrocketed 15.6% on Dec 9, closing the session at $71.93.
Net Income
On a GAAP basis, net income in the reported quarter was $103.5 million or 66 cents per share compared with $65 million or 42 cents per share in the prior-year quarter. The year-over-year increase was primarily driven by solid top-line expansion.
Adjusted net income was $132.7 million or 85 cents per share compared with $94.5 million or 60 cents per share in the year-ago quarter. The bottom line missed the Zacks Consensus Estimate by a penny.
In fiscal 2021, GAAP net income was $500.2 million or $3.19 per share compared with $361.3 million or $2.32 per share in fiscal 2020. Non-GAAP net income in the same period came in at $456.5 million or $2.91 per share compared with $460.1 million or $2.95 per share in the prior fiscal year.
Ciena Corporation Price, Consensus and EPS Surprise
Ciena Corporation price-consensus-eps-surprise-chart | Ciena Corporation Quote
Revenues
Quarterly total revenues soared 25.7% year over year to a record $1,041.5 million, well above the company’s guidance. The top line surpassed the consensus estimate of $1,031 million. Ciena secured a dozen new contracts in the reported quarter, including significant multi-year deals with two of the largest U.S. Tier 1 service providers.
With a strong order flow and an increased backlog, the performance reflects a combination of Ciena’s increasingly differentiated position in the marketplace and a robust demand environment. The company had one 10%-plus customer, representing 12.9% and 12.4% of the total revenues in the fiscal fourth quarter and fiscal 2021, respectively.
At the same time, higher demand for bandwidth and automation across the globe remains challenged by the industry-wide supply-chain constraints stemming from the COVID-19 pandemic.
Region-wise, revenues in the Americas were $748.7 million, up 40.8% year over year. Revenues in Europe, the Middle East and Africa were $170.8 million, up from $157.6 million. Revenues in the Asia Pacific totaled $122 million, down 12.4%.
In fiscal 2021, revenues increased 2.5% year over year to $3,620.7 million.
Segment Results
Total revenues in Networking Platforms rallied 30.5% year over year to $828.8 million. Platform Software and Services revenues were $66.1 million compared with $54.5 million in the prior-year quarter. Blue Planet Automation Software and Services revenues decreased from $20.9 million to $19.8 million. Total revenues in Global Services were $126.8 million, up 7.6%.
Other Details
Adjusted gross margin was 46.3% compared with 49.5% in the year-ago quarter. Adjusted operating expenses were $307.1 million, up from $278.9 million. Operating income increased to $137.4 million from $93.5 million.
Adjusted operating income increased to $175 million from $130.9 million. Adjusted operating margin came in at 16.8% compared with 15.8% in the prior-year quarter. Adjusted EBITDA was $199.2 million, up from $154.5 million.
In the reported quarter, Ciena repurchased nearly 0.5 million shares for $26.7 million. The board approved a new arrangement to repurchase up to $1 billion of common stock. As part of this new authorization, Ciena intends to enter into a $250 million accelerated share repurchase program. The final settlement is anticipated to be completed in the second quarter of fiscal 2022.
Notable Developments
Ciena has closed the deal with AT&T Inc. (T - Free Report) to acquire its Vyatta virtual routing and switching technology. The buyout reflects Ciena’s investment in its Routing and Switching roadmap to address the growing market opportunity to transform the edge, including 5G networks and cloud environment.
The key technologies and expertise gained from AT&T’s Vyatta will expand and reinforce Ciena’s Adaptive IP capabilities. The company plans to integrate the team of engineering specialists into its Routing and Switching R&D organization. The addition of the Vyatta talent and assets to its Routing and Switching business will extend Ciena’s success in helping customers create virtualized networks and deploy features faster and cost-effectively across 5G, enterprise and cloud use cases.
Also, Ciena collaborated with Samsung to integrate its next-gen MCP domain controller and services and xHaul solutions with the latter’s 5G core and RAN equipment to support global 5G networks.
Cash Flow & Liquidity
In fiscal 2021, Ciena generated $541.6 million of net cash from operating activities compared with $493.7 million in fiscal 2020.
As of Oct 30, the company had $1,422.5 million in cash and cash equivalents with $670.4 million of net long-term debt compared with the respective tallies of $1,088.6 million and $676.4 million a year ago.
Q1 2022 and Fiscal 2022 Outlook
Driven by strong order flow and continued bandwidth demand, management believes that Ciena will witness outsized revenue growth in the upcoming fiscal. For the fiscal first quarter, the company expects revenues of $870-$910 million. Adjusted gross margin is estimated between 43% and 46%. Adjusted operating expenses are estimated to be nearly $290 million.
For fiscal 2022, Ciena expects revenues to grow in the range of 11-13%. Adjusted gross margin is estimated between 43% and 46%. Adjusted operating expenses are expected to nearly $300 million on average per quarter. Adjusted operating margin is likely to be between 15% and 16%.
The company has also provided business outlook for the long run. It anticipates approximately 6% to 8% annual growth in revenues beginning in 2023. Adjusted operating margin is likely to be in the band of 17-18% for 2024. Adjusted earnings per share are expected to grow at an annual rate of 10% over the next three years.
Zacks Rank & Stocks to Consider
Ciena currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Harmonic, Inc. (HLIT - Free Report) is a better-ranked stock in the broader industry, carrying a Zacks Rank #2 (Buy). The consensus estimate for current-year earnings has been revised 23.1% upward over the past 60 days.
Harmonic delivered a trailing four-quarter earnings surprise of 61.1%, on average. The stock has appreciated 54.5% in the past year. HLIT has a long-term earnings growth expectation of 15%.
Qualcomm Incorporated (QCOM - Free Report) also has a Zacks Rank #2. The consensus estimate for current-year earnings has been revised 14.1% upward over the past 60 days.
Qualcomm delivered a trailing four-quarter earnings surprise of 11.2%, on average. It has gained 26.3% in the past year. QCOM has a long-term earnings growth expectation of 15.3%.