Ciena exceeds revenue expectations in second quarter

After missing revenue estimates in its fiscal first quarter (see "Ciena misses first quarter 2015 revenue target"), Ciena Corp. (NYSE: CIEN) atoned by blowing past both its guidance and Wall Street expectations for revenues in the second quarter. The company reported revenues of $621.6 million versus guidance of $585 million and $615 million and analyst consensus of $604 million.

The quarter's revenue total also exceeded the year ago quarter by 11%.

Sales of converged packet-optical gear led the way at $432.9 million, up from the $336.6 million of the previous quarter and the $356.8 million of 2Q14.

CFO Jim Moylan told attendees on an analyst call Thursday, June 4, that the company had a particularly strong quarter among non-telco customers, who accounted for 33% of sales. Ciena had its best quarter yet for revenues from cable MSOs, he added. The company also earned a contract win with a top five "web-scale provider," Moylan said. Answering an analyst's question, CEO and President Gary B. Smith said that Ciena now has enjoyed direct sales of its equipment to three of the top five web-scale companies.

On a GAAP basis, Ciena reported net income for the recently concluded quarter of $20.7 million ($0.17 per diluted common share), much better than the GAAP net loss of $10.2 million ($0.10 per diluted common share) for the year-ago quarter. In non-GAAP terms, the company said it saw net income of $47.3 million ($0.35 per diluted common share), also up from the year-ago quarter, when Ciena reported non-GAAP net income of $19.4 million ($0.17 per diluted common share).

GAAP gross margin was 43.8%, slightly up from the first quarter's 43.5% and the 42.4% of 2Q14. Non-GAAP gross margin was 44.4%, similarly better than the previous quarter (44.1%) and year-ago quarter (43.1%).

Looking ahead, Ciena predicts revenues for the third fiscal quarter to fall between $610 million and $640 million. The company expects non-GAAP gross margin of approximately 43%.

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