Oclaro 2Q15 sees gain in core telecom product sales thanks to 100G

Optical component and subsystems vendor Oclaro, Inc. (NASDAQ: OCLR) saw its total revenues for its second fiscal quarter of 2015 slip slightly sequentially, primarily due to the impact of its recent sale of its industrial and consumer business. With revenues from those assets discounted, core assets delivered 4% sequential growth, management stated. Company management was heartened particularly by the demand for their 100-Gbps components and optical modules.

The company reported revenues of $86.8 million for the quarter ended December 27, 2014, slightly smaller than the $89.2 million it earned in 1Q15. The fact that the previous quarter saw more revenue from the sold off assets -- $1.8 million of revenue in the second quarter versus $7.5 million in the previous quarter – accounted for the difference.

"Our second quarter financial results benefited from strong 100G revenue growth. Adjusted EBITDA for the quarter was better than our previously announced guidance range, and both gross margin and revenue were at the higher end of our guidance. Our recent results demonstrate that we are steadily making progress in achieving our financial and business objectives," said Oclaro CEO Greg Dougherty. "Market demand for 100G in both telecom and datacom continues to build and we expect to leverage our products and technology to drive future revenue growth."

The company reported GAAP gross margin for the quarter of 15.9%, also slightly down sequentially from 16.1%. GAAP operating loss was $3.8 million, significantly better than the GAAP operating loss of $17.5 million for 1Q15. GAAP net loss was $12.3 million, again an improvement over 1Q15, when the company suffered a GAAP net loss of $20.4 million.

On a non-GAAP basis, Oclaro reported gross margin was 16.5%, flat versus the previous quarter. Non-GAAP operating loss was $9.8 million for the quarter, compared with a non-GAAP operating loss of $13.6 million in the previous quarter. Non-GAAP net loss 2Q15 was $9.9 million, better than the non-GAAP net loss of $15.1 million in 1Q15.

Sales of 100G products accounted for nearly 40% of the company's total sales in the quarter, up from 24% of sales in Q1, Dougherty told attendees on an analyst call February 3. Client-side 100G pluggable optical modules, lithium niobate modulators, and narrow linewidth micro-iTLAs led the way.

Dougherty also reported that Oclaro's coherent CFP2 modules had entered the beta phase (see "Oclaro shows off coherent CFP2 at 200 Gbps"). He predicted that the company would not see "meaningful revenue" from these optical transceivers until late this calendar year.

Looking ahead, the company is expecting the usual first calendar quarter doldrums. Management forecasted revenues of $78 million to $85 million, Non-GAAP gross margin in the range of 13% to 17%, and adjusted EBITDA between negative $9 million and negative $5 million. Adjusted EBITDA was negative $5.5 million for the second quarter of fiscal 2015.

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