China shmina! CienaCorp. (NYSE: CIEN) countered the dominant financial trend in optical communications during the first quarter – a slowing in demand for technology in China that has affected optical component and subsystems vendors in particular as well as shrinking communications service provider capex – with fiscal year second quarter results that exceeded analyst expectations for revenue by $13.28 million and earnings per share by $0.16. The company also said during the June 1 announcement that it expects solid results in the fiscal third quarter.
Ciena reported revenue of $707.0 million for the second fiscal quarter of 2017, which ended April 30. The figure represented a significant improvement over the $640.7 million registered for the year-ago quarter as well as the $621.5 million reported in the fiscal first quarter of 2017. The quarter’s revenues also came in at the high end of Ciena’s guidance for the quarter, which was $680 to $710 million.
GAAP net income was $38.0 million ($0.25 per diluted common share), again better than the 2016 second quarter number of $14.0 million ($0.10 per diluted common share). Non-GAAP net income came in at $72.3 million ($0.45 per diluted common share) versus the $52.4 million ($0.34 per diluted common share) reported in 2Q16. GAAP gross margin was 45.0% (up from 44.1% in the previous quarter and the 44.2% of the year-ago quarter); the non-GAAP gross margin was 45.7% (again an improvement over the 44.9% of the first quarter and 45.1% of 2Q16). The non-GAAP gross margin was in line with guidance of the mid-40s.
Speaking to financial analysts on a conference call June 1, Ciena President and CEO Gary Smith said the company enjoyed its best quarter ever in terms of shipment volume and orders. In general, Smith attributed the good news to continued diversification, strength in Ciena’s core and traditional businesses, innovation, and the ability to take advantage of emerging opportunities in adjacent applications. In particular, Smith cited revenues from India, particularly Reliance Jio, as well as from Australia and Japan. In terms of market segments, Smith said Ciena had seen strong pull from submarine and data center interconnect applications. He also said he sees opportunities in emerging 5G networks as well as support of fiber-deep deployments by cable MSOs.
Looking ahead to the current quarter, Ciena management guided revenue in the range of $710 million to $740 million and non-GAAP gross margin again in the mid-40s percentage range. For the entire fiscal year, Ciena executives have increased their revenue growth projections to 8% to 9%.
For related articles, visit the Business Topic Center.
For more information on high-speed transmission systems and suppliers, visit the Lightwave Buyer's Guide.