Ciena’s CEO sees MOFN as a key service provider growth segment
Key Highlights
- Ciena’s MOFN solutions are increasingly adopted by service providers and cloud providers to address capacity and regulatory challenges globally.
- The company reported a record quarter for RLS shipments, with hyperscalers expanding their use of optical solutions for AI training across distances.
- Ciena is developing new products like Vesta 200 and Nitro redriver to enhance scale-up and scale-out capabilities within data centers, supporting the growth of AI infrastructure.
- The optical networking segment saw a 67.9% increase, driven by Waveserver and RLS product lines, highlighting strong market demand.
- Revenue forecasts for FY2026 have been raised, reflecting confidence in continued growth driven by high-speed optical and data center networking solutions.
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Ciena continues to capitalize on the Managed Optical Fiber Networks (MOFN) trend, one that service providers are offering to cloud providers that need immediate bandwidth in areas where it is more challenging to procure their own fiber facilities.
Cloud providers and hyperscalers are expanding rapidly to fuel growth, artificial intelligence (AI) initiatives, and entry into new and emerging markets. But obtaining dark fiber or licenses to own and operate a network can be difficult in some areas.
Gary Smith, CEO of Ciena, told investors during the company's fiscal first-quarter 2026 earnings call that it is seeing more of its service provider customers adopt its MOFN solutions.
“Service providers and cloud provider customers are increasingly working together to deliver connectivity through managed optical fiber networks or MOFN as they navigate regulatory requirements and capacity needs in the U.S. and in other new and emerging geographies around the world,” he said. “By way of example, our orders in India were up 40% year-over-year, reflecting ongoing high demand specifically for MOFN in that country.”
He added that there are multiyear demand drivers, highlighting the need for Ciena to serve WAN connectivity requirements.
“We expect revenue from the MOFN application will continue to be an important contributor to overall service provider growth going forward,” Smith said. “We are uniquely well-positioned to strengthen further our leadership in high-speed WAN connectivity for service providers, cloud providers, and the growing group of neoscalers from whom we saw increased momentum in the quarter for both direct and MOFN-related design wins.”
Parallel data center opportunities
As Ciena pursues more MOFN deals, the vendor continues to expand its focus on serving opportunities in and around the data center.
Over the past few weeks, several large hyperscalers, including Amazon, Microsoft, and Google, have announced plans to increase their 2026 capex to over $600 billion in aggregate to accommodate infrastructure needs related to AI training and scaling inference workloads.
“These buildouts involve several areas of opportunity for Ciena, not only in the WAN, but increasingly in and around the data center, including scale across, scale out, scale up, and our unique data center out-of-band management (DCOM) solution,” Smith said.
From a scale across perspective, Ciena’s interconnects portfolio is designed to address the needs of AI data centers facing power and space constraints. To overcome these constraints, hyperscalers are distributing compute across multiple sites and using high-speed optical networks to interconnect, creating a single AI training environment that operates across distances.
“We believe that we are in the very early stages of this wave of opportunity, and we are already experiencing extraordinary demand with 3 hyperscalers choosing to use our optical solutions for their training applications across distance,” Smith said. “And all three hyperscalers are significantly ramping, including additional orders for multiple additional clusters from the first hyperscaler we announced in the third quarter of 2025.”
The vendor said it had recorded a second consecutive record quarter for RLS shipments and revenue. Also, Ciena expects to expand its role in scale across applications with the introduction of its new RLS hyper-rail solution.
What’s compelling about hyper-rail, which was developed in collaboration with its hyperscaler customers, is that it can deliver an increase in fiber density within existing rack footprints, helping customers scale traffic while reducing and, in some cases, avoiding costs and complexity associated with adding substantial numbers of amplification huts.
Smith said he expects the hyper-rail “solution to begin standardization at the end of 2026 and will ramp in 2027, allowing us to capture share and incremental value as these distributed AI training expands across regional clusters and moves to further distances.”
Scale inside the data center
Beyond scale, Ciena sees opportunities in the data center, including scale-out connectivity between racks and scale-up connectivity within racks, as the physics of copper inside the data center is reaching its limits.
While there will be a place for copper solutions with shorter-distance scale-up interconnects, the network architecture will include more optical co-packaged interconnects.
Ciena is addressing the scale-up and scale-out opportunity by expanding its interconnect portfolio, including ZR and ZR plus pluggables, as well as new co-packaged optics platforms. Following its acquisition of Nubis last fall, which addresses scale-out and scale-up needs, Ciena recently announced Vesta 200 6.4T CPX flexible, an open, pluggable optical engine, will support hyperscalers' and neoscalers' efforts to scale their AI infrastructure.
“Samples of the Vesta product will be available in calendar Q2 2026, and we are actively discussing Vesta, as you'd expect with our cloud provider customers and partners,” Smith said.
For scale-up opportunities within the rack, where XPUs are getting faster and driving heat and power concerns, Ciena is advancing the Nitro linear redriver technology, also acquired with its Nubis acquisition. It expects samples of the Nitro redriver to be available in calendar Q2 2026.
“We believe this is a critical element of active copper cabling solutions, which extend the distance signals can travel and reduce power consumption by up to 80% compared to [AEC] type solutions,” Smith said.
Finally, Ciena said its data center out-of-band management (DCOM) solution continues to represent an opportunity inside the data center. “Leveraging our XGS-GPON and routing and switching platforms, DCOM was initially designed with Meta to meet hyperscale provisioning and configuration requirements,” Smith said.
Optical networking, routing rule revenues
Ciena’s fiscal first quarter of 2026 was dominated by growth in its Optical Networking and Routing and Switching segments.
Ciena reported that the Optical Networking segment rose 67.9 percent to $1.02 billion, while Routing and switching was up 8.7 percent to $126 million. In all, Ciena’s total revenue from networking platforms was $1.15 billion.
“Our optical revenue was up over 40% year-over-year, led by Waveserver and RLS product lines, each of which was up over 80% from the year-ago period,” said Marc Graff, CFO of Ciena. “We had 3 customers with greater than 10% growth, including 2 global cloud providers and a Tier 1 North American service provider with strong MOFN activity.”
Global Services was also a bright spot, rising by more than 12 percent to $164.1 million.
However, the company saw a slight dip in Platform Software and Services and Blue Planet Automation Software and Services, which declined 8.9 percent and 2.4 percent, respectively, to $93.3 million and $20.4 million.
For its fiscal first quarter 2026, Ciena reported $1.43 billion, up 33% from $1.07 billion in the fiscal first quarter 2025.
Looking forward, Ciena has forecast $1.5 billion plus or minus $50 million for the fiscal second quarter of 2026 revenue. It has also raised its revenue guidance range for fiscal year 2026 to $5.9 billion to $6.3 billion, a 28% year-over-year increase at the midpoint.
Graff said, “We believe this range appropriately balances the strong market demand with ongoing industry supply conditions.”
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Sean Buckley
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