Press release

Ciena Reports Fiscal Fourth Quarter 2023 Financial Results

0
Sponsored by Businesswire

Ciena® Corporation (NYSE: CIEN), a networking systems, services and software company, today announced unaudited financial results for its fiscal fourth quarter ended October 28, 2023.

  • Q4 Revenue: $1.13 billion

  • Q4 Net Income per Share: $0.62 GAAP; $0.75 adjusted (non-GAAP)

  • Share Repurchases: Repurchased approximately 4.2 million shares of common stock for an aggregate price of $188.8 million during the quarter

“Today we reported strong fiscal fourth quarter results, driven by positive demand dynamics, particularly with cloud provider customers. We delivered an outstanding fiscal year with 21% growth in revenue, gaining significant market share and further advancing our industry leadership position,” said Gary Smith, president and CEO, Ciena. “Looking ahead, as we execute on our strategy to extend our market leadership in optical while expanding our opportunities in routing and switching, we expect to continue to grow revenue faster than the market and take share.”

For fiscal fourth quarter 2023, Ciena reported revenue of $1.13 billion as compared to $971.0 million for the fiscal fourth quarter 2022. For fiscal year 2023, Ciena reported revenue of $4.39 billion, as compared to $3.63 billion for fiscal year 2022.

Ciena’s GAAP net income for the fiscal fourth quarter 2023 was $91.2 million, or $0.62 per diluted common share, which compares to a GAAP net income of $57.6 million, or $0.39 per diluted common share, for the fiscal fourth quarter 2022. For fiscal year 2023, Ciena’s GAAP net income was $254.8 million, or $1.71 per diluted common share, as compared to GAAP net income of $152.9 million, or $1.00 per diluted common share, for fiscal year 2022.

Ciena’s adjusted (non-GAAP) net income for the fiscal fourth quarter 2023 was $111.2 million, or $0.75 per diluted common share, which compares to an adjusted (non-GAAP) net income of $90.9 million, or $0.61 per diluted common share, for the fiscal fourth quarter 2022. For fiscal year 2023, Ciena’s adjusted (non-GAAP) net income was $406.3, or $2.72 per diluted common share, as compared to adjusted (non-GAAP) net income of $288.9, or $1.90 per diluted common share, for fiscal year 2022.

Performance Summary For Fiscal Fourth Quarter and Year Ended October 28, 2023

The tables below (in millions, except percentage data) provide comparisons of certain quarterly and annual results to the prior year. Appendices A and B set forth reconciliations between the GAAP and adjusted (non-GAAP) measures contained in this release.

 

 

GAAP Results (unaudited)

 

 

Quarter Ended

 

Period

 

Year Ended

 

Period

 

 

October 28,

 

October 29,

 

Change

 

October 28,

 

October 29,

 

Change

 

 

2023

 

2022

 

Y-T-Y*

 

2023

 

2022

 

Y-T-Y*

Revenue

 

$

1,129.5

 

 

$

971.0

 

 

16.3

%

 

$

4,386.5

 

 

$

3,632.7

 

 

20.8

%

Gross margin

 

 

43.1

%

 

 

44.7

%

 

(1.6

)%

 

 

42.8

%

 

 

43.0

%

 

(0.2

)%

Operating expense

 

$

395.0

 

 

$

356.3

 

 

10.9

%

 

$

1,521.3

 

 

$

1,337.5

 

 

13.7

%

Operating margin

 

 

8.1

%

 

 

8.0

%

 

0.1

%

 

 

8.2

%

 

 

6.1

%

 

2.1

%

 

 

Non-GAAP Results (unaudited)

 

 

Quarter Ended

 

Period

 

Year Ended

 

Period

 

 

October 28,

 

October 29,

 

Change

 

October 28,

 

October 29,

 

Change

 

 

2023

 

2022

 

Y-T-Y*

 

2023

 

2022

 

Y-T-Y*

Revenue

 

$

1,129.5

 

 

$

971.0

 

 

16.3

%

 

$

4,386.5

 

 

$

3,632.7

 

 

20.8

%

Adj. gross margin

 

 

43.7

%

 

 

45.2

%

 

(1.5

)%

 

 

43.5

%

 

 

43.6

%

 

(0.1

)%

Adj. operating expense

 

$

337.6

 

 

$

312.8

 

 

7.9

%

 

$

1,332.8

 

 

$

1,177.0

 

 

13.2

%

Adj. operating margin

 

 

13.8

%

 

 

13.0

%

 

0.8

%

 

 

13.1

%

 

 

11.2

%

 

1.9

%

Adj. EBITDA

 

$

178.8

 

 

$

153.5

 

 

16.5

%

 

$

665.8

 

 

$

502.4

 

 

32.5

%

* Denotes % change, or in the case of margin, absolute change

 

 

Revenue by Segment (unaudited)

 

 

Quarter Ended

 

 

October 28, 2023

 

October 29, 2022

 

 

Revenue

 

%**

 

Revenue

 

%**

Networking Platforms

 

 

 

 

 

 

 

 

Optical Networking 1

 

$

748.0

 

66.2

 

$

649.9

 

66.9

Routing and Switching

 

 

128.9

 

11.4

 

 

102.8

 

10.6

Total Networking Platforms

 

 

876.9

 

77.6

 

 

752.7

 

77.5

 

 

 

 

 

 

 

 

 

Platform Software and Services

 

 

82.1

 

7.3

 

 

71.6

 

7.4

 

 

 

 

 

 

 

 

 

Blue Planet Automation Software and Services

 

 

20.0

 

1.8

 

 

21.2

 

2.2

 

 

 

 

 

 

 

 

 

Global Services

 

 

 

 

 

 

 

 

Maintenance Support and Training

 

 

74.4

 

6.6

 

 

73.1

 

7.5

Installation and Deployment

 

 

60.1

 

5.3

 

 

36.9

 

3.8

Consulting and Network Design

 

 

16.0

 

1.4

 

 

15.5

 

1.6

Total Global Services

 

 

150.5

 

13.3

 

 

125.5

 

12.9

 

 

 

 

 

 

 

 

 

Total

 

$

1,129.5

 

100.0

 

$

971.0

 

100.0

 

 

Revenue by Segment (unaudited)

 

 

Year Ended

 

 

October 28, 2023

 

October 29, 2022

 

 

Revenue

 

%**

 

Revenue

 

%**

Networking Platforms

 

 

 

 

 

 

 

 

Optical Networking 1

 

$

2,987.3

 

68.1

 

$

2,380.0

 

65.5

Routing and Switching

 

 

506.2

 

11.5

 

 

398.4

 

11.0

Total Networking Platforms

 

 

3,493.5

 

79.6

 

 

2,778.4

 

76.5

 

 

 

 

 

 

 

 

 

Platform Software and Services

 

 

303.9

 

6.9

 

 

277.2

 

7.6

 

 

 

 

 

 

 

 

 

Blue Planet Automation Software and Services

 

 

69.1

 

1.6

 

 

76.6

 

2.1

 

 

 

 

 

 

 

 

 

Global Services

 

 

 

 

 

 

 

 

Maintenance Support and Training

 

 

288.3

 

6.6

 

 

292.4

 

8.1

Installation and Deployment

 

 

181.0

 

4.1

 

 

157.4

 

4.3

Consulting and Network Design

 

 

50.7

 

1.2

 

 

50.7

 

1.4

Total Global Services

 

 

520.0

 

11.9

 

 

500.5

 

13.8

 

 

 

 

 

 

 

 

 

Total

 

$

4,386.5

 

100.0

 

$

3,632.7

 

100.0

**

Denotes % of total revenue

1 Ciena renamed its former “Converged Packet Optical” product line “Optical Networking” effective as of the fourth quarter of fiscal 2023. This change, affecting only the presentation of such information, was made on a prospective basis and does not impact comparability of previous financial results or the composition of this product category.

Additional Performance Metrics for Fiscal Fourth Quarter and Year Ended October 28, 2023

 

 

Revenue by Geographic Region (unaudited)

 

 

Quarter Ended

 

 

October 28, 2023

 

October 29, 2022

 

 

Revenue

 

% **

 

Revenue

 

% **

Americas

 

$

801.4

 

71.0

 

$

723.5

 

74.5

Europe, Middle East and Africa

 

 

164.1

 

14.5

 

 

135.1

 

13.9

Asia Pacific

 

 

164.0

 

14.5

 

 

112.4

 

11.6

Total

 

$

1,129.5

 

100.0

 

$

971.0

 

100.0

 

 

Revenue by Geographic Region (unaudited)

 

 

Year Ended

 

 

October 28, 2023

 

October 29, 2022

 

 

Revenue

 

% **

 

Revenue

 

% **

Americas

 

$

3,110.3

 

70.9

 

$

2,636.9

 

72.6

Europe, Middle East and Africa

 

 

643.1

 

14.7

 

 

555.2

 

15.3

Asia Pacific

 

 

633.1

 

14.4

 

 

440.6

 

12.1

Total

 

$

4,386.5

 

100.0

 

$

3,632.7

 

100.0

** Denotes % of total revenue

  • Two customers represented 10%-plus of revenue for the fiscal fourth quarter 2023, combining for a total of 29.7% of revenue. Two customers represented 10%-plus of revenue for the fiscal year 2023, combining for a total of 23.4% of revenue.

  • Cash and investments at the end of fiscal year 2023 totaled $1.25 billion

  • Cash flow from operations totaled $195.5 million and $168.3 million for the fiscal fourth quarter and the fiscal year 2023, respectively

  • Average days’ sales outstanding (DSOs) were 92 and 95 for the fiscal fourth quarter and the fiscal year 2023, respectively

  • Accounts receivable, net balance was $1.00 billion

  • Unbilled contract assets, net balance was $150.3 million

  • Inventories totaled $1.05 billion, including:

    • Raw materials: $664.8 million

    • Work in process: $55.2 million

    • Finished goods: $314.2 million

    • Deferred cost of sales: $66.6 million

    • Reserve for excess and obsolescence: $(50.0) million

  • Product inventory turns were 2.0 for both the fiscal fourth quarter and the fiscal year 2023.

  • Headcount totaled 8,483 at the end of fiscal year 2023

Supplemental Materials and Live Web Broadcast of Unaudited Fiscal Fourth Quarter 2023 Results

Today, Thursday, December 7, 2023, in conjunction with this announcement, Ciena has posted to the Quarterly Results page of the Investor Relations section of its website certain related supporting materials for its unaudited fiscal fourth quarter 2023 results.

Ciena’s management will also host a discussion today with investors and financial analysts that will include the Company’s outlook. The live audio web broadcast beginning at 8:30 a.m. Eastern will be accessible via www.ciena.com. An archived replay of the live broadcast will be available shortly following its conclusion on the Investor Relations page of Ciena’s website.

Notes to Investors

Forward-Looking Statements. You are encouraged to review the Investors section of our website, where we routinely post press releases, Securities and Exchange Commission (“SEC”) filings, recent news, financial results, supplemental financial information, and other announcements. From time to time we exclusively post material information to this website along with other disclosure channels that we use. This press release contains certain forward-looking statements that involve risks and uncertainties. These statements are based on current expectations, forecasts, assumptions and other information available to the Company as of the date hereof. Forward-looking statements include statements regarding Ciena’s expectations, beliefs, intentions or strategies regarding the future and can be identified by forward-looking words such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “should,” “will,” and “would” or similar words. Forward-looking statements in this release include: “Today we reported strong fiscal fourth quarter results, driven by positive demand dynamics, particularly with cloud provider customers”; “We delivered an outstanding fiscal year with 21% growth in revenue, gaining significant market share and further advancing our industry leadership position”; “Looking ahead, as we execute on our strategy to extend our market leadership in optical while expanding our opportunities in routing and switching, we expect to continue to grow revenue faster than the market and take share.”

Ciena’s actual results, performance or events may differ materially from these forward-looking statements made or implied due to a number of risks and uncertainties relating to Ciena’s business, including: the effect of broader economic and market conditions on our customers, their spending and their businesses and markets; our ability to execute our business and growth strategies; the impact of macroeconomic conditions and global supply chain constraints or disruptions including increased supply costs and lead times; the impact of the introduction of new technologies by us or our competitors; seasonality and the timing and size of customer orders, their delivery dates and our ability to recognize revenue relating to such sales; the level of competitive pressure we encounter; the product, customer and geographic mix of sales within the period; changes in foreign currency exchange rates; factors beyond our control such as natural disasters, climate change, acts of war or terrorism, geopolitical tensions or events, including but not limited to the ongoing conflicts between Ukraine and Russia, and Israel and Hamas, and public health emergencies or epidemics, including the COVID-19 pandemic; changes in tax or trade regulations, including the imposition of tariffs, duties or efforts to withdraw from or materially modify international trade agreements; cyberattacks, data breaches or other security incidents involving our enterprise network environment or our products; regulatory changes, litigation involving our intellectual property or government investigations; and the other risk factors disclosed in Ciena’s periodic reports filed with the Securities and Exchange Commission (SEC) including Ciena’s Quarterly Report on Form 10-Q filed with the SEC on September 6, 2023 and its Annual Report on Form 10-K to be filed with the SEC. Ciena assumes no obligation to update any forward-looking information included in this press release.

Non-GAAP Presentation of Quarterly and Annual Results. This release includes non-GAAP measures of Ciena’s gross profit, operating expense, income from operations, earnings before interest, tax, depreciation and amortization (EBITDA), Adjusted EBITDA, and measures of net income and net income per share. In evaluating the operating performance of Ciena’s business, management excludes certain charges and credits that are required by GAAP. These items share one or more of the following characteristics: they are unusual and Ciena does not expect them to recur in the ordinary course of its business; they do not involve the expenditure of cash; they are unrelated to the ongoing operation of the business in the ordinary course; or their magnitude and timing is largely outside of Ciena’s control. Management believes that the non-GAAP measures below provide management and investors useful information and meaningful insight to the operating performance of the business. The presentation of these non-GAAP financial measures should be considered in addition to Ciena’s GAAP results and these measures are not intended to be a substitute for the financial information prepared and presented in accordance with GAAP. Ciena’s non-GAAP measures and the related adjustments may differ from non-GAAP measures used by other companies and should only be used to evaluate Ciena’s results of operations in conjunction with our corresponding GAAP results. To the extent not previously disclosed in a prior Ciena financial results press release, Appendices A and B to this press release set forth a complete GAAP to non-GAAP reconciliation of the non-GAAP measures contained in this release.

About Ciena. Ciena (NYSE: CIEN) is a global leader in networking systems, services, and software. We build the most adaptive networks in the industry, enabling customers to anticipate and meet ever-increasing digital demands. For three-plus decades, Ciena has brought our humanity to our relentless pursuit of innovation. Prioritizing collaborative relationships with our customers, partners, and communities, we create flexible, open, and sustainable networks that better serve all users—today and into the future. For updates on Ciena, follow us on Twitter @Ciena, LinkedIn, the Ciena Insights blog, or visit www.ciena.com.

CIENA CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

(unaudited)

 

 

Quarter Ended

 

Year Ended

 

October 28,

 

October 29,

 

October 28,

 

October 29,

 

2023

 

2022

 

2023

 

2022

Revenue:

 

 

 

 

 

 

 

Products

$

902,797

 

 

$

779,609

 

 

$

3,581,039

 

 

$

2,888,848

 

Services

 

226,690

 

 

 

191,401

 

 

 

805,510

 

 

 

743,813

 

Total revenue

 

1,129,487

 

 

 

971,010

 

 

 

4,386,549

 

 

 

3,632,661

 

Cost of goods sold:

 

 

 

 

 

 

 

Products

 

529,320

 

 

 

440,253

 

 

 

2,088,440

 

 

 

1,699,631

 

Services

 

113,886

 

 

 

97,160

 

 

 

419,258

 

 

 

372,686

 

Total cost of goods sold

 

643,206

 

 

 

537,413

 

 

 

2,507,698

 

 

 

2,072,317

 

Gross profit

 

486,281

 

 

 

433,597

 

 

 

1,878,851

 

 

 

1,560,344

 

Operating expenses:

 

 

 

 

 

 

 

Research and development

 

189,444

 

 

 

166,898

 

 

 

750,559

 

 

 

624,656

 

Selling and marketing

 

123,648

 

 

 

121,865

 

 

 

490,804

 

 

 

466,565

 

General and administrative

 

64,100

 

 

 

48,191

 

 

 

215,284

 

 

 

179,382

 

Significant asset impairments and restructuring costs

 

7,209

 

 

 

13,621

 

 

 

23,834

 

 

 

33,824

 

Amortization of intangible assets

 

10,578

 

 

 

5,754

 

 

 

37,351

 

 

 

32,511

 

Acquisition and integration costs

 

 

 

 

 

 

 

3,474

 

 

 

598

 

Total operating expenses

 

394,979

 

 

 

356,329

 

 

 

1,521,306

 

 

 

1,337,536

 

Income from operations

 

91,302

 

 

 

77,268

 

 

 

357,545

 

 

 

222,808

 

Interest and other income, net

 

11,297

 

 

 

1,887

 

 

 

62,008

 

 

 

6,747

 

Interest expense

 

(24,207

)

 

 

(13,775

)

 

 

(88,026

)

 

 

(47,050

)

Loss on extinguishment and modification of debt

 

(7,874

)

 

 

 

 

 

(7,874

)

 

 

 

Income before income taxes

 

70,518

 

 

 

65,380

 

 

 

323,653

 

 

 

182,505

 

Provision (benefit) for income taxes1

 

(20,681

)

 

 

7,735

 

 

 

68,826

 

 

 

29,603

 

Net income

$

91,199

 

 

$

57,645

 

 

$

254,827

 

 

$

152,902

 

 

 

 

 

 

 

 

 

Net Income per Common Share

 

 

 

 

 

 

 

Basic net income per common share

$

0.62

 

 

$

0.39

 

 

$

1.71

 

 

$

1.01

 

Diluted net income per potential common share

$

0.62

 

 

$

0.39

 

 

$

1.71

 

 

$

1.00

 

 

 

 

 

 

 

 

 

Weighted average basic common shares outstanding

 

147,437

 

 

 

148,548

 

 

 

148,971

 

 

 

151,208

 

Weighted average dilutive potential common shares outstanding 2

 

147,891

 

 

 

149,111

 

 

 

149,380

 

 

 

152,193

 

1 For the fourth quarter and year ended fiscal 2023, reflects a tax benefit resulting, in part, from guidance in Notice 2023-63 issued by the IRS addressing capitalization and amortization of specified research or experimental expenditures under Section 174 in accordance with the Tax Cuts and Jobs Act.

2 Weighted average dilutive potential common shares outstanding used in calculating GAAP diluted net income per potential common share includes the following number of shares underlying certain stock option and stock unit awards: (i) 0.5 million and 0.4 million shares for the fourth quarter and year ended fiscal 2023, respectively; and (ii) 0.6 million and 1.0 million shares for the fourth quarter and year ended fiscal 2022, respectively.

CIENA CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)

(unaudited)

 

 

October 28,

2023

 

October 29,

2022

ASSETS

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

1,010,618

 

 

$

994,352

 

Short-term investments

 

104,753

 

 

 

153,989

 

Accounts receivable, net

 

1,003,876

 

 

 

920,772

 

Inventories, net

 

1,050,838

 

 

 

946,730

 

Prepaid expenses and other

 

405,694

 

 

 

370,053

 

Total current assets

 

3,575,779

 

 

 

3,385,896

 

Long-term investments

 

134,278

 

 

 

35,385

 

Equipment, building, furniture and fixtures, net

 

280,147

 

 

 

267,779

 

Operating lease right-of-use assets

 

35,140

 

 

 

45,108

 

Goodwill

 

444,765

 

 

 

328,322

 

Other intangible assets, net

 

205,627

 

 

 

69,517

 

Deferred tax asset, net

 

809,306

 

 

 

824,008

 

Other long-term assets

 

116,453

 

 

 

113,617

 

Total assets

$

5,601,495

 

 

$

5,069,632

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

Current liabilities:

 

 

 

Accounts payable

$

317,828

 

 

$

516,047

 

Accrued liabilities and other short-term obligations

 

431,419

 

 

 

360,782

 

Deferred revenue

 

154,419

 

 

 

137,899

 

Operating lease liabilities

 

16,655

 

 

 

18,925

 

Current portion of long-term debt

 

11,700

 

 

 

6,930

 

Total current liabilities

 

932,021

 

 

 

1,040,583

 

Long-term deferred revenue

 

74,041

 

 

 

62,336

 

Other long-term obligations

 

170,407

 

 

 

150,335

 

Long-term operating lease liabilities

 

33,259

 

 

 

42,392

 

Long-term debt, net

 

1,543,406

 

 

 

1,061,125

 

Total liabilities

 

2,753,134

 

 

 

2,356,771

 

Stockholders’ equity:

 

 

 

Preferred stock – par value $0.01; 20,000,000 shares authorized; zero shares issued and outstanding

 

 

 

 

 

Common stock – par value $0.01; 290,000,000 shares authorized; 144,829,938 and 148,412,943 shares issued and outstanding

 

1,448

 

 

 

1,484

 

Additional paid-in capital

 

6,262,083

 

 

 

6,390,252

 

Accumulated other comprehensive loss

 

(37,767

)

 

 

(46,645

)

Accumulated deficit

 

(3,377,403

)

 

 

(3,632,230

)

Total stockholders’ equity

 

2,848,361

 

 

 

2,712,861

 

Total liabilities and stockholders’ equity

$

5,601,495

 

 

$

5,069,632

 

 

 

 

 

CIENA CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands) (unaudited)

 

 

Year Ended

 

October 28,

 

October 29,

 

2023

 

2022

Cash flows used in operating activities:

 

 

 

Net income

$

254,827

 

 

$

152,902

 

Adjustments to reconcile net income to net cash used in operating activities:

 

 

 

Loss on extinguishment of debt

 

1,864

 

 

 

 

Depreciation of equipment, building, furniture and fixtures, and amortization of leasehold improvements

 

92,564

 

 

 

95,922

 

Share-based compensation expense

 

130,455

 

 

 

105,131

 

Amortization of intangible assets

 

49,616

 

 

 

44,281

 

Deferred taxes

 

(14,852

)

 

 

(27,502

)

Provision for inventory excess and obsolescence

 

29,464

 

 

 

16,184

 

Provision for warranty

 

31,742

 

 

 

17,440

 

Gain on cost method equity investments, net

 

(26,368

)

 

 

(4,120

)

Other

 

15,771

 

 

 

4,120

 

Changes in assets and liabilities:

 

 

 

Accounts receivable

 

(94,565

)

 

 

(47,069

)

Inventories

 

(132,497

)

 

 

(589,113

)

Prepaid expenses and other

 

(51,965

)

 

 

(58,996

)

Operating lease right-of-use assets

 

14,190

 

 

 

16,453

 

Accounts payable, accruals and other obligations

 

(138,469

)

 

 

100,327

 

Deferred revenue

 

27,412

 

 

 

26,380

 

Short and long-term operating lease liabilities

 

(20,857

)

 

 

(20,096

)

Net cash used in operating activities

 

168,332

 

 

 

(167,756

)

Cash flows used in investing activities:

 

 

 

Payments for equipment, furniture, fixtures and intellectual property

 

(106,197

)

 

 

(90,818

)

Purchases of investments

 

(252,329

)

 

 

(647,526

)

Proceeds from sales and maturities of investments

 

208,104

 

 

 

702,197

 

Settlement of foreign currency forward contracts, net

 

(2,984

)

 

 

4,942

 

Purchase of cost method equity investments

 

 

 

 

(8,000

)

Acquisition of business, net of cash acquired

 

(230,048

)

 

 

(62,043

)

Net cash used in investing activities

 

(383,454

)

 

 

(101,248

)

Cash flows provided by (used in) financing activities:

 

 

 

Proceeds from issuance of senior notes

 

 

 

 

400,000

 

Proceeds from issuance of term loan, net

 

497,500

 

 

 

 

Payment of long term debt

 

(9,430

)

 

 

(5,197

)

Proceeds for modification of term loan

 

830

 

 

 

 

Payment of debt issuance costs

 

(6,379

)

 

 

(5,484

)

Payment of finance lease obligations

 

(3,791

)

 

 

(3,468

)

Shares repurchased for tax withholdings on vesting of stock unit awards

 

(38,506

)

 

 

(48,454

)

Repurchases of common stock – repurchase program

 

(242,201

)

 

 

(500,800

)

Proceeds from issuance of common stock

 

31,357

 

 

 

30,348

 

Net cash provided by (used in) financing activities

 

229,380

 

 

 

(133,055

)

Effect of exchange rate changes on cash, cash equivalents and restricted cash

 

2,150

 

 

 

(26,167

)

Net increase (decrease) in cash, cash equivalents and restricted cash

 

16,408

 

 

 

(428,226

)

Cash, cash equivalents and restricted cash at beginning of period

 

994,378

 

 

 

1,422,604

 

Cash, cash equivalents and restricted cash at end of period

$

1,010,786

 

 

$

994,378

 

Supplemental disclosure of cash flow information

 

 

 

Cash paid during the period for interest

$

84,465

 

 

$

42,812

 

Cash paid during the period for income taxes, net

$

78,242

 

 

$

34,967

 

Operating lease payments

$

22,782

 

 

$

21,661

 

Non-cash investing and financing activities

 

 

 

Purchase of equipment in accounts payable

$

6,990

 

 

$

12,373

 

Repurchase of common stock in accrued liabilities from repurchase program

$

9,310

 

 

$

 

Operating right-of-use assets subject to lease liability

$

10,236

 

 

$

23,242

 

Gain on cost method equity investments, net

$

26,368

 

 

$

4,120

 

APPENDIX A – Reconciliation of Adjusted (Non- GAAP) Measurements

(in thousands, except per share data) (unaudited)

 

 

 

 

 

 

 

 

 

 

 

Quarter Ended

 

Year Ended

 

 

October 28,

 

October 29,

 

October 28,

 

October 29,

 

 

2023

 

2022

 

2023

 

2022

Gross Profit Reconciliation (GAAP/non-GAAP)

 

 

 

 

 

 

 

 

GAAP gross profit

 

$

486,281

 

 

$

433,597

 

 

$

1,878,851

 

 

$

1,560,344

 

Share-based compensation-products

 

 

1,194

 

 

 

907

 

 

 

4,518

 

 

 

3,867

 

Share-based compensation-services

 

 

2,827

 

 

 

2,066

 

 

 

10,470

 

 

 

7,533

 

Amortization of intangible assets

 

 

2,763

 

 

 

2,005

 

 

 

12,264

 

 

 

11,770

 

Total adjustments related to gross profit

 

 

6,784

 

 

 

4,978

 

 

 

27,252

 

 

 

23,170

 

Adjusted (non-GAAP) gross profit

 

$

493,065

 

 

$

438,575

 

 

$

1,906,103

 

 

$

1,583,514

 

Adjusted (non-GAAP) gross profit percentage

 

 

43.7

%

 

 

45.2

%

 

 

43.5

%

 

 

43.6

%

 

 

 

 

 

 

 

 

 

Operating Expense Reconciliation (GAAP/non-GAAP)

 

 

 

 

 

 

 

 

GAAP operating expense

 

$

394,979

 

 

$

356,329

 

 

$

1,521,306

 

 

$

1,337,536

 

Share-based compensation-research and development

 

 

11,412

 

 

 

8,507

 

 

 

42,331

 

 

 

31,879

 

Share-based compensation-sales and marketing

 

 

9,187

 

 

 

8,084

 

 

 

35,136

 

 

 

31,280

 

Share-based compensation-general and administrative

 

 

10,274

 

 

 

7,610

 

 

 

37,587

 

 

 

30,435

 

Significant asset impairments and restructuring costs

 

 

7,209

 

 

 

13,621

 

 

 

23,834

 

 

 

33,824

 

Amortization of intangible assets

 

 

10,578

 

 

 

5,754

 

 

 

37,351

 

 

 

32,511

 

Acquisition and integration costs

 

 

 

 

 

 

 

 

3,474

 

 

 

598

 

Legal settlement

 

 

8,750

 

 

 

 

 

 

8,750

 

 

 

 

Total adjustments related to operating expense

 

 

57,410

 

 

 

43,576

 

 

 

188,463

 

 

 

160,527

 

Adjusted (non-GAAP) operating expense

 

$

337,569

 

 

$

312,753

 

 

$

1,332,843

 

 

$

1,177,009

 

 

 

 

 

 

 

 

 

 

Income from Operations Reconciliation (GAAP/non-GAAP)

 

 

 

 

 

 

 

 

GAAP income from operations

 

$

91,302

 

 

$

77,268

 

 

$

357,545

 

 

$

222,808

 

Total adjustments related to gross profit

 

 

6,784

 

 

 

4,978

 

 

 

27,252

 

 

 

23,170

 

Total adjustments related to operating expense

 

 

57,410

 

 

 

43,576

 

 

 

188,463

 

 

 

160,527

 

Total adjustments related to income from operations

 

 

64,194

 

 

 

48,554

 

 

 

215,715

 

 

 

183,697

 

Adjusted (non-GAAP) income from operations

 

$

155,496

 

 

$

125,822

 

 

$

573,260

 

 

$

406,505

 

Adjusted (non-GAAP) operating margin percentage

 

 

13.8

%

 

 

13.0

%

 

 

13.1

%

 

 

11.2

%

 

 

 

 

 

 

 

 

 

Net Income Reconciliation (GAAP/non-GAAP)

 

 

 

 

 

 

 

 

GAAP net income

 

$

91,199

 

 

$

57,645

 

 

$

254,827

 

 

$

152,902

 

Exclude GAAP provision for income taxes

 

 

(20,681

)

 

 

7,735

 

 

 

68,826

 

 

 

29,603

 

Income before income taxes

 

 

70,518

 

 

 

65,380

 

 

 

323,653

 

 

 

182,505

 

Total adjustments related to income from operations

 

 

64,194

 

 

 

48,554

 

 

 

215,715

 

 

 

183,697

 

Loss on extinguishment and modification of debt

 

 

7,874

 

 

 

 

 

 

7,874

 

 

 

 

Gain on cost method equity investments, net

 

 

 

 

 

 

 

 

(26,368

)

 

 

(4,120

)

Adjusted income before income taxes

 

 

142,586

 

 

 

113,934

 

 

 

520,874

 

 

 

362,082

 

Non-GAAP tax provision on adjusted income before income taxes

 

 

31,369

 

 

 

23,015

 

 

 

114,592

 

 

 

73,141

 

Adjusted (non-GAAP) net income

 

$

111,217

 

 

$

90,919

 

 

$

406,282

 

 

$

288,941

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average basic common shares outstanding

 

 

147,437

 

 

 

148,548

 

 

 

148,971

 

 

 

151,208

 

Weighted average dilutive potential common shares outstanding 1

 

 

147,891

 

 

 

149,111

 

 

 

149,380

 

 

 

152,193

 

 

 

 

 

 

 

 

 

 

Net Income per Common Share

 

 

 

 

 

 

 

 

GAAP diluted net income per potential common share

 

$

0.62

 

 

$

0.39

 

 

$

1.71

 

 

$

1.00

 

Adjusted (non-GAAP) diluted net income per potential common share

 

$

0.75

 

 

$

0.61

 

 

$

2.72

 

 

$

1.90

 

1 Weighted average dilutive potential common shares outstanding used in calculating Adjusted (non-GAAP) diluted net income per potential common share includes the following number of shares underlying certain stock option and stock unit awards: (i) 0.5 million and 0.4 million for the fourth quarter and year ended fiscal 2023, respectively; and (ii) 0.6 million and 1.0 million for the fourth quarter and year ended fiscal 2022, respectively.

APPENDIX B – Calculation of EBITDA and Adjusted EBITDA (unaudited)

(in thousands) (unaudited)

 

 

 

 

 

 

 

 

 

 

 

Quarter Ended

 

Year Ended

 

 

October 28,

 

October 29,

 

October 28,

 

October 29,

 

 

2023

 

2022

 

2023

 

2022

Earnings Before Interest, Tax, Depreciation and Amortization (EBITDA)

 

 

 

 

 

 

 

 

Net income (GAAP)

 

$

91,199

 

 

$

57,645

 

$

254,827

 

$

152,902

Add: Interest expense

 

 

24,207

 

 

 

13,775

 

 

88,026

 

 

47,050

Less: Interest and other income, net

 

 

11,297

 

 

 

1,887

 

 

62,008

 

 

6,747

Add: Loss on extinguishment and modification of debt

 

 

7,874

 

 

 

 

 

7,874

 

 

Add: Provision (benefit) for income taxes

 

 

(20,681

)

 

 

7,735

 

 

68,826

 

 

29,603

Add: Depreciation of equipment, building, furniture and fixtures, and amortization of leasehold improvements

 

 

23,351

 

 

 

27,642

 

 

92,564

 

 

95,922

Add: Amortization of intangible assets

 

 

13,342

 

 

 

7,759

 

 

49,616

 

 

44,281

EBITDA

 

$

127,995

 

 

$

112,669

 

$

499,725

 

$

363,011

Add: Share-based compensation cost

 

 

34,894

 

 

 

27,174

 

 

130,042

 

 

104,994

Add: Significant asset impairments and restructuring costs

 

 

7,209

 

 

 

13,621

 

 

23,834

 

 

33,824

Add: Acquisition and integration costs

 

 

 

 

 

 

 

3,474

 

 

598

Add: Legal settlement

 

 

8,750

 

 

 

 

 

8,750

 

 

Adjusted EBITDA

 

$

178,848

 

 

$

153,464

 

$

665,825

 

$

502,427

* * *

The adjusted (non-GAAP) measures above and their reconciliation to Ciena’s GAAP results for the periods presented reflect adjustments relating to the following items:

  • Share-based compensation – a non-cash expense incurred in accordance with share-based compensation accounting guidance.

  • Significant asset impairments and restructuring costs – costs incurred as a result of restructuring activities taken to align resources with perceived market opportunities, and the redesign of business processes including restructuring certain real estate facilities.

  • Amortization of intangible assets – a non-cash expense arising from the acquisition of intangible assets, principally developed technologies and customer-related intangibles, that Ciena is required to amortize over an expected useful life.

  • Acquisition and integration costs – primarily consist of financial, legal and accounting advisors’ costs and employment-related costs related to Ciena’s acquisitions in fiscal 2022 and fiscal 2023.

  • Loss on extinguishment and modification of debt – reflects extinguishment and debt modification expenses related to refinancing our then existing term loans which occurred during the fourth quarter of fiscal 2023.

  • Gain on cost method equity investments, net – reflects changes in the carrying value of certain cost method equity investments due to triggering events.

  • Legal settlements – costs incurred as a result of the settlement of certain patent infringement claims and the resolution of related legal proceedings during the fourth quarter of fiscal 2023.

  • Non-GAAP tax provision – consists of current and deferred income tax expense commensurate with the level of adjusted income before income taxes and utilizes a current, blended U.S. and foreign statutory annual tax rate of 22.0% for the fiscal fourth quarter and fiscal year 2023 and 20.2% for the fiscal fourth quarter and fiscal year 2022. This rate may be subject to change in the future, including as a result of changes in tax policy or tax strategy.