• Revenue: $1.07 billion for fiscal Q1 2025.
• Adjusted Gross Margin: 44.7%.
• Adjusted EPS: $0.64 per share.
• Adjusted Operating Expense: $347 million.
• Adjusted Operating Margin: 12.3%.
• Adjusted Net Income: $94 million.
• Cash from Operations: $104 million.
• Adjusted EBITDA: $156 million.
• Cash and Investments: Approximately $1.3 billion at quarter-end.
• Share Repurchase: Approximately 1 million shares for $79 million in Q1.
• Service Provider Revenue: Increased 14% year over year, comprising 51% of total revenue.
• Cloud Provider Revenue: Comprised 32% of total revenue.
• Routing and Switching Revenue: $93 million, up 17% sequentially.
• Platform Software and Services Revenue: Up 6% year over year.
• Blue Planet Revenue: Nearly doubled year over year.
• Q2 Revenue Guidance: $1.05 billion to $1.13 billion.
• Q2 Adjusted Gross Margin Guidance: Low 40% range.
• Q2 Adjusted Operating Expense Guidance: Approximately $355 million.
• Fiscal 2025 Revenue Growth Guidance: Toward the high end of 8% to 11% range.
• Fiscal 2025 Adjusted Gross Margin Guidance: 42% to 44% range.
• Fiscal 2025 Adjusted Operating Expense Guidance: $350 million to $360 million per quarter.

• Warning! GuruFocus has detected 7 Warning Signs with CIEN.

Release Date: March 11, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Ciena Corp (NYSE:CIEN) reported strong fiscal first-quarter results with revenue of $1.07 billion, adjusted gross margin of 44.7%, and adjusted EPS of $0.64 per share.
• The company experienced very strong order flow, particularly from cloud providers, which accounted for half of the overall orders in Q1.
• Ciena Corp (NYSE:CIEN) added 20 new customers for its WaveLogic 6 Extreme technology, indicating strong market acceptance.
• The company is on track to double its revenue from pluggables this year, with Q1 being the highest orders quarter yet for pluggables.
• Ciena Corp (NYSE:CIEN) has a resilient supply chain with manufacturing capabilities in multiple locations, allowing flexibility in response to potential tariffs.

Negative Points

• The company acknowledged potential risks from tariffs and international economic disruptions, although these were not included in the current guidance.
• Gross margins in Q1 were boosted by non-recurring events, and margins are expected to return to the low 40% range in Q2.
• Despite strong order flows, the revenue growth guidance for the fiscal second quarter is relatively modest, at 2% sequentially.
• The service provider segment, while recovering, has been impacted by inventory digestion and previous underinvestment in infrastructure.
• Ciena Corp (NYSE:CIEN) faces competitive challenges, particularly with the recent Nokia-Infinera deal, although it sees this as an opportunity due to potential portfolio rationalization.

Q & A Highlights

Q: Can you discuss the dynamics in the cloud service provider segment and any changes in order trends? A: Gary Smith, President and CEO, noted that there was very solid order growth driven by accelerating demand across multiple cloud players. There was no linearity or pause in orders, and demand has continued to increase into Q2. The growth is driven by machine learning and the need for high bandwidth, low latency solutions to connect multiple data centers.

Q: How do you see the seasonality of cloud customers, and what are your assumptions regarding tariffs? A: Gary Smith explained that cloud demand is not particularly seasonal and is expected to grow consistently. James Moylan, CFO, added that the tariff situation is fluid, and Ciena is prepared to mitigate potential impacts through a resilient supply chain and customer reimbursement strategies.

Q: What drove the strong gross margin performance in the January quarter, and what are the expectations moving forward? A: James Moylan stated that the strong gross margin was due to several unexpected one-time events, including software-related factors. These are not expected to recur in Q2, and the company anticipates gross margins to be in the low 40s for the first half of the year, improving in the second half.

Q: How is the pluggable opportunity unfolding, and what is the expected contribution from WaveLogic 5 versus 6? A: Gary Smith mentioned record order flows for pluggables, with expectations to double revenue for the year. Scott McFeely, Executive Advisor, added that WaveLogic 5 will remain the dominant volume contributor through 2025, while WaveLogic 6 will drive new business opportunities.

Q: What are the trends in the service provider business, particularly regarding MOFN opportunities and the recovery in India? A: Gary Smith indicated that MOFN opportunities are expected to increase, potentially reaching 10% to 20% of the service provider business over the next 18 months. In India, there is an improving pipeline driven by cloud activity, and the company expects growth in this market by the end of the fiscal year.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.