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Ciena (CIEN) Matches Q1 Earnings Estimates, Misses on Revenues

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Ciena Corporation (CIEN - Free Report) reported mixed first-quarter fiscal 2022 (ended Jan 29, 2022) results, wherein the bottom line was on par with the Zacks Consensus Estimate but the top line missed the same.

The company’s quarterly results reflect the impact of two specific types of supply-chain disruptions, which occurred at the tail end of the quarter. The first involved a last-minute delay in delivering key components from a few suppliers. The second pertained to a third-party manufacturing disruption causing a brief manufacturing hiccup. These events coupled with a surge in Omicron cases worsened the situation and made it difficult for the company to navigate these challenges. Despite these challenges, robust demand for its products and services, as underscored by extraordinary order growth and the accelerated cloud adoption and traffic growth, continued to boost its momentum.

The Hanover, MD-based networking systems and services company’s share price fell 10.9% on Mar 7, closing the session at $58.76.

Net Income

On a GAAP basis, net income in the reported quarter was $45.8 million or 29 cents per share compared with $55.3 million or 35 cents per share in the prior-year quarter.

Adjusted net income was $72.6 million or 47 cents per share compared with $81.3 million or 52 cents per share in the year-ago quarter. The bottom line matched the Zacks Consensus Estimate of 47 cents per share.

Revenues

Quarterly total revenues soared 11.5% year over year to $844.4 million. The top line, however, slightly missed the consensus metric of $846.5 million.

The company had one 10%-plus customer, representing 13.1% of the total revenues in the fiscal first quarter of 2022.

Region-wise, revenues in the Americas were $595.1 million, up 19.8% year over year. Revenues in Europe, the Middle East and Africa were $150.8 million, slightly down from the $155.4 million reported in the prior-year quarter. Revenues in the Asia Pacific totaled $98.5 million, declining from the $105.1 million reported in the prior-year quarter.

Ciena Corporation Price, Consensus and EPS Surprise

Ciena Corporation Price, Consensus and EPS Surprise

Ciena Corporation price-consensus-eps-surprise-chart | Ciena Corporation Quote

Segment Results

Total revenues in Networking Platforms rose 8.7% year over year to $626.6 million. However, the reported figure missed the consensus mark of $675 million.

Platform Software and Services revenues were $72.9 million compared with $49.9 million in the prior-year quarter. The reported figure surpassed the consensus mark of $57 million.
 
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revenues increased from $16.9 million to $21.1 million. The reported figure surpassed the consensus mark of $17.9 million.

Total revenues in Global Services were $123.8 million, up 8.9% year over year and beating the consensus mark of $116 million.

Other Details

Adjusted gross margin was 46.2% compared with 48% in the year-ago quarter. Adjusted operating expenses were $290 million, up from $253 million reported in the last-year quarter.

Adjusted operating margin came in at 11.8% compared with 14.6% in the prior-year quarter. Adjusted EBITDA declined 7.5% year over year to $123.7 million.

During the first quarter of fiscal 2022, Ciena entered into a $250-million accelerated share repurchase (ASR) arrangement under its new share repurchase program. The final settlement of the ASR was completed in the second quarter of fiscal 2022, with approximately 3.6 million shares repurchased.

Cash Flow & Liquidity

During the reported quarter, Ciena’s net cash used in operating activities was $54.4 million compared with $7.3 million in the prior-year quarter.

As of Jan 29, 2022, the company had $1,118.6 million in cash and cash equivalents and $1,065.2 million of net long-term debt compared with the respective tallies of $1,029.2 million and $674.9 million a year ago.

Guidance

For the fiscal second quarter, the company expects revenues of $930-$970 million. Adjusted gross margin is estimated between 42% and 44%. Adjusted operating expenses are estimated at nearly $300 million.

For fiscal year 2022, the company expects revenue growth in the range of 11-13%. Adjusted gross margin is estimated between 43% and 46%. Adjusted operating expenses are projectedto average $300 million per quarter. Adjusted operating margin is projected between 15% and 16%.

Zacks Rank & Stocks to Consider

At present, Ciena carries a Zacks Rank #4 (Sell).

Some better-ranked stocks from the broader technology space include Progress Software (PRGS - Free Report) , Badger Meter (BMI - Free Report) and Iridium Communications (IRDM - Free Report) . While Progress Software and Badger Meter sport a Zacks Rank #1 (Strong Buy), Iridium carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Progress Software has a projected earnings growth rate of 3.62% for fiscal 2022. The Zacks Consensus Estimate for Progress Software’s fiscal 2022 earnings has been revised upward by 6 cents in the past 60 days. The long-term earnings growth rate of PRGS is pegged at 2%.

Progress Software’s earnings beat the Zacks Consensus Estimate in the preceding four quarters, the average surprise being 26.8%. Shares of PRGS have dropped 3% in the past year.

Badger Meter has a projected earnings growth rate of 5.77% for 2022. The Zacks Consensus Estimate for Badger Meter’s 2022 earnings has been revised upward by 19 cents in the past 60 days.

Badger Meter’s earnings beat the Zacks Consensus Estimate in three of the last four quarters and met estimates once, the average surprise being 14%. Shares of BMI have dropped 7.8% in the past year.

Iridium has a projected earnings growth rate of 271.43% for 2022. The Zacks Consensus Estimate for Iridium’s 2022 earnings has been revised upward by a penny in the past 90 days.

Iridium’s earnings beat the Zacks Consensus Estimate in two of the last four quarters and met estimates twice, the average surprise being 39.4%. Shares of IRDM have dropped 0.9% in the past year.