We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
CIEN Stock Tanks 13% on Q2 Earnings Miss, AI Demand Drives Sales Y/Y
Read MoreHide Full Article
Key Takeaways
CIEN's Q2 EPS of 42 cents missed estimates but rose from 27 cents a year ago.
Revenues surged 23.6% to $1.13B, driven by record cloud sales and global customer demand.
Adjusted gross margin fell to 40.2% as tariffs and product mix affected profitability.
Ciena Corporation (CIEN - Free Report) reported second-quarter fiscal 2025 (ended May 3) adjusted earnings per share (EPS) of 42 cents, which lagged the Zacks Consensus Estimate by 19.2%. However, the bottom line compared favorably with the prior-year quarter’s 27 cents. During the reported quarter, it managed shifting U.S. tariffs with quick actions to reduce the impact on its bottom line and customers. Still, it faced a mid-single-digit million-dollar hit to its earnings.
Quarterly revenues jumped 23.6% year over year to $1.13 billion, beating the Zacks Consensus Estimate by 2.8%. The top line hit the high end of management’s guidance ($1.05-$1.13 billion), driven by broad-based demand across its global customer base and diverse portfolio, with cloud providers contributing significantly to the momentum. CIEN continues to strengthen its position in the networking equipment and services sector.
Ciena achieved record direct cloud provider revenues of over $400 million (38% of total revenues) in the fiscal second quarter, reflecting an increase of 85% year over year. This echoes the accelerating AI infrastructure investments and Ciena’s strong position in meeting this demand. Notably, three of the top five customers in this quarter were cloud providers. The company remains on track to double cloud provider orders in fiscal 2025, fueled by robust demand and a broad, deep customer base in this key segment.
In response to the mixed performance and probable geopolitical and tariff woes, CIEN’s shares plummeted 12.92% in trading and closed the session at $73.05 on June 5, 2025. Shares of the company have risen 59.7% in the past year compared with the Zacks Communication-Components industry's growth of 38.7%.
Image Source: Zacks Investment Research
Segmental Results
Total revenues in Networking Platforms (74.2% of total revenues) rose 28.1% year over year to $866.3 million. We expected the metric to be $793.3 million.
Platform Software and Services’ revenues (9.4%) totaled $85.4 million, flat year over year. We projected the metric to be $117.9 million.
Blue Planet Automation Software and Services’ revenues (1.6%) skyrocketed 94% to $28 million. We suggested the metric to be $21.8 million.
Total revenues in Global Services (14.8%) were $146.2 million, up 8.5% year over year. Our estimate for segmental revenues was $156.3 million.
Ciena Corporation Price, Consensus and EPS Surprise
Region-wise, revenues in the Americas totaled $833.8 million, up 25.8% year over year. Europe, the Middle East and Africa generated $191.6 million in revenues, up 23% from the prior-year levels. Revenues in the Asia Pacific totaled $100.5 million, up 9%.
Non-telco customer revenues represented 54% of total revenues in the fiscal second quarter. Two 10%-plus customers represented 23.9% of the top line.
In the quarter under review, CIEN gained 10 new WaveLogic 5 Extreme customers, bringing the total count to 344 worldwide. WaveLogic 5 Nano pluggables are now shipping to 178 customers, including cloud and service providers. Ciena saw strong momentum in coherent pluggables and is on track to double year-over-year revenues to at least $150 million in fiscal 2025.
Other Details
Non-GAAP adjusted gross margin was 41% compared with 43.5% a year ago.
Adjusted operating expenses were $369.5 million, up 10.7% year over year. The figure surpassed the estimated figure of $355 million due to strong order and financial performance, which increased incentive pay. Without the extra incentive cost, OpEx is likely to have been within management’s expectations.
Non-GAAP adjusted operating margin was 8.2% compared with 6.8% in the year-earlier quarter.
Non-GAAP adjusted EBITDA expanded 36% to $116.7 million.
Cash Flow & Liquidity
For the quarter that ended on May 3, 2025, CIEN’s net cash flow from operating activities was $156.9 million compared with $58.5 million in the prior-year period.
As of May 3, the company had $1.35 billion in cash and investments and $1.53 billion in net long-term debt.
In the reported quarter, CIEN repurchased about 1.2 million shares worth $84 million. Ciena aims to buy back about $330 million in total during fiscal 2025.
Guidance
For the third quarter of fiscal 2025, CIEN expects revenues to be in the range of $1.13-$1.21 billion. The adjusted gross margin is estimated to be in the low-40% range. Adjusted operating expenses are projected to be between $370 million and $375 million (including higher incentive compensation).
Despite ongoing geopolitical shifts, strong demand continues to drive Ciena’s growth. With better visibility, it has updated its full-year outlook and now expects about 14% revenue growth in fiscal 2025, up from the prior view of 8-11%.
Due to a higher mix of new products and RLS still ramping, Ciena continues to expect fiscal 2025 adjusted gross margins to be at the lower end of the 42-44% range.
Driven by strong orders and revenues, Ciena expects incentive pay to rise about $10 million per quarter. Adjusted operating expenses are now expected to average $360-$370 million per quarter for the year, compared with the earlier projection of $350-$360 million.
Altice USA, Inc. (ATUS - Free Report) reported soft first-quarter 2025 results, with both earnings and revenues missing the Zacks Consensus Estimate. The company witnessed revenue contraction year over year, owing to weak demand trends in the Residential, Business Services and Wholesale segments. However, growth in mobile line and fiber customer net additions, focus on network upgrades, improved customer care and financial discipline were the positives.
Shares of ATUS have declined 13% in the past year.
Corning Incorporated (GLW - Free Report) reported impressive first-quarter 2025 results, wherein adjusted earnings and revenues surpassed their respective Zacks Consensus Estimate. The advanced glass substrates producer witnessed revenue expansion year over year, driven by healthy sales across multiple end markets. The growing adoption of its advanced products for Gen-AI applications is a tailwind. Its U.S.-made solar products are also gaining solid market traction.
Shares of GLW have gained 37.7% in the past year.
Viavi Solutions Inc. (VIAV - Free Report) reported solid third-quarter fiscal 2025 results, with both the top and bottom lines surpassing the Zacks Consensus Estimate. The company reported an increase in revenues backed by healthy growth in the NE and SE segments. Management’s strong emphasis on various markets, such as wireless & fiber, optical transport, Ethernet, broadband access, video test and storage network testing, is a key growth driver. However, a constrained spending environment owing to macroeconomic challenges is worrisome.
Shares of VIAV have gained 25.8% in the past year.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
CIEN Stock Tanks 13% on Q2 Earnings Miss, AI Demand Drives Sales Y/Y
Key Takeaways
Ciena Corporation (CIEN - Free Report) reported second-quarter fiscal 2025 (ended May 3) adjusted earnings per share (EPS) of 42 cents, which lagged the Zacks Consensus Estimate by 19.2%. However, the bottom line compared favorably with the prior-year quarter’s 27 cents. During the reported quarter, it managed shifting U.S. tariffs with quick actions to reduce the impact on its bottom line and customers. Still, it faced a mid-single-digit million-dollar hit to its earnings.
Quarterly revenues jumped 23.6% year over year to $1.13 billion, beating the Zacks Consensus Estimate by 2.8%. The top line hit the high end of management’s guidance ($1.05-$1.13 billion), driven by broad-based demand across its global customer base and diverse portfolio, with cloud providers contributing significantly to the momentum. CIEN continues to strengthen its position in the networking equipment and services sector.
Ciena achieved record direct cloud provider revenues of over $400 million (38% of total revenues) in the fiscal second quarter, reflecting an increase of 85% year over year. This echoes the accelerating AI infrastructure investments and Ciena’s strong position in meeting this demand. Notably, three of the top five customers in this quarter were cloud providers. The company remains on track to double cloud provider orders in fiscal 2025, fueled by robust demand and a broad, deep customer base in this key segment.
In response to the mixed performance and probable geopolitical and tariff woes, CIEN’s shares plummeted 12.92% in trading and closed the session at $73.05 on June 5, 2025. Shares of the company have risen 59.7% in the past year compared with the Zacks Communication-Components industry's growth of 38.7%.
Image Source: Zacks Investment Research
Segmental Results
Total revenues in Networking Platforms (74.2% of total revenues) rose 28.1% year over year to $866.3 million. We expected the metric to be $793.3 million.
Platform Software and Services’ revenues (9.4%) totaled $85.4 million, flat year over year. We projected the metric to be $117.9 million.
Blue Planet Automation Software and Services’ revenues (1.6%) skyrocketed 94% to $28 million. We suggested the metric to be $21.8 million.
Total revenues in Global Services (14.8%) were $146.2 million, up 8.5% year over year. Our estimate for segmental revenues was $156.3 million.
Ciena Corporation Price, Consensus and EPS Surprise
Ciena Corporation price-consensus-eps-surprise-chart | Ciena Corporation Quote
Region-wise, revenues in the Americas totaled $833.8 million, up 25.8% year over year. Europe, the Middle East and Africa generated $191.6 million in revenues, up 23% from the prior-year levels. Revenues in the Asia Pacific totaled $100.5 million, up 9%.
Non-telco customer revenues represented 54% of total revenues in the fiscal second quarter. Two 10%-plus customers represented 23.9% of the top line.
In the quarter under review, CIEN gained 10 new WaveLogic 5 Extreme customers, bringing the total count to 344 worldwide. WaveLogic 5 Nano pluggables are now shipping to 178 customers, including cloud and service providers. Ciena saw strong momentum in coherent pluggables and is on track to double year-over-year revenues to at least $150 million in fiscal 2025.
Other Details
Non-GAAP adjusted gross margin was 41% compared with 43.5% a year ago.
Adjusted operating expenses were $369.5 million, up 10.7% year over year. The figure surpassed the estimated figure of $355 million due to strong order and financial performance, which increased incentive pay. Without the extra incentive cost, OpEx is likely to have been within management’s expectations.
Non-GAAP adjusted operating margin was 8.2% compared with 6.8% in the year-earlier quarter.
Non-GAAP adjusted EBITDA expanded 36% to $116.7 million.
Cash Flow & Liquidity
For the quarter that ended on May 3, 2025, CIEN’s net cash flow from operating activities was $156.9 million compared with $58.5 million in the prior-year period.
As of May 3, the company had $1.35 billion in cash and investments and $1.53 billion in net long-term debt.
In the reported quarter, CIEN repurchased about 1.2 million shares worth $84 million. Ciena aims to buy back about $330 million in total during fiscal 2025.
Guidance
For the third quarter of fiscal 2025, CIEN expects revenues to be in the range of $1.13-$1.21 billion. The adjusted gross margin is estimated to be in the low-40% range. Adjusted operating expenses are projected to be between $370 million and $375 million (including higher incentive compensation).
Despite ongoing geopolitical shifts, strong demand continues to drive Ciena’s growth. With better visibility, it has updated its full-year outlook and now expects about 14% revenue growth in fiscal 2025, up from the prior view of 8-11%.
Due to a higher mix of new products and RLS still ramping, Ciena continues to expect fiscal 2025 adjusted gross margins to be at the lower end of the 42-44% range.
Driven by strong orders and revenues, Ciena expects incentive pay to rise about $10 million per quarter. Adjusted operating expenses are now expected to average $360-$370 million per quarter for the year, compared with the earlier projection of $350-$360 million.
CIEN’s Zacks Rank
Ciena currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Companies
Altice USA, Inc. (ATUS - Free Report) reported soft first-quarter 2025 results, with both earnings and revenues missing the Zacks Consensus Estimate. The company witnessed revenue contraction year over year, owing to weak demand trends in the Residential, Business Services and Wholesale segments. However, growth in mobile line and fiber customer net additions, focus on network upgrades, improved customer care and financial discipline were the positives.
Shares of ATUS have declined 13% in the past year.
Corning Incorporated (GLW - Free Report) reported impressive first-quarter 2025 results, wherein adjusted earnings and revenues surpassed their respective Zacks Consensus Estimate. The advanced glass substrates producer witnessed revenue expansion year over year, driven by healthy sales across multiple end markets. The growing adoption of its advanced products for Gen-AI applications is a tailwind. Its U.S.-made solar products are also gaining solid market traction.
Shares of GLW have gained 37.7% in the past year.
Viavi Solutions Inc. (VIAV - Free Report) reported solid third-quarter fiscal 2025 results, with both the top and bottom lines surpassing the Zacks Consensus Estimate. The company reported an increase in revenues backed by healthy growth in the NE and SE segments. Management’s strong emphasis on various markets, such as wireless & fiber, optical transport, Ethernet, broadband access, video test and storage network testing, is a key growth driver. However, a constrained spending environment owing to macroeconomic challenges is worrisome.
Shares of VIAV have gained 25.8% in the past year.