Ciena Corporation Q4 FY2025 earnings call

• Record revenue and earnings: Q4 EPS $0.91 (up 69% YoY), full-year EPS $2.64 (up 45% from fiscal 2024); record orders of $7.8 billion. - Market demand: Accelerating demand from cloud providers (hyperscalers and Neo scalers) and service providers; cloud providers underinvested in networks, service providers reinvesting in transport. - Optical market share: Continued growth, expecting further gains in 2026. - In and around data center: Opportunities grew threefold from 2024 to 2025; interconnects portfolio and new architectural applications (scale across, DCOM). - Acquisition: Nubis acquisition supplements interconnect portfolio, with first products expected in fiscal 2026. - Gross margin and working capital: Q4 gross margin exceeded guide midpoint; improved cash conversion cycle; $1.4 billion cash at year-end.

Ciena Corporation reported record fiscal fourth quarter revenue of $1.35 billion and full-year revenue of $4.77 billion. The Optical business was up 19% YoY, driven by RLS growth of 72% YoY. The routing and switching business grew 49% YoY, with 3,005 series product revenue doubling. Global Services grew 25% YoY. Blue Planet achieved $34 million in Q4 revenue, $115 million for the year, and full-year profitability. Optical market share continued to grow, adding two points year-to-date.

• Fiscal 2026 revenue: $5.7 billion to $6.1 billion (midpoint ~24% growth), up from September's 17% growth. - Gross margin: 43% ± 1%, expecting improvement from first half to second half. - Operating expense: Flat at ~$1.52 billion post-Nubis acquisition. - Operating margin: Expected to improve to 17% ± 1%. - Capital expenditures: $250 million to $275 million. - Q1 2026 guidance: Revenue $1.35 billion to $1.43 billion, adjusted gross margin 43%-44%, adjusted operating expenses ~$380 million, operating margin 15.5%-16.5%.

• Supply chain constraints: Photonics parts and optical components facing supply constraints; increasing CapEx and working with suppliers. - Input cost pressures: Headwinds from ramping NPI products and rising input costs; working to mitigate through supply rebalancing and pricing actions.

Q: How much of new opportunities are in guidance?

A: All new opportunities discussed are in the guidance, with in and around data center wins contributing to low double-digit revenue percent in 2026.

Q: Details on 10% revenue customers?

A: One was AT&T, others not specified, collectively covering ~44% of Q4 revenue and ~28% of full-year revenue.

Q: Supply side constraints and actions?

A: CapEx increased, focusing on photonics parts; close collaboration with suppliers; vertical integration and investments to support demand.

Q: Margin outlook and scale across impact?

A: Margin improvement expected as yields improve and volume scales; scale across has initial margin headwinds but expected to improve with volume.

Q: DCOM and telco sustainability?

A: DCOM expanding with Meta and other hyperscalers; telco business sustainable with underinvestment in transport and MOFN growth.