Ciena Corporation Q1 FY2026 earnings call

• Demand is incredibly strong with exceptional order activity. - Ciena is the global leader in high-speed connectivity, powering advanced networks for various customers. - Opportunities in WAN business (including MOFON) and in and around data center (scale across, scale out, scale up, DCOM). - Executed well on top and bottom lines, with broad-based demand across service providers, hyperscalers, and neoscalers. - Focused on R&D, capital allocation, and managing supply chain constraints.

Revenue was $1.43 billion in the quarter, highest ever. Optical revenue up over 40% y-o-y, led by Wave Server and RLS product lines (each up over 80% y-o-y). Backlog increased by approximately $2 billion this quarter to exit Q1 at approximately $7 billion, with nearly all new orders for fulfillment in fiscal 2027. Adjusted gross margin came in at 44.7%, adjusted earnings per share $1.35 (more than double Q1 last year).

• Expect revenue for fiscal 2026 between $5.9 and $6.3 billion (raising year-over-year growth rate from 24% to 28% at midpoint). - 2026 gross margin expected between 43.5% and 44.5% (one point above December guide, 130 basis improvement above 2025). - Q2 2026 expected revenue range $1.5 billion ± $50 million, adjusted gross margins 43.5 - 44.5%, adjusted operating expense ~$375 - $390 million resulting in adjusted operating margin 17.5 - 18.5%.

• Supply landscape remains challenging, which could impact revenue. - Component pricing increases and potential repricing of backlogs pose risks. - Early ordering by customers could create fluctuations in backlog and revenue if not managed properly.

Q: On gross margin side, what are upside levels and pricing shift?

A: Driven by capacity infills, engineering cost reductions, and price increases to come.

Q: On pluggables market, compare 400 vs 800?

A: 800 gig is first to market, growth across portfolio.

Q: RPO, backlog product percentage, ZR pluggables sales percentage, telco MOFIN percentage?

A: Backlog ~80% products, no specific ZR pluggables sales percentage, ~10%-15% telco business MOFIN.

Q: Backlog increase, incremental, and pricing in backlog?

A: $2B increment in backlog, pricing increases on new orders to show in second half.

Q: OpEx flat, 10% customers?

A: Held OpEx flat via resetting guidance, harvesting savings, ceasing certain investments; had three 10% customers (two hyperscalers, one tier 1 NA service provider).

Q: CapEx duration, cost reductions?

A: CapEx duration related to expanding manufacturing capacity, cost reductions via multiple levers.

Q: Pricing aggressiveness, competitive environment?

A: Balance between pricing, supply chain, and long-term view; competitive environment different in WAN and data center.

Q: Order growth, early ordering risk, component pricing risk?

A: Order growth from underlying demand, managed early ordering via collaborative relationships; component pricing risks managed via forward commitments and balance of terms.