UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of report (Date of earliest event reported): December 8, 2022
(Exact name of registrant as specified in its charter)
Commission File Number: 001-36250
(State or other jurisdiction of incorporation)
(Address of principal executive offices)
(IRS Employer Identification No.)
(Zip Code)
Registrant's telephone number, including area code: (410 ) 694-5700
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below): | |||||||||||
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |||||||||||
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |||||||||||
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |||||||||||
| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) | |||||||||||
| Securities registered pursuant to Section 12(b) of the Act: | ||||||||
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
ITEM 2.02 – RESULTS OF OPERATIONS AND FINANCIAL CONDITION
On December 8, 2022, Ciena Corporation ("Ciena") issued a press release announcing its financial results for its fourth fiscal quarter ended October 29, 2022. The text of the press release is furnished as Exhibit 99.1 to this Report. As discussed in this press release, Ciena will be hosting an investor call to discuss its results of operations for its fourth fiscal quarter ended October 29, 2022.
In conjunction with the issuance of this press release, Ciena posted to the quarterly results page of the Investors section of www.ciena.com an accompanying investor presentation. The investor presentation is furnished as Exhibit 99.2 to this Report.
The information in Exhibits 99.1 and 99.2, as well as Item 2.02 of this Report, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section, and shall not be incorporated by reference into any registration statement pursuant to the Securities Act of 1933, as amended. Investors are encouraged to review the “Investors” page of our website at www.ciena.com because, as with the other disclosure channels that we use, from time to time we may post material information exclusively on that site.
ITEM 9.01 – FINANCIAL STATEMENTS AND EXHIBITS
Exhibit Number | Description of Document | ||||||||||
Exhibit 99.1 | Text of Press Release dated December 8, 2022, issued by Ciena Corporation, reporting its results of operations for its fiscal fourth quarter and year ended October 29, 2022. | ||||||||||
Exhibit 99.2 | Investor Presentation for Ciena Corporation's fourth fiscal quarter and fiscal year ended October 29, 2022. | ||||||||||
Exhibit 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). | ||||||||||
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. | ||
Ciena Corporation | ||||||||
Date: December 8, 2022 | By: | /s/ David M. Rothenstein | ||||||
David M. Rothenstein | ||||||||
Senior Vice President, General Counsel and Secretary | ||||||||
FOR IMMEDIATE RELEASE
Ciena Reports Fiscal Fourth Quarter 2022 and Year-End Financial Results
HANOVER, Md. - December 8, 2022 - Ciena® Corporation (NYSE: CIEN), a networking systems, services and software company, today announced unaudited financial results for its fiscal fourth quarter ended October 29, 2022.
•Q4 Revenue: $971.0 million
•Q4 Net Income per Share: $0.39 GAAP; $0.61 adjusted (non-GAAP)
•Share Repurchases: Repurchased approximately 154,200 shares of common stock for an aggregate price of $8.0 million during the quarter.
"Our strong fiscal fourth quarter financial results were better than expected as we benefited from some favorable supply chain developments in the second half of the quarter," said Gary Smith, president and CEO of Ciena. "Looking ahead, we expect to deliver outsized revenue growth in fiscal 2023 given our significant backlog and continued signs of gradual supply improvement. And, we remain confident that the durability of secular demand drivers and our strategic investments to expand our addressable market position us to deliver strong revenue growth over the next several years."
For fiscal fourth quarter 2022, Ciena reported revenue of $971.0 million as compared to $1.04 billion for the fiscal fourth quarter 2021. For fiscal year 2022, Ciena reported revenue of $3.63 billion, as compared to $3.62 billion for fiscal year 2021.
Ciena's GAAP net income for the fiscal fourth quarter 2022 was $57.6 million, or $0.39 per diluted common share, which compares to a GAAP net income of $103.5 million, or $0.66 per diluted common share, for the fiscal fourth quarter 2021. For fiscal year 2022, Ciena's GAAP net income was $152.9 million, or $1.00 per diluted common share, as compared to GAAP net income of $500.2 million, or $3.19 per diluted common share, for fiscal year 2021.
Ciena's adjusted (non-GAAP) net income for the fiscal fourth quarter 2022 was $90.9 million, or $0.61 per diluted common share, which compares to an adjusted (non-GAAP) net income of $132.7 million, or $0.85 per diluted common share, for the fiscal fourth quarter 2021. For fiscal year 2022, Ciena's adjusted (non-GAAP) net income was $288.9 million, or $1.90 per diluted common share, as compared to adjusted (non-GAAP) net income of $456.5 million, or $2.91 per diluted common share, for fiscal year 2021.
Performance Summary for Fiscal Fourth Quarter and the Year Ended October 29, 2022
The tables below (in millions, except percentage data) provide comparisons of certain quarterly results to the prior year. Appendices A and B set forth reconciliations between the GAAP and adjusted (non-GAAP) measures contained in this release.
1
| GAAP Results (unaudited) | ||||||||||||||||||||||||||||||||||||||
| Quarter Ended | Period | Year Ended | Period | |||||||||||||||||||||||||||||||||||
| October 29, | October 30, | Change | October 29, | October 30, | Change | |||||||||||||||||||||||||||||||||
| 2022 | 2021 | Y-T-Y* | 2022 | 2021 | Y-T-Y* | |||||||||||||||||||||||||||||||||
| Revenue | $ | 971.0 | $ | 1,041.5 | (6.8) | % | $ | 3,632.7 | $ | 3,620.7 | 0.3 | % | ||||||||||||||||||||||||||
| Gross margin | 44.7 | % | 45.8 | % | (1.1) | % | 43.0 | % | 47.6 | % | (4.6) | % | ||||||||||||||||||||||||||
| Operating expense | $ | 356.3 | $ | 339.7 | 4.9 | % | $ | 1,337.5 | $ | 1,226.6 | 9.0 | % | ||||||||||||||||||||||||||
| Operating margin | 8.0 | % | 13.2 | % | (5.2) | % | 6.1 | % | 13.7 | % | (7.6) | % | ||||||||||||||||||||||||||
| Non-GAAP Results (unaudited) | ||||||||||||||||||||||||||||||||||||||
| Quarter Ended | Period | Year Ended | Period | |||||||||||||||||||||||||||||||||||
| October 29, | October 30, | Change | October 29, | October 30, | Change | |||||||||||||||||||||||||||||||||
| 2022 | 2021 | Y-T-Y* | 2022 | 2021 | Y-T-Y* | |||||||||||||||||||||||||||||||||
| Revenue | $ | 971.0 | $ | 1,041.5 | (6.8) | % | $ | 3,632.7 | $ | 3,620.7 | 0.3 | % | ||||||||||||||||||||||||||
| Adj. gross margin | 45.2 | % | 46.3 | % | (1.1) | % | 43.6 | % | 47.9 | % | (4.3) | % | ||||||||||||||||||||||||||
| Adj. operating expense | $ | 312.8 | $ | 307.1 | 1.9 | % | $ | 1,177.0 | $ | 1,129.3 | 4.2 | % | ||||||||||||||||||||||||||
| Adj. operating margin | 13.0 | % | 16.8 | % | (3.8) | % | 11.2 | % | 16.8 | % | (5.6) | % | ||||||||||||||||||||||||||
| Adj. EBITDA | $ | 153.5 | $ | 199.2 | (22.9) | % | $ | 502.4 | $ | 702.8 | (28.5) | % | ||||||||||||||||||||||||||
* Denotes % change, or in the case of margin, absolute change
| Revenue by Segment (unaudited) | ||||||||||||||||||||||||||
| Quarter Ended | ||||||||||||||||||||||||||
| October 29, 2022 | October 30, 2021 | |||||||||||||||||||||||||
| Revenue | %** | Revenue | %** | |||||||||||||||||||||||
| Networking Platforms | ||||||||||||||||||||||||||
| Converged Packet Optical | $ | 649.9 | 66.9 | $ | 754.6 | 72.5 | ||||||||||||||||||||
| Routing and Switching | 102.8 | 10.6 | 74.2 | 7.1 | ||||||||||||||||||||||
| Total Networking Platforms | 752.7 | 77.5 | 828.8 | 79.6 | ||||||||||||||||||||||
| Platform Software and Services | 71.6 | 7.4 | 66.1 | 6.3 | ||||||||||||||||||||||
| Blue Planet Automation Software and Services | 21.2 | 2.2 | 19.8 | 1.9 | ||||||||||||||||||||||
| Global Services | ||||||||||||||||||||||||||
| Maintenance Support and Training | 73.1 | 7.5 | 71.3 | 6.9 | ||||||||||||||||||||||
| Installation and Deployment | 36.9 | 3.8 | 47.2 | 4.5 | ||||||||||||||||||||||
| Consulting and Network Design | 15.5 | 1.6 | 8.3 | 0.8 | ||||||||||||||||||||||
| Total Global Services | 125.5 | 12.9 | 126.8 | 12.2 | ||||||||||||||||||||||
| Total | $ | 971.0 | 100.0 | $ | 1,041.5 | 100.0 | ||||||||||||||||||||
2
| Revenue by Segment (unaudited) | ||||||||||||||||||||||||||
| Year Ended | ||||||||||||||||||||||||||
| October 29, 2022 | October 30, 2021 | |||||||||||||||||||||||||
| Revenue | %** | Revenue | %** | |||||||||||||||||||||||
| Networking Platforms | ||||||||||||||||||||||||||
| Converged Packet Optical | $ | 2,380.0 | 65.5 | $ | 2,553.5 | 70.5 | ||||||||||||||||||||
| Routing and Switching | 398.4 | 11.0 | 271.8 | 7.5 | ||||||||||||||||||||||
| Total Networking Platforms | 2,778.4 | 76.5 | 2,825.3 | 78.0 | ||||||||||||||||||||||
| Platform Software and Services | 277.2 | 7.6 | 229.6 | 6.4 | ||||||||||||||||||||||
| Blue Planet Automation Software and Services | 76.6 | 2.1 | 77.2 | 2.1 | ||||||||||||||||||||||
| Global Services | ||||||||||||||||||||||||||
| Maintenance Support and Training | 292.4 | 8.1 | 283.4 | 7.8 | ||||||||||||||||||||||
| Installation and Deployment | 157.4 | 4.3 | 171.5 | 4.7 | ||||||||||||||||||||||
| Consulting and Network Design | 50.7 | 1.4 | 33.7 | 1.0 | ||||||||||||||||||||||
| Total Global Services | 500.5 | 13.8 | 488.6 | 13.5 | ||||||||||||||||||||||
| Total | $ | 3,632.7 | 100.0 | $ | 3,620.7 | 100.0 | ||||||||||||||||||||
** Denotes % of total revenue
Additional Performance Metrics for Fiscal Fourth Quarter and Year Ended October 29, 2022
| Revenue by Geographic Region (unaudited) | ||||||||||||||||||||||||||
| Quarter Ended | ||||||||||||||||||||||||||
| October 29, 2022 | October 30, 2021 | |||||||||||||||||||||||||
| Revenue | % ** | Revenue | % ** | |||||||||||||||||||||||
| Americas | $ | 723.5 | 74.5 | $ | 748.7 | 71.9 | ||||||||||||||||||||
| Europe, Middle East and Africa | 135.1 | 13.9 | 170.8 | 16.4 | ||||||||||||||||||||||
| Asia Pacific | 112.4 | 11.6 | 122.0 | 11.7 | ||||||||||||||||||||||
| Total | $ | 971.0 | 100.0 | $ | 1,041.5 | 100.0 | ||||||||||||||||||||
| Revenue by Geographic Region (unaudited) | ||||||||||||||||||||||||||
| Year Ended | ||||||||||||||||||||||||||
| October 29, 2022 | October 30, 2021 | |||||||||||||||||||||||||
| Revenue | % ** | Revenue | % ** | |||||||||||||||||||||||
| Americas | $ | 2,636.9 | 72.6 | $ | 2,525.6 | 69.8 | ||||||||||||||||||||
| Europe, Middle East and Africa | 555.2 | 15.3 | 670.5 | 18.5 | ||||||||||||||||||||||
| Asia Pacific | 440.6 | 12.1 | 424.6 | 11.7 | ||||||||||||||||||||||
| Total | $ | 3,632.7 | 100.0 | $ | 3,620.7 | 100.0 | ||||||||||||||||||||
** Denotes % of total revenue
3
•Two customers each represented 10%-plus of revenue for the fiscal fourth quarter and fiscal year 2022, combining for a total of 25.6% of revenue for the fiscal fourth quarter and 23.0% of revenue for the fiscal year 2022
•Cash and investments at the end of fiscal year 2022 totaled $1.2 billion
•Cash flow used in operations totaled $14.5 million and $167.8 million for the fiscal fourth quarter and the fiscal year 2022, respectively
•Average days' sales outstanding (DSOs) were 100 and 107 for the fiscal fourth quarter and the fiscal year 2022, respectively
•Accounts receivable, net balance was $920.8 million
•Unbilled contract asset, net balance was $156.0 million
•Inventories totaled $946.7 million, including:
◦Raw materials: $664.9 million
◦Work in process: $18.2 million
◦Finished goods: $258.6 million
◦Deferred cost of sales: $41.1 million
◦Reserve for excess and obsolescence: $(36.1) million
•Product inventory turns were 1.9 and 1.8 for the fiscal fourth quarter and the fiscal year 2022, respectively
•Headcount totaled 8,079 at the end of fiscal year 2022
Supplemental Materials and Live Web Broadcast of Unaudited Fiscal Fourth Quarter 2022 Results
Today, Thursday, December 08, 2022, in conjunction with this announcement, Ciena has posted to the Quarterly Results page of the Investor Relations section of its website certain related supporting materials for its unaudited fiscal fourth quarter and fiscal year 2022 results.
Ciena's management will also host a discussion today with investors and financial analysts that will include the Company's outlook. The live audio web broadcast beginning at 8:30 a.m. Eastern will be accessible via www.ciena.com. An archived replay of the live broadcast will be available shortly following its conclusion on the Investor Relations page of Ciena's website.
Notes to Investors
Forward-Looking Statements. You are encouraged to review the Investors section of our website, where we routinely post press releases, Securities and Exchange Commission ("SEC") filings, recent news, financial results, supplemental financial information, and other announcements. From time to time we exclusively post material information to this website along with other disclosure channels that we use. This press release contains certain forward-looking statements that involve risks and uncertainties. These statements are based on current expectations, forecasts, assumptions and other information available to the Company as of the date hereof. Forward-looking statements include statements regarding Ciena's expectations, beliefs, intentions or strategies regarding the future and can be identified by forward-looking words such as "anticipate," "believe," "could," "estimate," "expect," "intend," "may," "should," "will," and "would" or similar words. Forward-looking statements in this release include: "Our strong fiscal fourth quarter financial results were better than expected as we benefited from some favorable supply chain developments in the second half of the quarter," said Gary Smith, president and CEO of Ciena. "Looking ahead, we expect to deliver outsized revenue growth in fiscal 2023 given our significant backlog and continued signs of gradual supply improvement. And, we remain confident that the durability of secular demand drivers and our strategic investments to expand our addressable market position us to deliver strong revenue growth over the next several years."
Ciena's actual results, performance or events may differ materially from these forward-looking statements made or implied due to a number of risks and uncertainties relating to Ciena's business, including: the effect of broader
4
economic and market conditions on our customers and their business; our ability to execute our business and growth strategies; the impact of supply chain constraints or disruptions; the duration and severity of the COVID-19 pandemic and the impact of countermeasures taken to mitigate its spread on macroeconomic conditions, economic activity, demand for our technology solutions, short- and long-term changes in customer or end user needs, continuity of supply chain, our business operations, liquidity and financial results; changes in network spending or network strategy by our customers; seasonality and the timing and size of customer orders, including our ability to recognize revenue relating to such sales; the level of competitive pressure we encounter; the product, customer and geographic mix of sales within the period; changes in foreign currency exchange rates; factors beyond our control such as natural disasters, climate change, acts of war or terrorism, geopolitical events, including but not limited to the ongoing conflict between Ukraine and Russia, and public health emergencies; changes in tax or trade regulations, including the imposition of tariffs, duties or efforts to withdraw from or materially modify international trade agreements; and the other risk factors disclosed in Ciena’s periodic reports filed with the Securities and Exchange Commission (SEC) including its Quarterly Report on Form 10-Q filed with the SEC on September 7, 2022 and its Annual report on Form 10-K to be filed with the SEC. Ciena assumes no obligation to update any forward-looking information included in this press release.
Non-GAAP Presentation of Quarterly and Annual Results. This release includes non-GAAP measures of Ciena's gross profit, operating expense, income from operations, earnings before interest, tax, depreciation and amortization (EBITDA), Adjusted EBITDA, and measures of net income and net income per share. In evaluating the operating performance of Ciena's business, management excludes certain charges and credits that are required by GAAP. These items share one or more of the following characteristics: they are unusual and Ciena does not expect them to recur in the ordinary course of its business; they do not involve the expenditure of cash; they are unrelated to the ongoing operation of the business in the ordinary course; or their magnitude and timing is largely outside of Ciena's control. Management believes that the non-GAAP measures below provide management and investors useful information and meaningful insight to the operating performance of the business. The presentation of these non-GAAP financial measures should be considered in addition to Ciena's GAAP results and these measures are not intended to be a substitute for the financial information prepared and presented in accordance with GAAP. Ciena's non-GAAP measures and the related adjustments may differ from non-GAAP measures used by other companies and should only be used to evaluate Ciena's results of operations in conjunction with our corresponding GAAP results. To the extent not previously disclosed in a prior Ciena financial results press release, Appendices A and B to this press release set forth a complete GAAP to non-GAAP reconciliation of the non-GAAP measures contained in this release.
About Ciena. Ciena (NYSE: CIEN) is a networking systems, services and software company. We provide solutions that help our customers create the Adaptive Network™ in response to the constantly changing demands of their users. By delivering best-in-class networking technology through high-touch consultative relationships, we build the world’s most agile networks with automation, openness and scale. For updates on Ciena, follow us on Twitter @Ciena, LinkedIn, the Ciena Insights blog, or visit www.ciena.com.
5
CIENA CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
| Quarter Ended | Year Ended | ||||||||||||||||||||||
| October 29, | October 30, | October 29, | October 30, | ||||||||||||||||||||
| 2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
| Revenue: | |||||||||||||||||||||||
| Products | $ | 779,609 | $ | 860,925 | $ | 2,888,848 | $ | 2,932,602 | |||||||||||||||
| Services | 191,401 | 180,561 | 743,813 | 688,082 | |||||||||||||||||||
| Total revenue | 971,010 | 1,041,486 | 3,632,661 | 3,620,684 | |||||||||||||||||||
| Cost of goods sold: | |||||||||||||||||||||||
| Products | 440,253 | 470,334 | 1,699,631 | 1,545,269 | |||||||||||||||||||
| Services | 97,160 | 94,033 | 372,686 | 353,436 | |||||||||||||||||||
| Total cost of goods sold | 537,413 | 564,367 | 2,072,317 | 1,898,705 | |||||||||||||||||||
| Gross profit | 433,597 | 477,119 | 1,560,344 | 1,721,979 | |||||||||||||||||||
| Operating expenses: | |||||||||||||||||||||||
| Research and development | 166,898 | 147,454 | 624,656 | 536,666 | |||||||||||||||||||
| Selling and marketing | 121,865 | 129,625 | 466,565 | 452,214 | |||||||||||||||||||
| General and administrative | 48,191 | 49,383 | 179,382 | 181,874 | |||||||||||||||||||
| Significant asset impairments and restructuring costs | 13,621 | 5,700 | 33,824 | 29,565 | |||||||||||||||||||
| Amortization of intangible assets | 5,754 | 5,836 | 32,511 | 23,732 | |||||||||||||||||||
| Acquisition and integration costs | — | 1,712 | 598 | 2,572 | |||||||||||||||||||
| Total operating expenses | 356,329 | 339,710 | 1,337,536 | 1,226,623 | |||||||||||||||||||
| Income from operations | 77,268 | 137,409 | 222,808 | 495,356 | |||||||||||||||||||
| Interest and other income (loss), net | 1,887 | (168) | 6,747 | (1,768) | |||||||||||||||||||
| Interest expense | (13,775) | (7,916) | (47,050) | (30,837) | |||||||||||||||||||
| Income before income taxes | 65,380 | 129,325 | 182,505 | 462,751 | |||||||||||||||||||
| Provision (benefit) for income taxes | 7,735 | 25,826 | 29,603 | (37,445) | |||||||||||||||||||
| Net income | $ | 57,645 | $ | 103,499 | $ | 152,902 | $ | 500,196 | |||||||||||||||
| Net Income per Common Share | |||||||||||||||||||||||
| Basic net income per common share | $ | 0.39 | $ | 0.67 | $ | 1.01 | $ | 3.22 | |||||||||||||||
| Diluted net income per potential common share | $ | 0.39 | $ | 0.66 | $ | 1.00 | $ | 3.19 | |||||||||||||||
| Weighted average basic common shares outstanding | 148,548 | 155,232 | 151,208 | 155,279 | |||||||||||||||||||
Weighted average dilutive potential common shares outstanding 1 | 149,111 | 156,689 | 152,193 | 156,743 | |||||||||||||||||||
1 Weighted average dilutive potential common shares outstanding used in calculating GAAP diluted net income per potential common share includes the following number of shares underlying certain stock option and stock unit awards: (i) 0.6 million and 1.0 million for the fourth quarter of fiscal 2022 and fiscal 2022, respectively; and (ii) 1.5 million shares for each of the fourth quarter of fiscal 2021 and fiscal 2021.
6
CIENA CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
(unaudited)
| October 29, 2022 | October 30, 2021 | ||||||||||
| ASSETS | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | 994,352 | $ | 1,422,546 | |||||||
| Short-term investments | 153,989 | 181,483 | |||||||||
| Accounts receivable, net | 920,772 | 884,958 | |||||||||
| Inventories | 946,730 | 374,265 | |||||||||
| Prepaid expenses and other | 370,053 | 325,654 | |||||||||
| Total current assets | 3,385,896 | 3,188,906 | |||||||||
| Long-term investments | 35,385 | 70,038 | |||||||||
| Equipment, building, furniture and fixtures, net | 267,779 | 284,968 | |||||||||
| Operating lease right-of-use assets | 45,108 | 44,285 | |||||||||
| Goodwill | 328,322 | 311,645 | |||||||||
| Other intangible assets, net | 69,517 | 65,314 | |||||||||
| Deferred tax asset, net | 824,008 | 800,180 | |||||||||
| Other long-term assets | 113,617 | 99,891 | |||||||||
| Total assets | $ | 5,069,632 | $ | 4,865,227 | |||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||
| Current liabilities: | |||||||||||
| Accounts payable | $ | 516,047 | $ | 356,176 | |||||||
| Accrued liabilities and other short-term obligations | 360,782 | 409,285 | |||||||||
| Deferred revenue | 137,899 | 118,007 | |||||||||
| Operating lease liabilities | 18,925 | 18,632 | |||||||||
| Current portion of long-term debt | 6,930 | 6,930 | |||||||||
| Total current liabilities | 1,040,583 | 909,030 | |||||||||
| Long-term deferred revenue | 62,336 | 57,457 | |||||||||
| Other long-term obligations | 150,335 | 166,803 | |||||||||
| Long-term operating lease liabilities | 42,392 | 41,564 | |||||||||
| Long-term debt, net | 1,061,125 | 670,355 | |||||||||
| Total liabilities | $ | 2,356,771 | $ | 1,845,209 | |||||||
| Stockholders’ equity: | |||||||||||
Preferred stock – par value $0.01; 20,000,000 shares authorized; zero shares issued and outstanding | — | — | |||||||||
Common stock – par value $0.01; 290,000,000 shares authorized; 148,412,943 and 154,858,981 shares issued and outstanding | 1,484 | 1,549 | |||||||||
| Additional paid-in capital | 6,390,252 | 6,803,162 | |||||||||
| Accumulated other comprehensive income (loss) | (46,645) | 439 | |||||||||
| Accumulated deficit | (3,632,230) | (3,785,132) | |||||||||
| Total stockholders’ equity | 2,712,861 | 3,020,018 | |||||||||
| Total liabilities and stockholders’ equity | $ | 5,069,632 | $ | 4,865,227 | |||||||
7
CIENA CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands) (unaudited)
| Year Ended | |||||||||||
| October 29, | October 30, | ||||||||||
| 2022 | 2021 | ||||||||||
| Cash flows provided by (used in) operating activities: | |||||||||||
| Net income | $ | 152,902 | $ | 500,196 | |||||||
| Adjustments to reconcile net income to net cash provided by (used in) operating activities: | |||||||||||
| Depreciation of equipment, building, furniture and fixtures, and amortization of leasehold improvements | 95,922 | 96,233 | |||||||||
| Share-based compensation expense | 105,131 | 84,336 | |||||||||
| Amortization of intangible assets | 44,281 | 36,033 | |||||||||
| Deferred taxes | (27,502) | (156,469) | |||||||||
| Provision for inventory excess and obsolescence | 16,184 | 17,850 | |||||||||
| Provision for warranty | 17,440 | 17,093 | |||||||||
| Other | — | 14,525 | |||||||||
| Changes in assets and liabilities: | |||||||||||
| Accounts receivable | (47,069) | (174,377) | |||||||||
| Inventories | (589,113) | (47,567) | |||||||||
| Prepaid expenses and other | (58,996) | (19,691) | |||||||||
| Operating lease right-of-use assets | 16,453 | 16,632 | |||||||||
| Accounts payable, accruals and other obligations | 100,327 | 162,134 | |||||||||
| Deferred revenue | 26,380 | 16,822 | |||||||||
| Short and long-term operating lease liabilities | (20,096) | (22,104) | |||||||||
| Net cash provided by (used in) operating activities | (167,756) | 541,646 | |||||||||
| Cash flows used in investing activities: | |||||||||||
| Payments for equipment, furniture, fixtures and intellectual property | (90,818) | (79,550) | |||||||||
| Purchase of available for sale securities | (643,971) | (172,778) | |||||||||
| Proceeds from maturities of available for sale securities | 698,642 | 152,253 | |||||||||
| Settlement of foreign currency forward contracts, net | 4,942 | 4,680 | |||||||||
| Acquisition of business, net of cash acquired | (62,043) | — | |||||||||
| Purchase of cost method equity investments | (8,000) | — | |||||||||
| Proceeds from sale of cost method equity investments | — | 4,678 | |||||||||
| Net cash used in investing activities | (101,248) | (90,717) | |||||||||
| Cash flows used in financing activities: | |||||||||||
| Proceeds from issuance of senior notes | 400,000 | — | |||||||||
| Payment of long term debt | (5,197) | (6,929) | |||||||||
| Payment of debt issuance costs | (5,484) | — | |||||||||
| Payment of finance lease obligations | (3,468) | (3,004) | |||||||||
| Shares repurchased for tax withholdings on vesting of stock unit awards | (48,454) | (44,071) | |||||||||
| Repurchases of common stock - repurchase program | (500,800) | (91,288) | |||||||||
| Proceeds from issuance of common stock | 30,348 | 28,457 | |||||||||
| Net cash used in financing activities | (133,055) | (116,835) | |||||||||
| Effect of exchange rate changes on cash, cash equivalents and restricted cash | (26,167) | (198) | |||||||||
| Net increase (decrease) in cash, cash equivalents and restricted cash | (428,226) | 333,896 | |||||||||
| Cash, cash equivalents and restricted cash at beginning of period | 1,422,604 | 1,088,708 | |||||||||
| Cash, cash equivalents and restricted cash at end of period | $ | 994,378 | $ | 1,422,604 | |||||||
| Supplemental disclosure of cash flow information | |||||||||||
| Cash paid during the period for interest | $ | 42,812 | $ | 29,864 | |||||||
| Cash paid during the period for income taxes, net | $ | 34,967 | $ | 73,127 | |||||||
| Operating lease payments | $ | 21,661 | $ | 24,058 | |||||||
| Non-cash investing and financing activities | |||||||||||
| Purchase of equipment in accounts payable | $ | 12,373 | $ | 10,138 | |||||||
| Repurchase of common stock in accrued liabilities from repurchase program | $ | — | $ | 800 | |||||||
| Operating right-of-use assets subject to lease liability | $ | 23,242 | $ | 4,356 | |||||||
| Unrealized gain on equity investment | $ | 4,120 | $ | — | |||||||
8
| APPENDIX A - Reconciliation of Adjusted (Non- GAAP) Measurements | ||||||||||||||||||||||||||
| (in thousands, except per share data) (unaudited) | ||||||||||||||||||||||||||
| Quarter Ended | Year Ended | |||||||||||||||||||||||||
| October 29, | October 30, | October 29, | October 30, | |||||||||||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||||||||||||
| Gross Profit Reconciliation (GAAP/non-GAAP) | ||||||||||||||||||||||||||
| GAAP gross profit | $ | 433,597 | $ | 477,119 | $ | 1,560,344 | $ | 1,721,979 | ||||||||||||||||||
| Share-based compensation-products | 907 | 920 | 3,867 | 3,408 | ||||||||||||||||||||||
| Share-based compensation-services | 2,066 | 1,240 | 7,533 | 5,181 | ||||||||||||||||||||||
| Canadian Emergency Wage Subsidy-products | — | — | — | (4,283) | ||||||||||||||||||||||
| Canadian Emergency Wage Subsidy-services | — | — | — | (2,667) | ||||||||||||||||||||||
| Amortization of intangible assets | 2,005 | 2,856 | 11,770 | 12,301 | ||||||||||||||||||||||
| Total adjustments related to gross profit | 4,978 | 5,016 | 23,170 | 13,940 | ||||||||||||||||||||||
| Adjusted (non-GAAP) gross profit | $ | 438,575 | $ | 482,135 | $ | 1,583,514 | $ | 1,735,919 | ||||||||||||||||||
| Adjusted (non-GAAP) gross profit percentage | 45.2 | % | 46.3 | % | 43.6 | % | 47.9 | % | ||||||||||||||||||
| Operating Expense Reconciliation (GAAP/non-GAAP) | ||||||||||||||||||||||||||
| GAAP operating expense | $ | 356,329 | $ | 339,710 | $ | 1,337,536 | $ | 1,226,623 | ||||||||||||||||||
| Share-based compensation-research and development | 8,507 | 5,684 | 31,879 | 21,863 | ||||||||||||||||||||||
| Share-based compensation-sales and marketing | 8,084 | 6,192 | 31,280 | 25,152 | ||||||||||||||||||||||
| Share-based compensation-general and administrative | 7,610 | 7,466 | 30,435 | 28,804 | ||||||||||||||||||||||
| Canadian Emergency Wage Subsidy-research and development | — | — | — | (29,519) | ||||||||||||||||||||||
| Canadian Emergency Wage Subsidy-sales and marketing | — | — | — | (2,604) | ||||||||||||||||||||||
| Canadian Emergency Wage Subsidy-general and administrative | — | — | — | (2,207) | ||||||||||||||||||||||
| Significant asset impairments and restructuring costs | 13,621 | 5,700 | 33,824 | 29,565 | ||||||||||||||||||||||
| Amortization of intangible assets | 5,754 | 5,836 | 32,511 | 23,732 | ||||||||||||||||||||||
| Acquisition and integration costs | — | 1,712 | 598 | 2,572 | ||||||||||||||||||||||
| Total adjustments related to operating expense | 43,576 | 32,590 | 160,527 | 97,358 | ||||||||||||||||||||||
| Adjusted (non-GAAP) operating expense | $ | 312,753 | $ | 307,120 | $ | 1,177,009 | $ | 1,129,265 | ||||||||||||||||||
| Income from Operations Reconciliation (GAAP/non-GAAP) | ||||||||||||||||||||||||||
| GAAP income from operations | $ | 77,268 | $ | 137,409 | $ | 222,808 | $ | 495,356 | ||||||||||||||||||
| Total adjustments related to gross profit | 4,978 | 5,016 | 23,170 | 13,940 | ||||||||||||||||||||||
| Total adjustments related to operating expense | 43,576 | 32,590 | 160,527 | 97,358 | ||||||||||||||||||||||
| Total adjustments related to income from operations | 48,554 | 37,606 | 183,697 | 111,298 | ||||||||||||||||||||||
| Adjusted (non-GAAP) income from operations | $ | 125,822 | $ | 175,015 | $ | 406,505 | $ | 606,654 | ||||||||||||||||||
| Adjusted (non-GAAP) operating margin percentage | 13.0 | % | 16.8 | % | 11.2 | % | 16.8 | % | ||||||||||||||||||
| Net Income Reconciliation (GAAP/non-GAAP) | ||||||||||||||||||||||||||
| GAAP net income | $ | 57,645 | $ | 103,499 | $ | 152,902 | $ | 500,196 | ||||||||||||||||||
| Exclude GAAP provision (benefit) for income taxes | 7,735 | 25,826 | 29,603 | (37,445) | ||||||||||||||||||||||
| Income before income taxes | 65,380 | 129,325 | 182,505 | 462,751 | ||||||||||||||||||||||
| Total adjustments related to income from operations | 48,554 | 37,606 | 183,697 | 111,298 | ||||||||||||||||||||||
| Unrealized (gain) loss on cost method equity investment | — | — | (4,120) | 165 | ||||||||||||||||||||||
| Adjusted income before income taxes | 113,934 | 166,931 | 362,082 | 574,214 | ||||||||||||||||||||||
| Non-GAAP tax provision on adjusted income before income taxes | 23,015 | 34,221 | 73,141 | 117,714 | ||||||||||||||||||||||
| Adjusted (non-GAAP) net income | $ | 90,919 | $ | 132,710 | $ | 288,941 | $ | 456,500 | ||||||||||||||||||
9
| APPENDIX A - Reconciliation of Adjusted (Non- GAAP) Measurements | ||||||||||||||||||||||||||
| (in thousands, except per share data) (unaudited) | ||||||||||||||||||||||||||
| Quarter Ended | Year Ended | |||||||||||||||||||||||||
| October 29, | October 30, | October 29, | October 30, | |||||||||||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||||||||||||
| Weighted average basic common shares outstanding | 148,548 | 155,232 | 151,208 | 155,279 | ||||||||||||||||||||||
Weighted average dilutive potential common shares outstanding 1 | 149,111 | 156,689 | 152,193 | 156,743 | ||||||||||||||||||||||
| Net Income per Common Share | ||||||||||||||||||||||||||
| GAAP diluted net income per potential common share | $ | 0.39 | $ | 0.66 | $ | 1.00 | $ | 3.19 | ||||||||||||||||||
| Adjusted (non-GAAP) diluted net income per potential common share | $ | 0.61 | $ | 0.85 | $ | 1.90 | $ | 2.91 | ||||||||||||||||||
1 Weighted average dilutive potential common shares outstanding used in calculating Adjusted (non-GAAP) diluted net income per potential common share includes the following number of shares underlying certain stock option and stock unit awards: (i) 0.6 million and 1.0 million for the fourth quarter of fiscal 2022 and fiscal 2022, respectively; and (ii) 1.5 million each for the fourth quarter of fiscal 2021 and fiscal 2021.
10
| APPENDIX B - Calculation of EBITDA and Adjusted EBITDA (unaudited) | ||||||||||||||||||||||||||
| (in thousands) (unaudited) | ||||||||||||||||||||||||||
| Quarter Ended | Year Ended | |||||||||||||||||||||||||
| October 29, | October 30, | October 29, | October 30, | |||||||||||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||||||||||||
| Earnings Before Interest, Tax, Depreciation and Amortization (EBITDA) | ||||||||||||||||||||||||||
| Net income (GAAP) | $ | 57,645 | $ | 103,499 | $ | 152,902 | $ | 500,196 | ||||||||||||||||||
| Add: Interest expense | 13,775 | 7,916 | 47,050 | 30,837 | ||||||||||||||||||||||
| Less: Interest and other income (loss), net | 1,887 | (168) | 6,747 | (1,768) | ||||||||||||||||||||||
| Add: Provision (benefit) for income taxes | 7,735 | 25,826 | 29,603 | (37,445) | ||||||||||||||||||||||
| Add: Depreciation of equipment, building, furniture and fixtures, and amortization of leasehold improvements | 27,642 | 24,315 | 95,922 | 96,233 | ||||||||||||||||||||||
| Add: Amortization of intangible assets | 7,759 | 8,692 | 44,281 | 36,033 | ||||||||||||||||||||||
| EBITDA | $ | 112,669 | $ | 170,416 | $ | 363,011 | $ | 627,622 | ||||||||||||||||||
| Less: Canadian Emergency Wage Subsidy | — | — | — | 41,280 | ||||||||||||||||||||||
| Add: Share-based compensation cost | 27,174 | 21,366 | 104,994 | 84,336 | ||||||||||||||||||||||
| Add: Significant asset impairments and restructuring costs | 13,621 | 5,700 | 33,824 | 29,565 | ||||||||||||||||||||||
| Add: Acquisition and integration costs | — | 1,712 | 598 | 2,572 | ||||||||||||||||||||||
| Adjusted EBITDA | $ | 153,464 | $ | 199,194 | $ | 502,427 | $ | 702,815 | ||||||||||||||||||
* * *
The adjusted (non-GAAP) measures above and their reconciliation to Ciena's GAAP results for the periods presented reflect adjustments relating to the following items:
•Share-based compensation - a non-cash expense incurred in accordance with share-based compensation accounting guidance.
•Canadian Emergency Wage Subsidy - a program introduced by the Government of Canada to offset a portion of employee wages for a limited period in response to COVID-19 outbreak.
•Significant asset impairments and restructuring costs - costs incurred as a result of restructuring activities taken to align resources with perceived market opportunities, the redesign of business processes and, in fiscal 2022, a $3.8 million impairment charge due to Ciena's decision to suspend its business operations in Russia in response to the conflict in Ukraine.
•Amortization of intangible assets - a non-cash expense arising from the acquisition of intangible assets, principally developed technologies and customer-related intangibles, that Ciena is required to amortize over its expected useful life.
•Acquisition and integration costs - includes financial, legal and accounting advisor expenses related to our acquisition activity in fiscal 2022. Acquisition and integration costs for fiscal 2021 include costs of acquisition compensation associated with a three-year earn-out arrangement related to the DonRiver acquisition in fiscal 2018.
•Unrealized (gain)loss on cost method equity investment - reflects a change in the carrying value of a certain cost method equity investment.
•Non-GAAP tax provision - consists of current and deferred income tax expense commensurate with the level of adjusted income before income taxes and utilizes a current, blended U.S. and foreign statutory annual tax rate of 20.2% for fiscal quarter 2022 and 20.5% for fiscal quarter 2021. This rate may be subject to change in the future, including as a result of changes in tax policy or tax strategy.
11
Copyright © Ciena Corporation 2022. All rights reserved. Proprietary information. Ciena Corporation Period ended October 29, 2022 December 8, 2022 Earnings Presentation
2Copyright © Ciena Corporation 2022. All rights reserved. Proprietary information. Forward-looking statements and non-GAAP measures Information in this presentation and related comments of presenters contain a number of forward-looking statements. These statements are based on current expectations, forecasts, assumptions and other information available to the Company as of the date hereof. Forward-looking statements include Ciena’s prospective financial results, return of capital plans, business strategies, expectations about its addressable markets and market share, and business outlook for future periods, as well as statements regarding Ciena’s expectations, beliefs, intentions or strategies regarding the future. Often, these can be identified by forward-looking words such as “target” “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “should,” “will,” “plan,” “predict,” “potential,” “project", “continue,” and “would” or similar words. Ciena's actual results, performance or events may differ materially from these forward-looking statements made or implied due to a number of risks and uncertainties relating to Ciena's business, including: the effect of broader economic and market conditions on our customers and their business; our ability to execute our business and growth strategies; the impact of supply chain constraints or disruptions; the duration and severity of the COVID-19 pandemic and the impact of countermeasures taken to mitigate its spread on macroeconomic conditions, economic activity, demand for our technology solutions, short- and long-term changes in customer or end user needs, continuity of supply chain, our business operations, liquidity and financial results; changes in network spending or network strategy by our customers; seasonality and the timing and size of customer orders, including our ability to recognize revenue relating to such sales; the level of competitive pressure we encounter; the product, customer and geographic mix of sales within the period; changes in foreign currency exchange rates; factors beyond our control such as natural disasters, climate change, acts of war or terrorism, geopolitical events, including but not limited to the ongoing conflict between Ukraine and Russia, and public health emergencies; changes in tax or trade regulations, including the imposition of tariffs, duties or efforts to withdraw from or materially modify international trade agreements; and the other risk factors disclosed in Ciena’s periodic reports filed with the Securities and Exchange Commission (SEC) including Ciena’s Quarterly Report on Form 10-Q filed with the SEC on September 8, 2022 and Ciena’s Annual Report on Form 10-K to be filed with the SEC. All information, statements, and projections in this presentation and the related earnings call speak only as of the date of this presentation and related earnings call. Ciena assumes no obligation to update any forward-looking or other information included in this presentation or related earnings calls, whether as a result of new information, future events or otherwise. In addition, this presentation includes historical, and may include prospective, non-GAAP measures of Ciena’s gross margin, operating expense, operating profit, EBITDA, net income, and net income per share. These measures are not intended to be a substitute for financial information presented in accordance with GAAP. A reconciliation of non- GAAP measures used in this presentation to Ciena’s GAAP results for the relevant period can be found in the Appendix to this presentation. Additional information can also be found in our press release filed this morning and in our reports on Form 10-Q and Form 10K filed with the Securities and Exchange Commission.
3Copyright © Ciena Corporation 2022. All rights reserved. Proprietary information. Table of Contents 1 Overview & recent achievements 2 Market context and Ciena's portfolio 3 Fiscal year 2022 financial performance 4 Fourth quarter 2022 financial performance 5 Appendix
4Copyright © Ciena Corporation 2022. All rights reserved. Proprietary information. Overview & recent achievements
5Copyright © Ciena Corporation 2022. All rights reserved. Proprietary information. Ciena is an industry-leading global networking systems, services, and software company ….. Leading technology and innovation … with a strong track record of creating shareholder value Diversification and scale of business Leader in Optical markets and disruptor in emerging opportunities Demonstrated track record of financial performance Flexibility with strong balance sheet
6Copyright © Ciena Corporation 2022. All rights reserved. Proprietary information. FY 2022 key achievements ▪ Delivering industry-leading coherent technology including the world’s most widely deployed 800G, WaveLogic™ 5 Extreme (WL5e), and the widest range of interoperable and performance pluggables with WaveLogic 5 Nano ▪ 200+ customers for WL5e with more than 50,000 modems shipped to date ▪ More than 200 Adaptive IP customers in our Routing and Switching portfolio fueled by momentum in Coherent Routing, Metro aggregation, PON and high-speed business services We are driving the pace of innovation We are committed to our people and communities We have a resilient business and financial model ▪ Despite the challenging supply environment, we have grown order backlog to record levels ▪ As part of our $1 billion stock repurchase program, we repurchased approximately 8.4 million shares for $500 million ▪ Our balance sheet remains a competitive advantage • Ended the fiscal year with approximately $1.2B in cash and investments ▪ Leverage remains in line with our target level after a successful $400M Senior Notes offering ▪ Achieved our sustainability objectives, including increased participation in our Ciena Cares program, reduced air travel, and corporate-wide diversity and inclusion training ▪ Volunteered 36,000 hours and raised more than $3.2 million through employee giving, matched donations, and volunteer rewards ▪ Advanced toward our goal to be carbon neutral for operational emissions by end of 2023, reducing air travel by 50% from 2019 levels and addressing 75% of our site energy emissions through renewable sources
7Copyright © Ciena Corporation 2022. All rights reserved. Proprietary information. Market context and our portfolio
8Copyright © Ciena Corporation 2022. All rights reserved. Proprietary information. Six mega trends and the innovations that will enable them Digital Transformation & Automation Cloud Data Center Mobility & 5G IoT & Connected Objects Virtual & Hybrid Lifestyles
9Copyright © Ciena Corporation 2022. All rights reserved. Proprietary information. Technical and professional services that help customers build, operate, and optimize their networks Predictive analytics and machine learning based on both big data and small data Dynamic pool of virtual and physical network resources; instrumented, open, scalable, and secure Federated inventory, open domain control, and multi-layer orchestration Our vision for a new network end-state How it works
10Copyright © Ciena Corporation 2022. All rights reserved. Proprietary information. Our market leadership Optical Transport Report, 3Q22Optical Networking Report, 3Q22 Data Center Interconnect Market Share Report, 2Q22 Service Provider Switching & Routing Report, 3Q22 Transport Hardware Report, 3Q22 Transport Customer Markets Report, 3Q22 Transport Applications Report, 2Q22 #1 GLOBALLY ◦ DATA CENTER INTERCONNECT ◦ OPTICAL FOR INTERNET CONTENT PROVIDER CUSTOMERS ◦ OPTICAL FOR CABLE MSO CUSTOMERS #1 N. AMERICA ◦ DATA CENTER INTERCONNECT ◦ TOTAL OPTICAL NETWORKING ◦ OPTICAL PACKET #2 GLOBALLY ◦ TOTAL OPTICAL NETWORKING ◦ OPTICAL PACKET ◦ PURPOSE-BUILT/COMPACT MODULAR DCI #1 GLOBALLY ◦ DATA CENTER INTERCONNECT ◦ DATA CENTER INTERCONNECT FOR ICP/CNPs ◦ SLTE WDM ◦ ACCESS SWITCHING #1 N. AMERICA ◦ TOTAL OPTICAL NETWORKING ◦ DATA CENTER INTERCONNECT ◦ ACCESS SWITCHING #2 GLOBALLY ◦ TOTAL OPTICAL NETWORKING ◦ PURPOSE-BUILT/COMPACT MODULAR DCI #1 GLOBALLY ◦ PURPOSE-BUILT/COMPACT MODULAR DCI ◦ OPTICAL FOR CLOUD & COLO ◦ SLTE WDM ◦ PACKET ACCESS #1 N. AMERICA ◦ TOTAL OPTICAL NETWORKING ◦ PURPOSE-BUILT/COMPACT MODULAR DCI ◦ OPTICAL FOR CLOUD & COLO ◦ PACKET ACCESS #2 GLOBALLY ◦ TOTAL OPTICAL NETWORKING ◦ OPTICAL FOR SERVICE PROVIDER ◦ OPTICAL FOR ENTERPRISE & GOVERNMENT
11Copyright © Ciena Corporation 2022. All rights reserved. Proprietary information. Fiscal 2022 results
12Copyright © Ciena Corporation 2022. All rights reserved. Proprietary information. FY 2022 comparative financial highlights * A reconciliation of these non-GAAP measures to our GAAP results is included in the press release for the relative period. FY 2022 FY 2021 Revenue $3.63B $3.62B Adjusted Gross Margin* 43.6% 47.9% Adjusted Operating Expense* $1.18B $1.13B Adjusted Operating Margin* 11.2% 16.8% Adjusted EBITDA* $502M $703M Adjusted EPS* $1.90 $2.91
13Copyright © Ciena Corporation 2022. All rights reserved. Proprietary information. FY 2022 comparative operating metrics FY 2022 FY 2021 Cash and investments $1.18B $1.67B Cash from (used in) operations $(168)M $542M DSO 107 98 Inventory Turns 1.8 4.1 Gross Leverage 2.25x 1.10x Net Cash $51M $927M
14Copyright © Ciena Corporation 2022. All rights reserved. Proprietary information. Delivering profitability and total shareholder return **Source: company disclosures and S&P Capital IQ. Represents 12/1/2017-11/30/2022 * A reconciliation of these non-GAAP measures to our GAAP results is included in the press release for the relative period. **
15Copyright © Ciena Corporation 2022. All rights reserved. Proprietary information. Q4 FY 2022 results
16Copyright © Ciena Corporation 2022. All rights reserved. Proprietary information. Recent key highlights ▪ Non-telco represented 38% of total revenue in fiscal Q4 2022 ▪ Routing and Switching revenue increased 39% YoY in fiscal Q4 2022, reflecting strong contribution from the recently acquired Vyatta platform and organic portfolio enhancements ▪ Platform Software and Services increased 8% YoY in fiscal Q4 2022, representing 7% of total revenue ▪ GAAP R&D investment was approximately 17.2% of total revenue in fiscal Q4 2022 ▪ 776 100G+ total customers, which includes 17 new wins on WaveLogic Ai and 15 new wins on WaveLogic 5 Extreme ▪ Further expanded our Coherent Routing offering with the introduction and initial orders for our new 14.4T 8190 Coherent Aggregation Router ▪ Total shareholder return five year CAGR of 16%1 ▪ Made strategic investments to expand our addressable market ▪ Entered into agreement to acquire Tibit Communications, Inc., a provider of passive optical network solutions ▪ Completed the acquisition of Benu Networks, Inc., a provider of broadband network gateway software 1 Based on closing share price between 12/1//2017 to 11/30/2022 Achieving balanced growth Prioritizing long term shareholder value Driving the pace of innovation
17Copyright © Ciena Corporation 2022. All rights reserved. Proprietary information. Q4 FY 2022 comparative financial highlights * A reconciliation of these non-GAAP measures to our GAAP results is included in the press release for the relative period. Q4 FY 2022 Q4 FY 2021 Revenue $971.0M $1,041.5M Adjusted Gross Margin* 45.2% 46.3% Adjusted Operating Expense* $312.8M $307.1M Adjusted Operating Margin* 13.0% 16.8% Adjusted EBITDA* $153.5M $199.2M Adjusted EPS* $0.61 $0.85
18Copyright © Ciena Corporation 2022. All rights reserved. Proprietary information. Revenue by segment (Amounts in millions) Q4 FY 2022 Q4 FY 2021 Revenue %** Revenue %** Networking Platforms Converged Packet Optical $649.9 66.9 $754.6 72.5 Routing and Switching 102.8 10.6 74.2 7.1 Total Networking Platforms 752.7 77.5 828.8 79.6 Platform Software and Services 71.6 7.4 66.1 6.3 Blue Planet Automation Software and Services 21.2 2.2 19.8 1.9 Global Services Maintenance Support and Training 73.1 7.5 71.3 6.9 Installation and Deployment 36.9 3.8 47.2 4.5 Consulting and Network Design 15.5 1.6 8.3 0.8 Total Global Services 125.5 12.9 126.8 12.2 Total $971.0 100.0 $1,041.5 100.0 * A reconciliation of these non-GAAP measures to GAAP results is included in the appendix to this presentation. ** Denotes % of total revenue
19Copyright © Ciena Corporation 2022. All rights reserved. Proprietary information. Continued revenue strength derived from non-telco customers
20Copyright © Ciena Corporation 2022. All rights reserved. Proprietary information. Revenue by geographic region 12% 12% 15%16% 18% 14% 72% 70% 74% 71% 15% 11% 12% 14% 74%
21Copyright © Ciena Corporation 2022. All rights reserved. Proprietary information. Q4 FY 2022 appendix
22Copyright © Ciena Corporation 2022. All rights reserved. Proprietary information. Q4 FY 2022 Q3 FY 2022 Q2 FY 2022 Q1 FY 2022 Q4 FY 2021 GAAP gross profit $433,597 $340,779 $401,781 $384,187 $477,119 Share-based compensation-products 907 1,002 1,058 900 920 Share-based compensation-services 2,066 1,940 1,943 1,584 1,240 Amortization of intangible assets 2,005 3,140 3,313 3,312 2,856 Total adjustments related to gross profit 4,978 6,082 6,314 5,796 5,016 Adjusted (non-GAAP) gross profit $438,575 $346,861 $408,095 $389,983 $482,135 Adjusted (non-GAAP) gross profit percentage 45.2 % 40.0 % 43.0 % 46.2 % 46.3 % Gross Profit Reconciliation (Amounts in thousands)
23Copyright © Ciena Corporation 2022. All rights reserved. Proprietary information. Q4 FY 2022 Q3 FY 2022 Q2 FY 2022 Q1 FY 2022 Q4 FY 2021 GAAP operating expense $356,329 $313,672 $343,352 $324,183 $339,710 Share-based compensation-research and development 8,507 8,233 8,309 6,830 5,684 Share-based compensation-sales and marketing 8,084 8,075 8,061 7,060 6,192 Share-based compensation-general and administrative 7,610 7,579 7,334 7,912 7,466 Significant asset impairments and restructuring costs 13,621 7,692 9,102 3,409 5,700 Amortization of intangible assets 5,754 8,919 8,920 8,918 5,836 Acquisition and integration costs — 35 495 68 1,712 Total adjustments related to operating expense 43,576 40,533 42,221 34,197 32,590 Adjusted (non-GAAP) operating expense $312,753 $273,139 $301,131 $289,986 $307,120 Q4 FY 2022 Q3 FY 2022 Q2 FY 2022 Q1 FY 2022 Q4 FY 2021 GAAP income from operations $77,268 $27,107 $58,429 $60,004 $137,409 Total adjustments related to gross profit 4,978 6,082 6,314 5,796 5,016 Total adjustments related to operating expense 43,576 40,533 42,221 34,197 32,590 Total adjustments related to income from operations 48,554 46,615 48,535 39,993 37,606 Adjusted (non-GAAP) income from operations $125,822 $73,722 $106,964 $99,997 $175,015 Adjusted (non-GAAP) operating margin percentage 13.0 % 8.5 % 11.3 % 11.8 % 16.8 % Operating Expense Reconciliation (Amounts in thousands) Income from Operations Reconciliation (Amounts in thousands)
24Copyright © Ciena Corporation 2022. All rights reserved. Proprietary information. Q4 FY 2022 Q3 FY 2022 Q2 FY 2022 Q1 FY 2022 Q4 FY 2021 GAAP net income $57,645 $10,512 $38,922 $45,823 $103,499 Exclude GAAP provision for income taxes 7,735 4,319 8,330 9,219 25,826 Income before income taxes 65,380 14,831 47,252 55,042 129,325 Total adjustments related to income from operations 48,554 46,615 48,535 39,993 37,606 Unrealized gain on cost method equity investment — — — (4,120) — Adjusted income before income taxes 113,934 61,446 95,787 90,915 166,931 Non-GAAP tax provision on adjusted income before income taxes 23,015 12,412 19,349 18,365 34,221 Adjusted (non-GAAP) net income $90,919 $49,034 $76,438 $72,550 $132,710 Weighted average basic common shares outstanding 148,548 149,862 152,197 154,151 155,232 Weighted average diluted potential common shares outstanding(1) 149,111 150,463 153,344 155,807 156,689 Q4 FY 2022 Q3 FY 2022 Q2 FY 2022 Q1 FY 2022 Q4 FY 2021 GAAP diluted net income per potential common share $ 0.39 $ 0.07 $ 0.25 $ 0.29 $ 0.66 Adjusted (non-GAAP) diluted net income per potential common share $ 0.61 $ 0.33 $ 0.50 $ 0.47 $ 0.85 1. Weighted average dilutive potential common shares outstanding used in calculating Adjusted (non-GAAP) diluted net income per potential common share for the fourth quarter of fiscal 2022 includes 0.6 million shares underlying certain stock option and stock unit awards. Net Income Reconciliation (Amounts in thousands) Net Income per Common Share
25Copyright © Ciena Corporation 2022. All rights reserved. Proprietary information. Earnings Before Interest, Tax, Depreciation and Amortization (EBITDA) Q4 FY 2022 Q3 FY 2022 Q2 FY 2022 Q1 FY 2022 Q4 FY 2021 Net income (GAAP) $57,645 $10,512 $38,922 $45,823 $103,499 Add: Interest expense 13,775 12,642 11,985 8,648 7,916 Less: Interest and other income (loss), net 1,887 366 808 3,686 (168) Add: Provision for income taxes 7,735 4,319 8,330 9,219 25,826 Add: Depreciation of equipment, building, furniture and fixtures, and amortization of leasehold improvements 27,642 22,250 22,377 23,653 24,315 Add: Amortization of intangible assets 7,759 12,059 12,233 12,230 8,692 EBITDA $112,669 $61,416 $93,039 $95,887 $170,416 Add: Share-based compensation cost 27,174 26,857 26,673 24,297 21,366 Add: Significant asset impairments and restructuring costs 13,621 7,692 9,102 3,409 5,700 Add: Acquisition and integration costs — 35 495 68 1,712 Adjusted EBITDA $153,464 $96,000 $129,309 $123,661 $199,194 Earnings Before Interest, Tax, Depreciation and Amortization (EBITDA) (Amounts in thousands)