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•	Q1 Revenue: $646.1 million, increasing 4% year over year

•	Q1 Net Income (Loss) per Share: $(3.29) GAAP; $0.15 adjusted (non-GAAP)

◦	GAAP loss primarily due to significant non-cash charges related to the Tax Cuts and Jobs Act, which resulted in an estimated $476.9 million of additional tax expense

•	Share Repurchase: Commenced repurchase activity on three-year, $300 million repurchase program during Q1

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•	U.S. customers contributed 59.3% of total revenue

•	Two customers each accounted for greater than 10% of revenue and in aggregate represented 25% of total revenue

•	Cash and investments totaled $986.8 million

•	Cash flow from operations totaled $35.7 million

•	Free cash flow totaled $10.0 million

•	Average days' sales outstanding (DSOs) were 77

•	Accounts receivable balance was $553.7 million

•	Inventories totaled $255.3 million, including:

◦	Raw materials: $47.7 million

◦	Work in process: $16.5 million

◦	Finished goods: $176.5 million

◦	Deferred cost of sales: $64.4 million

◦	Reserve for excess and obsolescence: $(49.8) million

•	Product inventory turns were 4.9

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•	Headcount totaled 5,712

•	$431.3 million charge related to the remeasurement of U.S. net deferred tax assets at the lower statutory rate under the Tax Cuts and Jobs Act; and

•	$45.6 million charge related to a transition tax on accumulated historical foreign earnings and its deemed repatriation to the U.S.

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1.	Weighted average dilutive potential common shares outstanding used in calculating Adjusted (non-GAAP) diluted net income per common share for the first quarter of fiscal 2018 includes 0.9 million shares underlying certain stock options and restricted stock units and 0.7 million shares underlying Ciena's "New" 3.75% convertible senior notes, due October 15, 2018.

2.

The calculation of Adjusted (non-GAAP) diluted net income per common share for the first quarter of fiscal 2017 requires adding back interest expense of approximately $0.4 million associated with Ciena's 0.875% convertible senior notes, which were paid at maturity during the third quarter of fiscal 2017 and approximately $2.3 million associated with Ciena's "Original" 3.75% convertible senior notes, due October 15, 2018 to the Adjusted (non-GAAP) net income in order to derive the numerator for the Adjusted earnings per common share calculation.

•	Share-based compensation - a non-cash expense incurred in accordance with share-based compensation accounting guidance.

•	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.

•	Significant asset impairments and restructuring costs - costs incurred as a result of restructuring activities taken to align resources with perceived market opportunities.

•	Non-cash loss on extinguishment of debt - related to certain private repurchases conducted with several holders of Ciena's 0.875% convertible senior notes, which were paid at maturity during the third quarter of fiscal 2017.

•	Non-cash interest expense - a non-cash debt discount expense amortized as interest expense during the term of Ciena's 4.0% senior convertible notes due December 15, 2020 relating to the required separate accounting of the equity component of these convertible notes.

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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 25.87% for the first fiscal quarter of 2018, and 36.5% for the first fiscal quarter of 2017. This rate may be subject to change in the future, including as a result of changes in tax policy or tax strategy. In calculating, the Non-GAAP tax provision for the first fiscal quarter of 2018, Ciena excluded certain significant non-cash

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•	Last quarter we shared a set of long-term financial targets and our strategy for managing the business over the next several years to hit those targets.

◦	Our fiscal first quarter 2018 (“Q1”) results today demonstrate that we are off to a strong start and making solid progress toward those goals.

•	As we said last quarter, we are focused on profitability and taking market share given the opportunities we see within the current industry environment.

◦	In the first quarter, we continued to grow and diversify our business.

◦	In the meantime, our competitors are still struggling on a number of fronts, including keeping up with the pace of innovation given the level of expertise required and how high the threshold for investment is today.

•	This quarter, we delivered particularly strong diversification metrics.

◦	Non-telco revenue comprised roughly 35% of total sales. And our Direct webscale business was 15% of revenue, which is roughly double the contribution from this key customer segment in Q1’17 - both as a percentage of revenue and in absolute dollars.

◦	Our Asia-Pacific momentum continued. The region contributed 17% of Q1 revenue, up 25% from the same quarter last year, including contributions from several customers outside of our strong India base.

◦	And, our submarine business was up 10% year over year, largely driven by the continued growth of webscale traffic.

•	Overall, we performed very well in Q1, including a particularly strong order flow performance for a fiscal first quarter, which is often challenging due to seasonality.

◦	And, we continued to execute on our strategy of capturing new footprint around the world, primarily with global service providers, and also with non-telco customers.

•	For Q1:

◦	We posted revenue of $646.1 million, which is above the midpoint of our guidance.

◦	We delivered adjusted gross margin of 42.6%, which is within our expected range and is a result of our deliberate strategy to take share from competitors and gain footprint with new and existing customers.

◦	And, finally, we reported adjusted operating expense of $234.4 million.

•	With respect to profitability measures in the first quarter, we delivered:

◦	Adjusted operating margin of 6.3%

◦	Adjusted net income of $21.9 million

◦	Adjusted earnings-per-share (EPS) of $0.15

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•	Both earnings before interest, taxes, depreciation and amortization (EBITDA) and cash flow have become more meaningful measures of our progress and performance as our business has grown and matured. In Q1…

◦	Our adjusted EBITDA was $61.8 million

◦	We generated $35.7 million in cash from operations

◦	And free cash flow was $10 million

•	We ended the quarter with approximately $1 billion in cash and investments.

•	We have been delivering consistent and differentiated financial performance with respect to top-line growth, profitability and cash generation for some time.

•	We’ve been successful - and will continue to be - because of our ability to do the following:

◦	Deliver innovations ahead of the competition that directly address the changing business and consumption models of our customers.

◦	Leverage our exposure and investment in high-growth and emerging markets to intersect the demand drivers that play a key role in our market share opportunities.

•	From the rapid proliferation and adoption of mobile applications, to cloud-based services, to over-the-top video streaming, network operators around the world are working to respond to the increased demand for capacity. And we are uniquely positioned to help them solve this challenge.

◦	With our WaveLogic Ai coherent modem, we lead the market across the full range of high-capacity technologies, including 400G, which is beginning to change the “unit of currency” for capacity in our customers’ networks today.

•	Specifically, we expect that 200G will begin to replace many 100G long-haul connections over time, while 300G can now be deployed for 1000km distances, and 400G for shorter reach distances.

•	In Q1, we had 7 new wins for our 400G-capable WaveLogic Ai, bringing us to total of 17 to date.

•	We’re seeing this capacity trend play out with global Tier 1 service providers, notably in Asia Pacific, where a key contributor to our Q1 growth in region was revenue from our recent wins in Japan and Korea, in addition to continued strength in India.

◦	This capacity trend also encompasses the metro builds we’ve discussed, including a strong contribution from the Verizon metro network project in Q1, which is rolling out as expected.

•	And, it’s no surprise that DCI applications - particularly in our webscale customer base - are driving a need for higher-capacity solutions. Highlighting the rapid adoption of our purpose-built DCI solution, Waveserver generated approximately $65 million in revenue in Q1, and today claims more than 80 customers globally.

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•	In subsea, traffic levels continue to rise on existing cables and new cables are now being deployed. We signed two new deals in January - one for a trans-pacific cable system and another for a trans-Atlantic system.

•	On the emerging side of our strategic drivers is fiber densification, which is becoming a more frequent topic of conversation with our customers. This includes 5G network strategies, where we recently announced our solution plans. It also includes Fiber Deep strategies with cable operators, where in Q1 we secured our second MSO customer for this application.

•	And, of course, software automation is critical in optimizing all of this capacity. Q1 got us off to a good start for the year in software with a strong contribution to our top line from our Blue Planet network domain controller and orchestration solutions.

•	Overall, it is clear that our key market segments and customer verticals performed very well in the first quarter.

•	With respect to our overall market conditions, we are seeing continued growth in network traffic, increased network service and capacity requirements, and the transition to more open, programmable and adaptive networks.

◦	Accordingly, the primary driver for network operators’ spend in our space is the need to deploy and manage capacity as demand continues to grow and fiber densification architectures are implemented.

◦	These factors went into the long-term financial targets we laid out for you last quarter.

•	Since our last quarterly report, however, there has been a lot of speculation about additional demand drivers in our industry, including the impact of U.S. Tax Reform and an acceleration of 5G-related deployments.

◦	We believe that tax reform is a positive for our customers, however definitive plans are largely yet to be determined.

◦	In any event, we view the effect of Tax Reform as secondary to the core industry trends that have been impacting and continue to drive customer network spending.

•	Accordingly, while we are well positioned to benefit from these and other similar dynamics at some point, we view them as secondary to the core industry trends that have been impacting and continue to impact customer network spending.

•	We remain confident in the outlook we provided three months ago and in our long-term plans for managing the business to continue growing faster than market and expanding our profitability at the bottom line.

•	Like most other U.S.-based companies, we’ve had to account for the impact of the Tax Cuts and Jobs Act in our financial results.

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◦	In the first quarter, we experienced a GAAP loss primarily due to significant non-cash charges related to U.S. Tax Reform, which resulted in an estimated $476.9 million of additional tax expense.

◦	As of today, we do not expect to pay substantial cash taxes for U.S. federal income tax for the foreseeable future primarily due to our deferred tax asset balance.

◦	And with respect to our tax rate for fiscal 2018, there may be quarterly fluctuations, however we currently expect our blended GAAP tax rate for the year to be 29%.

•	In calculating adjusted net income, we expect to use a 25.8% rate for FY18.

•	We are also providing an update on the share repurchase program that we announced with last quarter’s results, which allows us to repurchase up to $300 million of Ciena common stock through the end of fiscal 2020.

◦	We began repurchases late in our fiscal first quarter 2018, and through March 5, 2018, we have repurchased approximately 874,000 shares of common stock, for an aggregate purchase price of $19.5 million at an average price of $22.34 per share.

◦	We intend to continue repurchasing activity as part of the strategy we articulated last quarter and our commitment to returning capital to shareholders. Investors should view this as an indication of our confidence in our long-term growth and our strong balance sheet and cash flow generation.

•	As highlighted by today’s results, our business is strong and we are executing well on our strategy.

•	We are uniquely positioned in the industry to continue delivering a combination of top-line growth, profitability and cash generation with a strengthening balance sheet.

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•	“[W]e expect that 200G will begin to replace many 100G long-haul connections over time…”

•	“We remain confident in the outlook we provided three months ago and in our long-term plans for managing the business to continue growing faster than market and expanding our profitability at the bottom line.”

•	“[W]e do not expect to pay substantial cash taxes for U.S. federal income tax for the foreseeable future primarily due to our deferred tax asset balance.”

•	“[W]e currently expect our blended GAAP tax rate for the year to be 29%.”

•	“In calculating adjusted net income, we expect to use a 25.8% rate for FY18.”

•	“We intend to continue repurchasing activity as part of the strategy we articulated last quarter and our commitment to returning capital to shareholders.”

•	“We are uniquely positioned in the industry to continue delivering a combination of top-line growth, profitability and cash generation with a strengthening balance sheet.”

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