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Ciena (CIEN) Q2 Earnings Beat Estimates, Revenues Up Y/Y

Ciena Corporation CIEN delivered solid second-quarter fiscal 2019 (ended Apr 30, 2019) financial results, wherein both the top line and the bottom line surpassed the respective Zacks Consensus Estimate, and increased year over year. The performance was driven by market share gains on the back of technology leadership and diversified customer base in high-growth markets.

Net Income

On a GAAP basis, net income for the quarter was $52.7 million or 33 cents per share compared with $13.9 million or 9 cents per share in the year-ago quarter. The year-over-year improvement was primarily supported by top-line growth.

Adjusted net income came in at $76.2 million or 48 cents per share compared with $33.8 million or 23 cents per share in the prior-year quarter. The bottom line beat the Zacks Consensus Estimate by 8 cents.

Ciena Corporation Price, Consensus and EPS Surprise


Quarterly total revenues increased 18.5% year over year to $865 million, primarily driven by higher product sales. Notably, Ciena had two 10%-plus customers in the quarter, which represented 25% of revenues. The top line surpassed the consensus estimate of $816 million.

Geographically, revenues from North America were $576.1 million, up 33.6% year over year, driven by additional share gains across diverse customer base, including new wins and increasing traction of packet and software portfolios. Revenues from Europe, Middle East and Africa were $115 million, down 5.5%. Caribbean and Latin America totaled $39.4 million, up 57%. Asia Pacific revenues were $134.5 million, down 11.5%.

Segmental Performance

Revenues from Networking Platforms increased 17.8% year over year to $697 million. Software and Software-Related Services revenues were $47.7 million compared with $38.7 million in the prior-year quarter. Revenues from Global Services were $120.3 million compared with $99.6 million a year ago.

Other Details

Gross margin was 43.3% compared with 40.2% in the year-ago quarter. Operating expenses were $294.4 million, up from $261.2 million. Operating margin was 9.3% compared with 4.4% in the prior-year quarter. EBITDA was $110.6 million, up from $58.5 million.

Share Repurchases

During the reported quarter, Ciena repurchased nearly 1.2 million shares for an aggregate amount of $45.4 million.

Cash Flow & Liquidity

During the first six months of fiscal 2019, Ciena generated $90 million of net cash from operating activities compared with $73.1 million in the year-ago period. As of Apr 30, 2019, the company had $699.1 million in cash and equivalents with $683.4 million of net long-term debt.

Zacks Rank & Stocks to Consider

Ciena currently has a Zacks Rank #3 (Hold). A few better-ranked stocks in the broader industry are Harris Corp. HRS, Motorola Solutions, Inc. MSI and Ubiquiti Networks, Inc. UBNT, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Harris has long-term earnings growth expectation of 8%.

Motorola has long-term earnings growth expectation of 7.7%.

Ubiquiti has long-term earnings growth expectation of 19.8%.

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