Ciena (CIEN) Q4 Earnings Beat Estimates, Revenues Rise Y/Y

Ciena Corporation CIEN reported healthy fourth-quarter fiscal 2018 (ended Oct 31, 2018) results wherein both the top line and the bottom line surpassed the respective Zacks Consensus Estimate.

Net Income

On a GAAP basis, net income for the reported quarter was $64 million or 34 cents per share compared with $1,160.1 million or $7.32 per share in the year-ago quarter. The year-over-year decrease was primarily due to higher cost of goods sold and lower benefit from income tax. For fiscal 2018, net loss was $344.7 million or loss of $2.49 per share against income of $1,262 million or $7.53 per share a year ago, mainly due to higher income tax expenses.

Non-GAAP net income came in at $81 million or 53 cents per share compared with $48.5 million or 32 cents per share in the year-ago quarter. The bottom line beat the Zacks Consensus Estimate by 4 cents.

Ciena Corporation Price, Consensus and EPS Surprise

Ciena Corporation Price, Consensus and EPS Surprise | Ciena Corporation Quote

Revenues

Quarterly total revenues increased 20.8% year over year to $899.4 million, primarily due to higher product sales. The top line surpassed the Zacks Consensus Estimate of $861 million. Fiscal 2018 revenues increased 10.4% year over year to $3,094.3 million.

Geographically, revenues from North America were $555.3 million, up 26.1% year over year. Revenues from Europe, Middle East and Africa were $123.1 million, up 11.2%. In Caribbean and Latin America revenues totaled $53 million, up 21.8% and in Asia Pacific revenues were $168 million, up 12.2%.

Other Quarter Details

Gross margin was 44.3% compared with 43.7% in the year-ago quarter. Operating expenses were $302.2 million compared with $269.9 million a year ago. Operating margin was 10.7% compared with 7.5% in the prior-year quarter. Adjusted EBITDA was $145.8 million, up from $109.7 million.

Segmental Performance

Revenues from Networking Platforms increased 19% year over year to $712.9 million. Software and Software-Related Services revenues were $67.3 million compared with $41.8 million in the prior-year quarter. Revenues from Global Services were $119.2 million compared with $103.7 million a year ago.

Share Repurchases

During the quarter, Ciena repurchased approximately 1.3 million shares for an aggregate amount of $36.2 million. During fiscal 2018, the company repurchased approximately 4.3 million shares at an average price of $25.86 per share for an aggregate amount of $111 million.

Cash Flow

In fiscal 2018, Ciena generated $229.3 million of cash from operating activities compared with $234.9 million in fiscal 2017.

Liquidity

As of Oct 31, 2018, Ciena had $745.4 million of cash and cash equivalents and $686.5 million of net long-term debt.

Zacks Rank & Other Stocks to Consider

Ciena currently carries a Zacks Rank #2 (Buy). Other top-ranked stocks in the broader industry include QUALCOMM Incorporated QCOM, Ubiquiti Networks, Inc. UBNT and Juniper Networks, Inc. JNPR. While Qualcomm and Ubiquiti sport a Zacks Rank #1 (Strong Buy), Juniper carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.               

Qualcomm has a long-term earnings growth expectation of 11.5%. It beat earnings estimates in each of the trailing four quarters, the average being 18.5%.

Ubiquiti has a long-term earnings growth expectation of 14%. It surpassed earnings estimates in three of the trailing four quarters, the average positive surprise being 11.3%.

Juniper has a long-term earnings growth expectation of 5.5%. It beat earnings estimates in each of the trailing four quarters, the average being 11%.         

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