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Ciena's (CIEN) Q2 Earnings & Revenues Top Estimates, Rise Y/Y

Zacks Equity Research
·4 mins read

Ciena Corporation CIEN reported healthy second-quarter fiscal 2020 results (ended May 2, 2020), with the top and the bottom line beating the Zacks Consensus Estimate.

The Hanover, MD-based networking systems, services and software company delivered industry-leading financial performance despite uncertainties related to the COVID-19 pandemic. This has been backed by Ciena’s strategy that hinges around innovation, diversification and global scale, leading to a resilient business.

Net Income

On a GAAP basis, net income in the quarter was $91.7 million or 59 cents per share compared with $52.7 million or 33 cents per share in the year-ago quarter. The improvement was primarily driven by higher operating income.

Adjusted net income came in at $117.4 million or 76 cents per share compared with $76.2 million or 48 cents per share in the prior-year quarter. The bottom line beat the Zacks Consensus Estimate by 25 cents.

Ciena Corporation Price, Consensus and EPS Surprise

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

Ciena Corporation price-consensus-eps-surprise-chart | Ciena Corporation Quote

Revenues

Quarterly total revenues increased 3.4% year over year to $894.1 million, driven by higher product sales. Ciena had one 10%-plus customer in the quarter, which represented 12% of revenues. The top line surpassed the consensus estimate of $888 million.

Region-wise, revenues in the Americas were $650.4 million, up 5.7% year over year. Revenues in Europe, the Middle East and Africa were $141.4 million, up from $115 million in the year-ago quarter. Asia-Pacific revenues totaled $102.3 million, down 23.9% year over year.

Segment Results

Total revenues in the Networking Platforms increased 3.1% year over year to $718.5 million. Platform Software and Services revenues were $45 million compared with $35.2 million in the prior-year quarter. Blue Planet Automation Software and Services revenues increased from $12.5 million to $15 million. Total revenues in Global Services were $115.6 million compared with $120.3 million in the year-ago quarter.

Other Details

The adjusted gross margin was 46.9% compared with 43.9% in the year-ago quarter. Adjusted operating expenses were $258.7 million, down from $269.7 million. Operating income improved to $127.5 million from $80.3 million.

Adjusted operating income increased to $160.3 million from $109.9 million. The adjusted operating margin came in at 17.9% compared with 12.7% in the prior-year quarter. Adjusted EBITDA was $183 million, up from $131.4 million in the year-ago quarter.

Prior to suspending repurchases during the reported quarter, Ciena repurchased about 0.6 million shares for an aggregate price of $23.8 million.

Cash Flow & Liquidity

In the first six months of fiscal 2020, Ciena generated $130.9 million of net cash from operating activities compared with $90 million in the prior-year period. As of May 2, 2020, the company had $887.7 million in cash and equivalents with $679.4 million of net long-term debt.

Zacks Rank & Other Stocks to Consider

Ciena currently carries a Zacks Rank #2 (Buy).

Some better-ranked stocks in the broader industry are Turtle Beach Corporation HEAR, Ooma, Inc. OOMA and Acacia Communications, Inc. ACIA, each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Turtle Beach has a trailing four-quarter positive earnings surprise of 46.4%, on average.

Ooma has a trailing four-quarter positive earnings surprise of 228.2%, on average.

Acacia has a trailing four-quarter positive earnings surprise of 17.7%, on average. The company’s earnings beat the Zacks Consensus Estimate in three of the last four quarters.

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