Ciena (CIEN) Missed Q3 Earnings and Revenue Estimates, Down Year-over-Year

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Ciena Corporation CIEN reported lackluster results for the third quarter of fiscal 2022 (ended July 30, 2022), with adjusted earnings of 33 cents per share missing Zacks’ consensus estimate by 5.7% and down 64%. % year over year.

Quarterly total revenue decreased 12.2% year-over-year to $868 million, due to the negative impact of delivery delays and significantly “below-commitment” volume from a small number of vendors for specific components, Ciena noted. The first line missed the consensus mark of $907.8 million. Widespread supply chain issues will remain an overhang in the current quarter, but should improve in fiscal 2023, Ciena said.

Regionally, revenue in the Americas was $617.4 million, down 10.9% year-on-year. Revenue in Europe, the Middle East and Africa was $124.1 million, down 34.4% from year-ago quarter levels. Revenue in the Asia Pacific region totaled $126.4 million, up 19.1% from the prior year quarter.

Ciena Corporation Pricing, Consensus, and EPS Surprise

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

Shares of the Hanover, Maryland-based network systems and services company fell 10.4% on Sept. 1, closing the session at $45.48. However, the shares rose 0.8% in premarket trading on Sept. 2. Over the past year, the stock has lost 20.1% of its value compared to the industry’s 20.3% decline.

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Image source: Zacks Investment Research

Sector results

Total revenue in Networking platforms (76.6% of total revenue) fell 15% year-over-year to 664.6 million.

Platform software and services revenues (7.3% of total revenues) totaled $63.5 million, up 11.6% from year-ago quarter levels.

Blue Planet Automation software and serviceRevenue (2% of total revenue) increased 4.2% to $17.3 million.

Total revenue in Worldwide Services (14.1% of total revenue) were $122.6 million, down 7.1% year over year.

Other details

Adjusted non-GAAP gross margin was 40% versus 48.5% in the prior year quarter, heavily impacted by higher component costs and supply chain-induced logistics expenses. Adjusted operating expenses were $273.1 million, down 6% from year-ago quarter levels.

Adjusted non-GAAP operating margin was 8.5% compared to 19.1% in the prior year quarter. Non-GAAP adjusted EBITDA decreased 55.1% year over year to $96 million.

The company repurchased approximately 3.2 million shares worth $155 million during the third fiscal quarter under the billion-dollar share repurchase program. Ciena repurchased $500 million of stock in fiscal 2022.

Cash flow and liquidity

For the nine months ended July 30, 2022, Ciena’s net cash used by operating activities was $153.2 million, compared to $286.8 million of cash provided by operating activities during the comparable period of the previous year.

As of July 30, 2022, the company had $1.3 billion in cash and investments and $1,062.5 million in long-term net debt.

Tips

For the fourth fiscal quarter, the company expects revenue of $800 million to $880 million. The adjusted gross margin is estimated at nearly 40%. Adjusted operating expenses are estimated at approximately $315 million. The outlook is driven by uncertainty stemming from supply chain issues.

Zacks Ranking and Stocks to Consider

Currently, Ciena carries a Zacks rank #4 (sell).

Some top-ranked stocks in the broader tech space are Cadence Design systems CDNS, badger meter BMI and Arista Networks A NET. Cadence and Arista sport a Zacks Rank #1 (Strong Buy) while Badger Meter wears a Zacks Rank #2 (Buy). You can see today’s full list of Zacks #1 Rank stocks here.

The Zacks consensus estimate for CDNS 2022 earnings is pegged at $4.11 per share, up 5.7% over the past 60 days. The long-term earnings growth rate is expected to be 17.7%.

Cadence’s earnings have exceeded the Zacks consensus estimate for the past four quarters, averaging 9.8%. Shares of CDNS have jumped 2.7% over the past year.

The Zacks consensus estimate for BMI’s earnings in 2022 is pegged at $2.30 per share, up 6% over the past 60 days.

Earnings at Badger Meter have exceeded the Zacks consensus estimate in three of the previous four quarters, averaging 12.6%. BMI shares have lost 10.2% of their value over the past year.

Zacks’ consensus estimate for Arista Network’s 2022 earnings is pegged at $4.04 per share, up 9.8% over the past 60 days. The long-term earnings growth rate is expected to be 18.6%.

Arista Network’s earnings have exceeded Zacks’ consensus estimate for the past four quarters, averaging 10.1%. ANET shares have risen 29.2% over the past year.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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