EX-99.2 3 ex992q120earningspresent.htm EXHIBIT 99.2
Ciena Corporation Earnings Presentation Period ended January 31, 2020 March 5, 2020 Copyright © Ciena Corporation 2020. All rights reserved. Confidential & Proprietary.

Forward-looking statements and non-GAAP measures Information in this presentation and related comments of presenters contain a number of forward-looking statements. These statements are based on current expectations, forecasts, assumptions and other information available to the Company as of the date hereof. Forward-looking statements include Ciena’s long-term financial targets, prospective financial results, return of capital plans, business strategies, expectations about its addressable markets and market share, and business outlook for future periods, as well as statements regarding Ciena’s expectations, beliefs, intentions or strategies regarding the future. Often, these can be identified by forward-looking words such as “target” “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “should,” “will,” “plan,” “predict,” “potential,” “project, “continue,” and “would” or similar words. Ciena's actual results, performance or events may differ materially from these forward-looking statements made or implied due to a number of risks and uncertainties relating to Ciena's business, including: the effect of broader economic and market conditions on our customers and their business; our ability to execute our business and growth strategies; changes in network spending or network strategy by our customers; seasonality and the timing and size of customer orders, including our ability to recognize revenue relating to such sales; the level of competitive pressure we encounter; the product, customer and geographic mix of sales within the period; supply chain disruptions and the level of success relating to efforts to optimize Ciena's operations; changes in foreign currency exchange rates affecting revenue and operating expense; factors beyond our control such as natural disasters, pandemics, or a widespread health epidemic, such as the outbreak of the 2019 novel coronavirus; the impact of the Tax Cuts and Jobs Act; changes in tax or trade regulations, including the imposition of tariffs and duties; and the other risk factors disclosed in Ciena’s periodic reports filed with the Securities and Exchange Commission (SEC) including Ciena’s Annual Report on Form 10-K filed with the SEC on December 20, 2019 and Ciena’s Quarterly Report on Form 10-Q to be filed with the SEC. All information, statements, and projections in this presentation and the related earnings call speak only as of the date of this presentation and related earnings call. Ciena assumes no obligation to update any forward-looking or other information included in this presentation or related earnings calls, whether as a result of new information, future events or otherwise. In addition, this presentation includes historical, and may include prospective, non-GAAP measures of Ciena’s gross margin, operating expense, operating profit, EBITDA, net income, and net income per share. These measures are not intended to be a substitute for financial information presented in accordance with GAAP. A reconciliation of non-GAAP measures used in this presentation to Ciena’s GAAP results for the relevant period can be found in the Appendix to this presentation. Additional information can also be found in our press release filed this morning and in our reports on Form 10-Q filed with the Securities and Exchange Commission. Copyright © Ciena Corporation 2020. All rights reserved. Confidential & Proprietary. 2

Achieving balanced growth Driving the pace of innovation Delivering shareholder value ▪ Non-telco represented 35% of total ▪ TTM Adjusted R&D* investment was revenue $536M ▪ Direct web-scale contributed 15% of ▪ WaveLogic Ai has 197 total customers total revenue with 36 new wins in Q1 ▪ MSO contributed 9% of total revenue ▪ Announced our first WaveLogic 5 ▪ Americas revenue up 11% YoY customers * A reconciliation of these non-GAAP measures to our GAAP results is included in the appendix to this presentation. Copyright © Ciena Corporation 2020. All rights reserved. Confidential & Proprietary. 3

Q1 FY 2020 financial highlights Adjusted Operating Expense* * A reconciliation of these non-GAAP measures to our GAAP results is included in the appendix to this presentation. Copyright © Ciena Corporation 2020. All rights reserved. Confidential & Proprietary. 4

Q1 FY 2020 comparisons (year-over-year) Revenue Adj. Gross Margin* Adj. Operating Margin* (in millions) Q1 FY'19 Q1 FY'20 Q1 FY'19 Q1 FY'20 Q1 FY'19 Q1 FY'20 45.1% $832.9 13.1% $778.5 42.2% 9.6% Adj. OpEx* Adj. EBITDA* Adj. EPS* (in millions) (in millions) Q1 FY'19 Q1 FY'20 Q1 FY'19 Q1 FY'20 Q1 FY'19 Q1 FY'20 $266.4 $0.52 $253.6 $135.3 $96.2 $0.33 Copyright © Ciena Corporation 2020. All rights reserved. Confidential & Proprietary. * A reconciliation of these non-GAAP measures to our GAAP results is included in the appendix to this presentation. 5

Revenue by segment (Amounts in millions) 44.7% 45.1% Q1 FY 2020 Q1 FY 2019 1,000.0 43.9% 43.8% 42.2% 45.0% 900.0 Revenue %** Revenue %** 40.0% 800.0 Networking Platforms 35.0% 700.0 Converged Packet Optical $591.5 71.0 $548.9 70.5 30.0% Packet Networking 600.0 67.5 8.1 71.6 9.2 25.0% Total Networking Platforms 500.0 659.0 79.1 620.5 79.7 20.0% Platform Software and Services 51.9 6.2 41.6 5.3 400.0 16.2% Blue Planet Automation Software and 12.7% 13.3% 13.1% 15.0% 300.0 Services 15.5 1.9 15.0 1.9 9.6% Global Services 200.0 10.0% Maintenance Support and Training 61.8 7.4 61.3 8.0 100.0 5.0% Installation and Deployment 34.9 4.2 30.6 3.9 0.0 0.0% Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Consulting and Network Design 9.8 1.2 9.5 1.2 Total Global Services Networking Platforms Platform Software and Services 106.5 12.8 101.4 13.1 BP Automation Software and Services Global Services Total Adj. Operating Margin* Adj. Gross Margin* $832.9 100.0% $778.5 100.0% * A reconciliation of these non-GAAP measures to our GAAP results is included in the appendix to this presentation. ** Denotes % of total revenue Copyright © Ciena Corporation 2020. All rights reserved. Confidential & Proprietary. 6

Continued strength derived from non-telco revenue* Q1 FY 2020 Direct Webscale Cable Gov't, R&E & Enterprise 45% 40% 7% 35% 11% Direct Webscale 8% 30% 8% 7% 11% 11.0% 14.9% Cable 25% 7% 9% 7% 20% 9% Gov't, R&E, 9.2% Enterprise 15% 27% 10% 21% 19% 20% 15% 5% *represents 35.0% of total revenue in Q1 FY 2020 0% Q1 FY'19 Q2 FY'19 Q3 FY'19 Q4 FY'19 Q1 FY'20 Copyright © Ciena Corporation 2020. All rights reserved. Confidential & Proprietary. 7

Revenue by geographic region Q1 FY 2020 Americas Europe, Middle East, Africa Asia Pacific $1,000.0 10% $900.0 14% $800.0 16% 16% 16% 18% Americas $700.0 17% 15.5% 13% 16% $600.0 17% 15.6% Europe, Middle East and Africa $500.0 68.9% Asia Pacific (Inmillions) $400.0 74% 71% 68% $300.0 69% 66% $200.0 $100.0 $- Q1 FY'19 Q2 FY'19 Q3 FY'19 Q4 FY'19 Q1 FY'20 Copyright © Ciena Corporation 2020. All rights reserved. Confidential & Proprietary. 8

Q1 FY 2020 balance sheet and operating metrics Free Cash Flow Copyright © Ciena Corporation 2020. All rights reserved. Confidential & Proprietary. 9

Returning value to shareholders through strong capital allocation priorities Adj. R&D* R&D % Rev $60.0 $600 17.0% $50.0 16.5% $500 $40.0 16.0% $400 15.5% $30.0 $300 15.0% $20.0 $200 14.5% $10.0 $100 14.0% $0 13.5% $0.0 FY'15 FY'16 FY'17 FY'18 FY'19 Q1 FY'19 Q2 FY'19 Q3 FY'19 Q4 FY'19 Q1 FY'20 * A reconciliation of these non-GAAP measures to our GAAP results is included in the appendix to this presentation. Copyright © Ciena Corporation 2020. All rights reserved. Confidential & Proprietary. 10

Delivering consistent and differentiated financial performance Normalized Revenue Normalized Adjusted OM Ciena Industry Avg Ciena Industry Avg 1.60 2.00 1.40 1.50 1.20 1.00 1.00 0.50 0.80 0.00 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019 Source: Company filings Industry Average: ACIA, ADTN, ADVA, CSCO, INFN1, JNPR and NOKIA Networks segment 1. INFN represents INFN+Coriant from the time the acquisition closed Copyright © Ciena Corporation 2020. All rights reserved. Confidential & Proprietary. 11

Delivering profitability and total shareholder return Adjusted EPS Q1 FY’20 Stock Return* 31.4% CAGR 30.0% $2.11 25.0% 20.0% $1.39 15.0% $1.14 10.0% $0.93 5.0% 0.0% -5.0% -10.0% FY'16 FY'17 FY'18 FY'19 Ciena Infinera ADVA Nokia Acacia ADTRAN Cisco Juniper Source: company disclosures and S&P Capital IQ *Q1 represents 11/1/19-1/31/20 Copyright © Ciena Corporation 2020. All rights reserved. Confidential & Proprietary. 12

Long-term targets Copyright © Ciena Corporation 2020. All rights reserved. Confidential & Proprietary. 13

Long-term financial targets1 Execution of our strategy will drive top-line growth, profitability and cash generation 1 Projections or outlook with respect to future operating results are only as of December 12, 2019, the date presented on the related earnings call. Actual results may differ materially from these forward-looking statements. Ciena assumes no obligation to update this information, whether as a result of new information, future events or otherwise. Copyright © Ciena Corporation 2020. All rights reserved. Confidential & Proprietary. 14

Q1 fiscal 2020 appendix Copyright © Ciena Corporation 2020. All rights reserved. Confidential & Proprietary. 15

Q1 FY 2020 Q4 FY 2019 Q3 FY 2019 Q2 FY 2019 Q1 FY 2019 GAAP gross profit $370,535 $419,696 $424,352 $374,677 $323,341 Share-based compensation-products 671 748 781 702 637 Share-based compensation-services 842 715 783 907 770 Amortization of intangible assets 3,834 3,303 3,303 3,303 3,418 Total adjustments related to gross profit 5,347 4,766 4,867 4,912 4,825 Adjusted (non-GAAP) gross profit $375,882 $424,462 $429,219 $379,589 $328,166 Adjusted (non-GAAP) gross margin 45.1% 43.8% 44.7% 43.9% 42.2% Copyright © Ciena Corporation 2020. All rights reserved. Confidential & Proprietary. 16

Q1 FY 2020 Q4 FY 2019 Q3 FY 2019 Q2 FY 2019 Q1 FY 2019 GAAP operating expense $292,578 $326,494 $299,051 $294,357 $275,398 Share-based compensation-research and development 3,849 3,287 3,560 4,083 3,391 Share-based compensation-sales and marketing 4,613 4,151 4,192 4,346 3,785 Share-based compensation-general and administrative 5,527 6,425 5,813 5,491 5,112 Amortization of intangible assets 5,853 5,222 5,529 5,529 5,528 Significant asset impairments and restructuring costs 4,472 12,842 5,355 4,068 2,273 Acquisition and integration costs, excluding share-based compensation 1,819 (735) 1,362 1,135 1,608 Legal settlement - - - - 137 Total adjustments related to operating expense $26,133 31,192 $25,811 $24,652 $21,834 Adjusted (non-GAAP) operating expense $266,445 $295,302 $273,240 $269,705 $253,564 Q1 FY 2020 Q4 FY 2019 Q3 FY 2019 Q2 FY 2019 Q1 FY 2019 GAAP income from operations $77,957 $93,202 $125,301 $80,320 $47,943 Total adjustments related to gross profit 5,347 4,766 4,867 4,912 4,825 Total adjustments related to operating expense 26,133 31,192 25,811 24,652 21,834 Total adjustments related to income from operations 31,480 35,958 30,678 29,564 26,659 Adjusted (non-GAAP) income from operations $109,437 $129,160 $155,979 $109,884 $74,602 Adjusted (non-GAAP) operating margin 13.1% 13.3% 16.2% 12.7% 9.6% Copyright © Ciena Corporation 2020. All rights reserved. Confidential & Proprietary. 17

Q1 FY 2020 Q4 FY 2019 Q3 FY 2019 Q2 FY 2019 Q1 FY 2019 GAAP net income $62,328 $80,331 $86,749 $52,738 $33,616 Exclude GAAP provision for income taxes 9,814 2,552 30,198 17,867 9,139 Income before income taxes 72,142 82,883 116,947 70,605 42,755 Total adjustments related to income from operations 31,480 35,958 30,678 29,564 26,659 Loss on extinguishment and modification of debt 646 - - - - Adjusted income before income taxes 104,268 118,841 147,625 100,169 69,414 Non-GAAP tax provision on adjusted income before income taxes 22,522 28,403 35,282 23,940 16,590 Adjusted (non-GAAP) net income $81,746 $90,438 $112,343 $76,229 $52,824 Weighted average basic common shares outstanding 154,334 154,852 155,488 156,170 156,314 Weighted average dilutive potential common shares outstanding1 155,738 156,612 157,455 158,289 158,174 Q1 FY 2020 Q4 FY 2019 Q3 FY 2019 Q2 FY 2019 Q1 FY 2019 GAAP diluted net income per common share $ 0.40 $ 0.51 $ 0.55 $ 0.33 $ 0.21 Adjusted (Non-GAAP) diluted net income per common share $ 0.52 $ 0.58 $ 0.71 $ 0.48 $ 0.33 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 2020 includes 1.4 million shares underlying certain stock options and stock unit awards. Copyright © Ciena Corporation 2020. All rights reserved. Confidential & Proprietary. 18

Earnings Before Interest, Tax, Depreciation and Amortization (EBITDA) Q1 FY 2020 Q4 FY 2019 Q3 FY 2019 Q2 FY 2019 Q1 FY 2019 Net income (GAAP) $ 62,328 $ 80,331 $ 86,749 $ 52,738 $ 33,616 Add: Interest expense 8,815 9,136 9,404 9,471 9,441 Less: Interest and other income (loss), net 3,646 (1,183) 1,050 (244) 4,253 Add: Loss on extinguishment and modification of debt 646 - - - - Add: Provision for income taxes 9,814 2,552 30,198 17,867 9,139 Add: Depreciation of equipment, building, furniture and fixtures, and amortization 25,782 22,505 22,076 21,482 21,513 of leasehold improvements Add: Amortization of intangible assets 9,687 8,525 8,832 8,832 8,947 EBITDA $ 113,426 $ 124,232 $ 156,209 $ 110,634 $ 78,403 Add: Shared-based compensation cost 15,602 15,290 15,084 15,607 13,755 Add: Significant asset impairments and restructuring costs 4,472 12,842 5,355 4,068 2,273 Add: Acquisition and integration costs 1,819 (735) 1,362 1,135 1,608 Add: Legal settlement - - - - 137 Adjusted EBITDA $ 135,319 $ 151,629 $ 178,010 $ 131,444 $ 96,176 Copyright © Ciena Corporation 2020. All rights reserved. Confidential & Proprietary. 19