A month has passed by because the final earnings report for Ciena (CIEN). Shares have added about 24.5% in that timeframe, outperforming the S&P 500.
Will the latest optimistic pattern proceed main as much as its subsequent earnings launch, or is Ciena due for a pullback? Earlier than we dive into how buyers and analysts have reacted as of late, let’s take a fast take a look at the newest earnings report with the intention to get a greater deal with on the necessary drivers.
Ciena Q3 Earnings High Estimates
Ciena reported third-quarter fiscal 2024 (ended July 27) adjusted earnings per share (EPS) of 35 cents, which beat the Zacks Consensus Estimate of 26 cents. Earnings plunged 40.7% yr over yr.
Whole revenues have been down 11.8% yr over yr to $942.3 million within the reported quarter. Nonetheless, the highest line surpassed the Zacks Consensus Estimate by 1.4%.
A slower-than-expected restoration of order volumes from worldwide service suppliers drove the year-over-year lower. This contains cautious buy conduct from European service suppliers attributable to macroeconomic and geopolitical turmoil within the area. Nonetheless, administration highlighted the enlargement of its service enterprise in India, South Asia, Germany, Scandinavia and North America within the fiscal third quarter.
Continued momentum with cloud and AI infrastructure is a plus. Direct Cloud Supplier revenues went up 9% sequentially, pushed by new buyer wins from main cloud suppliers throughout terrestrial, submarine and coherent pluggable purposes.
Section Outcomes
Whole revenues in Networking Platforms (74.2% of complete revenues) decreased 17.4% yr over yr to $699.5 million. We anticipated the metric to be $693.5 million.
Platform Software program and Companies’ revenues (8.9%) totaled $83.2 million, up 5.5% from the prior yr. We projected the metric to be $79.7 million.
Blue Planet Automation Software program and Companies’ revenues (2.7%) rose 97% to $25.8 million. We anticipated the metric to be $25.1 million.
Whole revenues in World Companies (14.2%) have been $133.8 million, up 3.5% yr over yr. Our estimate for segmental revenues was $126.2 million.
Area-wise, revenues within the Americas have been $718.6 million, down 4.1% yr over yr. Europe, the Center East and Africa generated $135 million in revenues, down 11.6% from the prior-year ranges. Revenues within the Asia Pacific totaled $88.7 million, down 46.4%.
Non-telco buyer revenues represented 46% of complete revenues within the fiscal third quarter. Two 10%-plus clients represented 26.6% of the highest line within the reported quarter. Within the quarter beneath assessment, Ciena added 12 new clients for WaveLogic 5 Excessive, bringing the entire buyer rely to greater than 300.
WaveLogic 6 Excessive is selecting up tempo, and administration expects to witness top-line progress within the fiscal fourth quarter on elevated adoption. To this point, it has secured orders from 23 clients for WaveLogic 6 Excessive.
Different Particulars
Non-GAAP adjusted gross margin was 43.7% in contrast with 42.7% a yr in the past. Adjusted working bills have been $336 million, up 2.5%.
Non-GAAP adjusted working margin was 8% in contrast with 12% within the year-earlier quarter. Non-GAAP adjusted EBITDA decreased 34.9% to $98.5 million.
Money Movement & Liquidity
For the quarter that ended on July 27, 2024, Ciena’s web money utilized in working actions was $159.4 million in opposition to $9 million web money generated within the prior-year quarter.
As of July 27, the corporate had $1.2 billion in money and investments and $1,538.3 million of web long-term debt.
Within the reported quarter, Ciena repurchased about 600,000 shares price $29 million. It plans to purchase again a complete of $250 million in shares by the tip of fiscal 2024.
Steering
For the fourth quarter of fiscal 2024, administration expects revenues within the vary of $1,060- $1,140 million. The adjusted gross margin is estimated within the low to mid 40% vary. Adjusted working bills are projected to be $350 million.
How Have Estimates Been Shifting Since Then?
It seems, recent estimates have trended downward throughout the previous month.
The consensus estimate has shifted -18.63% attributable to these adjustments.
VGM Scores
At the moment, Ciena has a subpar Development Rating of D, although it’s lagging a bit on the Momentum Rating entrance with an F. Nonetheless, the inventory was allotted a grade of C on the worth aspect, placing it within the center 20% for this funding technique.
General, the inventory has an combination VGM Rating of F. In the event you aren’t targeted on one technique, this rating is the one try to be all for.
Outlook
Estimates have been broadly trending downward for the inventory, and the magnitude of those revisions signifies a downward shift. Notably, Ciena has a Zacks Rank #3 (Maintain). We anticipate an in-line return from the inventory within the subsequent few months.
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Ciena Corporation (CIEN) : Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the creator and don’t essentially mirror these of Nasdaq, Inc.
