CIENA CORP

Previous wording

We are a network platform, software, and services company, providing solutions that enable a wide range of network operators to deploy and manage next-generation networks that deliver services to businesses and consumers. We provide hardware, software, and services that support the delivery of video, data, and voice traffic over core, metro, aggregation, and access communications networks. Our solutions are used globally by communications service providers, cable and multiservice operators, cloud providers, submarine network operators, governments, and enterprises across multiple industry verticals. Our portfolio is designed to enable the Adaptive Network, which is our vision for a network end state that leverages a programmable and scalable network infrastructure, driven by software control and automation capabilities, that is informed by analytics and intelligence. Our solutions include Networking Platforms, including our Optical Networking and Routing and Switching portfolios, which can be applied from the network core to end-user access points, and which allow network operators to scale capacity, increase transmission speeds, allocate traffic efficiently and adapt dynamically to changing end-user service demands. To complement our Networking Platforms, we offer Platform Software, which includes our Navigator Network Control Suite TM (“Navigator NCS”), which we previously referred to as Manage, Control, and Plan (MCP), and applications that deliver advanced multi-layer domain control and operations. Through our Blue Planet Software, we also enable complete service lifecycle management automation with productized operational support systems (OSS), which include inventory, orchestration and assurance solutions that help our customers to achieve closed loop automation across multi-vendor and multi-domain environments.

Current wording

We are a network technology company, providing hardware, software, and services to a wide range of network operators and enabling enhanced network capacity, service delivery, and automation. Our solutions support network traffic across a wide range of applications, including cloud, video, data, AI, and voice. Our network solutions are used globally by communications service providers, cable and multiservice operators, cloud providers, submarine network operators, governments, and enterprises across multiple industry verticals. Our portfolio is designed to enable the Adaptive Network™, which is our vision for a network end state that leverages a programmable and scalable network infrastructure, driven by software control and automation capabilities, that is informed by network analytics and intelligence. Our solutions include Networking Platforms, including our Optical Networking portfolio and our Routing and Switching portfolio, which can be applied from the network core to end-user access points, and which allow network operators to scale capacity, increase transmission speeds, allocate traffic efficiently, and adapt dynamically to changing end-user service demands. To complement our Networking Platforms, we offer Platform Software, which includes our Navigator NCS and advanced applications that deliver multi-layer domain control and operations for network operators. Through our Blue Planet Automation Software, we also enable complete service lifecycle management automation with productized OSS, including inventory, orchestration and assurance solutions that help our customers to achieve closed loop automation across multi-vendor and multi-domain environments.

Previous wording

As a result of the factors impacting order volumes and order delivery timing described under “Overview” above, our revenue declined by 11.8% in the third quarter of fiscal 2024 as compared to the third quarter of fiscal 2023, and 11.2% in the first nine months of fiscal 2024 as compared to the first nine months of fiscal 2023. In addition, during both the third quarter and first nine months of fiscal 2024, approximately 14.4% of our revenue was non-U.S. Dollar-denominated, primarily including sales in Euros, Canadian Dollars, and Indian Rupees. During the third quarter of fiscal 2024 as compared to the third quarter of fiscal 2023, the U.S. Dollar primarily strengthened against these and other currencies. As a result of these currency fluctuations, our revenue reported in U.S. Dollars was adversely impacted by approximately $2.5 million, or 0.3%, as compared to the third quarter of fiscal 2023. During the first nine months of fiscal 2024 as compared to the first nine months of fiscal 2023, the U.S. Dollar fluctuated against these and other currencies, however, there was minimal impact as compared to the first nine months of fiscal 2023.

Current wording

As a result of the factors described under “Overview” above, our revenue increased by 3.3%, or $34.5 million in the first quarter of fiscal 2025 as compared to the first quarter of fiscal 2024.

Previous wording

•Platform Software and Services segment revenue increased by $36.6 million, reflecting sales increases of $20.9 million in sales of software platforms and $15.7 million in sales of our software maintenance services, both primarily for our Navigator NCS software platform.

Current wording

•Platform Software and Services segment revenue increased by $5.3 million, primarily reflecting sales increases of our software maintenance services, partially offset by sales decreases of our software platforms.

Previous wording

•Global Services segment revenue increased by $25.6 million, reflecting sales increases of $12.1 million of our installation and deployment services, $11.9 million of our maintenance support and training and $1.6 million of our consulting and network design services.

Current wording

•Global Services segment revenue increased by $3.2 million, primarily reflecting a sales increase in our installation and deployment services, partially offset by a sales decrease in our consulting and network design services.

Previous wording

Our operating segments engage in business and operations across three geographic regions: the United States, Canada, the Caribbean and Latin America (“Americas”); Europe, Middle East and Africa (“EMEA”); and Asia Pacific, Japan and India (“APAC”). The geographic distribution of our revenue can fluctuate significantly from period to period, and the timing of revenue recognition for large network projects, particularly outside of the United States, can result in large variations in geographic revenue results in any particular period. The decrease in our Americas region revenue for the quarter and nine months ended July 27, 2024 was primarily driven by decreased sales in the United States and Canada. The decrease in our APAC region revenue for the quarter and nine months ended July 27, 2024 was primarily driven by decreased sales in India and Australia. The decrease in our EMEA region revenue for the quarter ended July 27, 2024 was primarily driven by decreased sales in the Netherlands and Great Britain. The increase in our EMEA region revenue for the nine months ended July 27, 2024 was partially offset by sales decreases in Great Britain and France.

Current wording

Our operating segments engage in business and operations across three geographic regions: the United States, Canada, the Caribbean and Latin America (“Americas”); Europe, Middle East and Africa (“EMEA”); and Asia Pacific, Japan and India (“APAC”). The geographic distribution of our revenue can fluctuate significantly from period to period, and the timing of revenue recognition for large network projects, particularly outside of the United States, can result in large variations in geographic revenue results in any particular period.

Previous wording

There are a number of important factors or conditions that can adversely affect or cause our gross profit as a percentage of product or service revenue, or “gross margin,” to fluctuate on a quarterly basis. For example, early stages of new network builds also often include an increased concentration of lower margin “common” equipment, photonics sales, and installation services, with the intent to improve margin as we sell channel cards and maintenance services to customers as they add capacity. The component elements that comprise our product cost of goods sold and services cost of goods sold, and certain factors that can cause gross margin to fluctuate, are described in detail in the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Risk Factors” sections of our 2023 Annual Report.

Current wording

There are a number of important factors or conditions that can adversely affect or cause our gross profit as a percentage of product or service revenue, or “gross margin,” to fluctuate on a quarterly basis. For example, early stages of new network builds also often include an increased concentration of lower margin “common” equipment, photonic line systems, pluggable solutions, and installation services, with the intent to improve margin as we sell channel cards, advanced software, and maintenance services to customers as they add capacity. The component elements that comprise our product cost of goods sold and services cost of goods sold, and certain factors that can cause gross margin to fluctuate, are described in detail in the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Risk Factors” sections of our 2024 Annual Report.

Previous wording

•Research and development expense increased by $10.4 million, net of hedging. This increase primarily reflects increases in employee-related compensation costs, net of a lower provision associated with our annual cash incentive compensation plan, facility and information technology costs and higher technology related costs, partially offset by decreased professional services.

Current wording

•Research and development expense increased by $5.4 million. Net of hedging, this increase primarily reflects increases in employee-related compensation costs partially offset by lower prototype expense.

Previous wording

•Selling and marketing expense increased by $3.3 million. This increase primarily reflects increases in employee-related compensation costs primarily due to higher commission expense, partially offset by a decrease in travel and entertainment costs.

Current wording

•Selling and marketing expense increased by $8.3 million. Net of hedging, this increase primarily reflects increases in employee-related compensation costs primarily due to higher commission expense.

Previous wording

•General and administrative expense increased by $8.9 million. This increase primarily reflects an increase in legal fees.

Current wording

•General and administrative expense remained relatively unchanged.

Previous wording

•Platform Software and Services segment profit increased by $3.4 million, primarily due to higher sales volume as described above.

Current wording

•Significant asset impairments and restructuring costs decreased by $3.4 million, primarily due to a reduction in restructuring activities that we have taken with respect to our global workforce.

Previous wording

•Amortization of intangible assets decreased by $2.3 million, primarily reflecting certain intangible assets having reached the end of their economic lives.

Current wording

•Amortization of intangible assets remained relatively unchanged.

Previous wording

Approximately 47.7% and 48.7% of our operating expense was non-U.S. Dollar-denominated during the third quarter and first nine months of fiscal 2024, respectively, primarily including expenses in Canadian Dollars, Indian Rupees, and Euros. During the third quarter of fiscal 2024, as compared to the third quarter of fiscal 2023, the U.S. Dollar strengthened against these and other currencies. As a result of these currency fluctuations, our operating expense, net of hedging, reported in U.S. Dollars, slightly decreased by approximately $1.5 million, or 0.4%, as compared to the third quarter of fiscal 2023. During the first nine months of fiscal 2024 as compared to the first nine months of fiscal 2023 the U.S. Dollar primarily strengthened against these and other currencies, however, net of hedging, there was minimal impact as compared to the first nine months of fiscal 2023.

Current wording

Approximately 47.5% of our operating expense was non-U.S. Dollar-denominated during the first quarter of fiscal 2025. During the first quarter of fiscal 2025, as compared to the first quarter of fiscal 2024, the U.S. Dollar primarily strengthened against other currencies. These currency fluctuations, net of hedging, had the effect of reducing our operating expense by approximately $5.5 million, or 1.4%, as compared to the first quarter of fiscal 2024.

Previous wording

•Networking Platforms segment profit decreased by $201.1 million, primarily due to lower product sales volume as described above and increased research and development costs.

Current wording

•Networking Platforms segment profit decreased by $16.7 million, primarily due to lower product margin as described above and higher research and development costs, partially offset by higher sales volume.

Previous wording

•Blue Planet Automation Software and Services segment profit increased by $16.8 million, primarily due to higher sales volume and improved margins on software services as described above, and decreased research and development costs.

Current wording

•Platform Software and Services segment profit increased by $5.1 million, primarily due to higher services sales volume and improved services margin as described above.

Previous wording

•Global Services segment profit slightly decreased, primarily due to reduced margins on maintenance support and training partially offset by increased sales volume, as described above.

Current wording

•Global Services segment profit slightly decreased, primarily due to reduced margins on maintenance support and training partially offset by increased sales volume.

Previous wording

•Interest and other income, net increased by $3.8 million, primarily resulting from higher interest income on our investments and the impact of foreign exchange rates on assets and liabilities denominated in a currency other than the relevant functional currency, net of hedging activity.

Current wording

•Interest and other income, net increased primarily resulting from the impact of foreign exchange rates on assets and liabilities denominated in a currency other than the relevant functional currency, net of hedging activity.

Previous wording

Liquidity Position. Based on past performance and current expectations, we believe that cash from operations, cash, cash equivalents, investments, and other sources of liquidity, including our Revolving Credit Facility, will satisfy our currently anticipated working capital needs, capital expenditures, and other liquidity requirements associated with our operations through the next 12 months and the reasonably foreseeable future. We regularly evaluate our liquidity position, debt obligations, and anticipated cash needs to fund our operating or investment plans, and will continue to consider capital raising and other market opportunities that may be available to us. We regularly evaluate alternatives to manage our capital structure and market opportunities to enhance our liquidity and provide further operational and strategic flexibility.

Current wording

Based on past performance and current expectations, we believe that cash from operations, cash, cash equivalents, investments, and other sources of liquidity, including our Revolving Credit Facility, will satisfy our currently anticipated working capital needs, capital expenditures, and other liquidity requirements associated with our operations through the next 12 months and the reasonably foreseeable future. We regularly evaluate our liquidity position, debt obligations, and anticipated cash needs to fund our operating or investment plans, and will continue to consider capital raising and other market opportunities that may be available to us. We regularly evaluate alternatives to manage our capital structure and market opportunities to enhance our liquidity and provide further operational and strategic flexibility.

Previous wording

Principal Sources of Liquidity. Our principal sources of liquidity on hand include our cash, cash equivalents, and investments, which, as of July 27, 2024, totaled $1.2 billion, as well as the unused portion of the Revolving Credit Facility, to which we and certain of our subsidiaries are parties. The Revolving Credit Facility provides for a total commitment of $300.0 million with a maturity date of October 24, 2028. We principally use the Revolving Credit Facility to support the issuance of letters of credit that arise in the ordinary course of our business and for general corporate purposes. As of July 27, 2024, letters of credit totaling $72.0 million were issued under the Revolving Credit Facility. There were no borrowings outstanding under the Revolving Credit Facility as of July 27, 2024.

Current wording

Principal Sources of Liquidity. Our principal sources of liquidity on hand include our cash, cash equivalents, and investments, which, as of February 1, 2025, totaled $1.3 billion, as well as the unused portion of our senior secured revolving credit facility (the “Revolving Credit Facility”), to which we and certain of our subsidiaries are parties. The Revolving Credit Facility provides for a total commitment of $300.0 million with a maturity date of October 24, 2028. We principally use the Revolving Credit Facility to support the issuance of letters of credit that arise in the ordinary course of our business and for general corporate purposes. As of February 1, 2025, letters of credit totaling $58.3 million were issued under the Revolving Credit Facility. There were no borrowings outstanding under the Revolving Credit Facility as of February 1, 2025.

Previous wording

Foreign Liquidity. The amount of cash, cash equivalents and short-term investments held by our foreign subsidiaries was $155.9 million as of July 27, 2024. Approximately $93.0 million of future cash generated from these foreign subsidiaries is expected to be repatriated, with any remaining amount continuing to be indefinitely reinvested. A deferred tax liability related to the expected repatriation amount was accrued in fiscal 2023. There are no other significant temporary differences related to our investment in the foreign subsidiaries for which a deferred tax liability has not been recognized.

Current wording

Foreign Liquidity. The amount of cash, cash equivalents and short-term investments held by our foreign subsidiaries was $157.9 million as of February 1, 2025. Approximately $92.5 million of future cash generated from these foreign subsidiaries is expected to be repatriated, with any remaining amount continuing to be indefinitely reinvested. A deferred tax liability related to the expected repatriation amount was accrued in fiscal 2023. There are no other significant temporary differences related to our investment in the foreign subsidiaries for which a deferred tax liability has not been recognized.

Previous wording

Stock Repurchase Authorization. On December 9, 2021, we announced that our Board of Directors authorized a program to repurchase up to $1.0 billion of our common stock, which replaced in its entirety the previous stock repurchase program authorized in fiscal 2019. During thefirst nine months of fiscal 2024, we repurchased an additional$118.0 million of our common stock under the stock repurchase program, and $132.0 million remained under the current repurchase authorization as of July 27, 2024. The amount and timing of any further repurchases under our stock repurchase program are subject to a variety of factors including liquidity, cash flow, stock price, and general business and market conditions. The program may be modified, suspended, or discontinued at any time. See Note 16 to our Condensed Consolidated Financial Statements included in Item 1 of Part I of this report as well as Item 2 of Part II of this report.

Current wording

Stock Repurchase Authorization. On October 2, 2024, we announced that our Board of Directors authorized a program to repurchase up to $1.0 billion of our common stock, which replaced in its entirety the previous stock repurchase program authorized in fiscal 2022. During thefirst three months of fiscal 2025, we repurchased$79.2 million of our common stock under the stock repurchase program, and $920.8 million remained under the current repurchase authorization as of February 1, 2025. The amount and timing of any further repurchases under our stock repurchase program are subject to a variety of factors including liquidity, cash flow, stock price, and general business and market conditions. The program may be modified, suspended, or discontinued at any time. See Note 14 to our Condensed Consolidated Financial Statements included in Item 1 of Part I of this report as well as Item 2 of Part II of this report.

Previous wording

Cash, cash equivalents and investments decreased by $36.6 million during the first nine months of fiscal 2024. Cash from operations was partially offset by the following: (i) cash used for stock repurchases under our stock repurchase program of $125.8 million; (ii) cash used to fund our investing activities for capital expenditures totaling $53.1 million; (iii) stock repurchases on vesting of our stock unit awards to employees relating to tax withholding of $33.5 million; and (iv) cash used for our purchase of an equity investmentin a privately held technology company of $21.7 million. In addition to cash provided by operating activities, proceeds from the issuance of equity under our employee stock purchase plan provided $34.3 million in cash during the nine months ended July 27, 2024.

Current wording

Cash, cash equivalents and investments decreased by $15.0 million during the first three months of fiscal 2025. Cash from operations generated $103.7 million which was partially offset by the following: (i) cash used for stock repurchases under our stock repurchase program of $81.2 million; (ii) cash used to fund our investing activities for capital expenditures totaling $26.9 million; and (iii) stock repurchases on vesting of our stock unit awards to employees relating to tax withholding of $25.5 million. In addition to cash provided by operating activities, proceeds from the issuance of equity under our employee stock purchase plan provided $17.1 million in cash during the three months ended February 1, 2025.

Previous wording

The following sections set forth the components of our $165.2 million of cash provided by operating activities during the first nine months of fiscal 2024:

Current wording

The following sections set forth the components of our $103.7 million of cash provided by operating activities during the first three months of fiscal 2025 as net income (adjusted for non-cash charges) of $111.7 million was partially offset by a net use of cash in operating assets and liabilities of $8.0 million.

Previous wording

Working capital used$139.0 million of cash during the period. The following table sets forth the major components of the cash used in working capital (in thousands):

Current wording

Operating asset and liability requirements increased by$8.0 million during the period. The following table sets forth the major components of the cash changes in operating assets and liabilities (in thousands):

Previous wording

As compared to the end of fiscal 2023:

Current wording

As compared to the end of fiscal 2024, for the first three months of fiscal 2025:

Previous wording

•The $112.4 million of cash used in accounts payable, accruals, and other obligations during the first nine months of fiscal 2024 primarily reflects the timing of payments for inventory purchases, payroll, our annual cash incentive compensation plans and income taxes;

Current wording

•The change in accounts payable, accruals, and other obligations primarily reflects the timing of payments to suppliers, our annual cash incentive compensation plans and income taxes;

Previous wording

•The $28.8 million of cash provided by deferred revenue during the first nine months of fiscal 2024 represents an increase in advanced payments received on multi-year maintenance contracts from customers prior to revenue recognition; and

Current wording

•The change in deferred revenue represents an increase in advanced payments received on multi-year maintenance contracts from customers prior to revenue recognition; and

Previous wording

•The $4.3 million of cash used in operating lease assets and liabilities, net, during the first nine months of fiscal 2024 represents cash paid for operating lease payments in excess of operating lease costs.

Current wording

•The change in operating lease assets and liabilities, net, represents cash paid for operating lease payments in excess of operating lease costs.

Previous wording

Our days sales outstanding (“DSOs”) increased from 94 for the first nine months of fiscal 2023 to 97 for the first nine months of fiscal 2024. The calculation of DSOs includes accounts receivables, net and contract assets for unbilled receivables, net included in prepaid expenses and other. Our inventory turns increased from 1.7 for the first nine months of fiscal 2023 to 1.9 for the first nine months of fiscal 2024.

Current wording

Our days sales outstanding (“DSOs”) increased from 88 for the first three months of fiscal 2024 to 90 for the first three months of fiscal 2025. The calculation of DSOs includes accounts receivables, net and contract assets for unbilled receivables, net included in prepaid expenses and other. Our inventory turns increased from 1.9 for the first three months of fiscal 2024 to 2.3 for the first three months of fiscal 2025.

Previous wording

(1) Interest on the 2030 New Term Loan is payable periodically based on the interest period selected for borrowing. The 2030 New Term Loan bears interest at SOFR for the chosen borrowing period plus a spread of 2.00% subject to a minimum SOFR rate of 0.00%. At the end of the third quarter of fiscal 2024, the interest rate on the 2030 New Term Loan was 7.35%.

Current wording

(2) Interest on the Refinanced 2030 Term Loan is payable periodically based on the interest period selected for borrowing. The Refinanced 2030 Term Loan bears interest at SOFR for the chosen borrowing period plus a spread of 1.75% subject to a minimum SOFR rate of 0.00%. At the end of the first quarter of fiscal 2025, the interest rate on the Refinanced 2030 Term Loan was 6.05%.

Previous wording

(2) The 2030 Notes bear interest at a rate of 4.00% per annum and mature on January 31, 2030. Interest is payable on the 2030 Notes in arrears on January 31 and July 31 of each year.

Current wording

(3) The 2030 Notes bear interest at a rate of 4.00% per annum. Interest is payable on the 2030 Notes in arrears on January 31 and July 31 of each year.

Previous wording

(4) During the first nine months of fiscal 2024, we utilized the Revolving Credit Facility to issue certain standby letters of credit and paid nominal commitment fees, interest expense and other administrative charges primarily relating to the Revolving Credit Facility.

Current wording

(5) During the first three months of fiscal 2025, we utilized the Revolving Credit Facility to issue certain standby letters of credit and paid nominal commitment fees, interest expense and other administrative charges primarily relating to the Revolving Credit Facility.

Previous wording

For additional information about our debt and interest rate swaps, see Notes 12 and 13 to our Condensed Consolidated Financial Statements included in Item 1 of Part I of this report.

Current wording

For additional information about our debt and interest rate swaps, see Notes 10 and 11 to our Condensed Consolidated Financial Statements included in Item 1 of Part I of this report.

Previous wording

Our contractual obligations have not changed materially since October 28, 2023, except for the items listed below. For a summary of our contractual obligations, see Item 7 of Part II of the 2023 Annual Report.

Current wording

Our contractual obligations have not changed materially since November 2, 2024. For a summary of our contractual obligations, see Item 7 of Part II of the 2024 Annual Report.