Slide 1: Ciena Corporation Earnings Presentation
Ciena Corporation Earnings Presentation Period ended January 31, 2020 March 5, 2020 Copyright © Ciena Corporation 2020. All rights reserved. Confidential & Proprietary.
Slide 2: Forward-looking statements and non-GAAP measures
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 dat
Slide 3: Achieving balanced growth, driving innovation, delivering shareholder value
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 contribu
Slide 4: Financial highlights
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
Slide 5: Comparisons (year-over-year)
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'1
Slide 6: Revenue by segment
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 Networkin
Slide 7: Continued strength derived from non-telco revenue
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
Slide 8: Revenue by geographic region
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 $
Slide 9: Balance sheet and operating metrics
Q1 FY 2020 balance sheet and operating metrics Free Cash Flow Copyright © Ciena Corporation 2020. All rights reserved. Confidential & Proprietary. 9
Slide 10: Returning value to shareholders through strong capital allocation priorities
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 re
Slide 11: Delivering consistent and differentiated financial performance
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, ADV
Slide 12: Delivering profitability and total shareholder return
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
Slide 13: Long-term targets
Long-term targets Copyright © Ciena Corporation 2020. All rights reserved. Confidential & Proprietary. 13
Slide 14: Long-term financial targets
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 material
Slide 15: Q1 fiscal 2020 appendix
Q1 fiscal 2020 appendix Copyright © Ciena Corporation 2020. All rights reserved. Confidential & Proprietary. 15
Slide 16: Adjusted gross profit and margin reconciliation
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 adju
Slide 17: Adjusted operating expense and operating income reconciliation
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 compensati
Slide 18: Adjusted net income and EPS reconciliation
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
Slide 19: EBITDA reconciliation
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,