Slide 1: Ciena Corporation Q2 FY 2018 Investor Presentation
Ciena Corporation Q2 FY 2018 Investor presentation Quarterly Period ended April 30, 2018 May 31, 2018 Copyright © Ciena Corporation 2018. 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: Diversification and growth through market share gains
Diversification and growth through market share gains ▪ Non-telco represented 34% of total revenue ▪ Direct webscale was 17% of total revenue ▪ EMEA was up QoQ and YoY at 16.7% of total revenue ▪ APAC contributed over 20% of total revenue; India revenue was over 10% of total revenue at $79 million F
Slide 4: Q2 Fiscal 2018 Financial Highlights
Q2 Fiscal 2018 Financial Highlights * A reconciliation of these non-GAAP measures to our GAAP results is included in the appendix to this presentation. Copyright © Ciena Corporation 2018. All rights reserved. Confidential & Proprietary. 4
Slide 5: Q2 Fiscal 2018 Comparisons (Year-over-Year)
Q2 Fiscal 2018 Comparisons (Year-over-Year) Revenue Adj. Gross Margin* Adj. Operating Margin* Q2'18 Q2'17 Q2'18 Q2'17 Q2'18 Q2'17 $730.0 $707.0 45.7% 12.5% 40.7% 7.7% Adj. EBITDA* Cash flow from Operations Adj. EPS* Q2'18 Q2'17 Q2'18 Q2'17 Q2'18 Q2'17 $107.6 $72.0 $0.30 $77.1 $0.23 $37.4 Copyright ©
Slide 6: Q2 Fiscal 2018 Comparisons (Revenue by Segment)
Q2 Fiscal 2018 Comparisons (Revenue by Segment) (in millions) $800.0 $700.0 $99.6 $97.8 $38.7 $600.0 $37.7 $500.0 $400.0 $300.0 $591.7 $571.5 $200.0 $100.0 $0.0 Q2'18 Q2'17 Networking Platforms Software & Software-Related Services Global Services Copyright © Ciena Corporation 2018. All rights reserv
Slide 7: Q2 Fiscal 2018 Revenue by Segment
Q2 Fiscal 2018 Revenue by Segment (Amounts in millions) Q2 FY 2018 Q2 FY 2017 Revenue %* Revenue %* Networking Platforms Converged Packet Optical $527.9 72.4 $505.2 71.4 Packet Networking 63.8 8.7 66.3 9.4 Total Networking Platforms 591.7 81.1 571.5 80.8 Software and Software-Related Services Softwa
Slide 8: U.S. and International Revenue
U.S. and International Revenue (Amounts in millions) Revenue Q2 FY 2018 Q1 FY 2018 Q4 FY 2017 Q3 FY 2017 Q2 FY 2017 United States $392.8 $383.4 $418.2 $438.1 $392.0 International 337.2 262.7 $326.2 $290.6 $315.0 Total $730.0 $646.1 $744.4 $728.7 $707.0 % of Total Revenue Q2 FY 2018 Q1 FY 2018 Q4 FY
Slide 9: Q2 Fiscal 2018 Revenue by Geographic Region
Q2 Fiscal 2018 Revenue by Geographic Region 20.8% North America 3.4% Europe, Middle East and Africa Caribbean and Latin America 59.1% 16.7% Asia Pacific Copyright © Ciena Corporation 2018. All rights reserved. Confidential & Proprietary. 9
Slide 10: Revenue by Geographic Region
Revenue by Geographic Region (Amounts in millions) Revenue Q2 FY 2018 Q1 FY 2018 Q4 FY 2017 Q3 FY 2017 Q2 FY 2017 North America $431.2 $402.9 $440.5 $465.2 $424.4 Europe, Middle East and Africa 121.7 97.8 110.7 96.1 $105.8 Caribbean and Latin America 25.1 34.6 43.5 51.7 $33.9 Asia Pacific 152.0 110.
Slide 11: Q2 Fiscal 2018 Balance Sheet and Operating Metrics
Q2 Fiscal 2018 Balance Sheet and Operating Metrics DSO Copyright © Ciena Corporation 2018. All rights reserved. Confidential & Proprietary. 11
Slide 12: Strengthening balance sheet
Strengthening balance sheet Ciena has improved its leverage and reduced its debt position Leverage Trend Net Debt (Cash) Position (in millions) Gross debt-to-EBITDA leverage ratio Cash* Debt Net Debt 14.0x $1,600 13.2x $1,451 $1,400 12.0x $1,264 $1,254 $1,198 10.9x $1,200 $1,143 10.0x $1,021 $969 $9
Slide 13: Delivering consistent financial performance
Delivering consistent financial performance Ciena has successfully managed periods of volatility that can impact the industry Normalized Revenue Normalized Adjusted OM 1.60 3.00 2.50 1.40 2.00 1.20 1.50 1.00 1.00 0.50 0.80 0.00 2014 2015 2016 2017 2014 2015 2016 2017 Ciena Industry Avg Ciena Industr
Slide 14: Market Growth
Market Growth Global Ex-China forecasted annual growth of 2.6% for 2018; Q1 2018 actuals flat Y/Y* China NA EMEA 17.4% 2.5% 2.6% 1.3% 1.9% 6.0% 5.6% (2.2% (6.7% ) 2017 2018 '18-'20 2017 Actual ) 2017 2018 '18-'20 Market Growth 2017 2018 '18-'20 2018 Forecasted Market Growth CALA Global Ex-China APAC
Slide 15: Convertible Debt Overview
Convertible Debt Overview Copyright © Ciena Corporation 2018. All rights reserved. Confidential & Proprietary. 15
Slide 16: Convertible Notes and Diluted Earnings Per Share (EPS) Analysis (GAAP)
Convertible Notes and Diluted Earnings Per Share (EPS) Analysis (GAAP) Memo: Additional Shares Ciena’s quarterly net income must be Underlying Quarterly Interest Par Value Conversion In Diluted EPS Diluted EPS equal to or greater than the below amounts Outstanding Convertible Notes Shares Expense Ne
Slide 17: Illustrative Treasury Stock Method for New 2018 Notes
Illustrative Treasury Stock Method for New 2018 Notes The following table (in thousands, except Stock Price Per Share) illustrates the treatment of Ciena’s New 2018 Notes in calculating diluted EPS in the future based on various hypothetical stock prices and using the Treasury Stock Method. The rang
Slide 18: Q2 Fiscal 2018 Appendix
Q2 Fiscal 2018 Appendix Copyright © Ciena Corporation 2018. All rights reserved. Confidential & Proprietary. 18
Slide 19: Q2 FY 2018 Q1 FY 2018 Q4 FY 2017 Q3 FY 2017 Q2 FY
Q2 FY 2018 Q1 FY 2018 Q4 FY 2017 Q3 FY 2017 Q2 FY 2017 GAAP gross profit $293,307 $271,765 $325,685 $328,076 $318,240 Share-based compensation-products 824 672 694 709 708 Share-based compensation-services 722 625 561 619 679 Amortization of intangible assets 2,289 2,289 2,332 2,417 3,623 Total adju
Slide 20: Q2 FY 2018 Q1 FY 2018 Q4 FY 2017 Q3 FY 2017 Q2 FY
Q2 FY 2018 Q1 FY 2018 Q4 FY 2017 Q3 FY 2017 Q2 FY 2017 GAAP operating expense $261,241 $255,029 $269,886 $246,077 $260,420 Share-based compensation-research and development 3,796 3,255 2,956 3,139 3,653 Share-based compensation-sales and marketing 3,760 3,328 3,218 3,242 3,513 Share-based compensati
Slide 21: Q2 FY 2018 Q1 FY 2018 Q4 FY 2017 Q3 FY 2017 Q2 FY
Q2 FY 2018 Q1 FY 2018 Q4 FY 2017 Q3 FY 2017 Q2 FY 2017 GAAP net income (loss) $13,856 ($473,363) $1,160,056 $60,010 $38,026 Exclude GAAP provision (benefit) for income taxes 6,475 477,940 (1,117,531) 7,726 3,568 Income before income taxes 20,331 4,577 42,525 67,736 41,594 Total adjustments related t
Slide 22: Earnings Before Interest, Tax, Depreciation and Amortization (EBITDA)
Earnings Before Interest, Tax, Depreciation and Amortization (EBITDA) Q2 FY 2018 Q1 FY 2018 Q4 FY 2017 Q3 FY 2017 Q2 FY 2017 Net income (loss) (GAAP) $13,856 ($473,363) $1,160,056 $60,010 $38,026 Add: Interest expense 13,031 13,734 13,926 13,415 13,308 Less: Interest and other income (loss), net 1,2
Slide 23: • • • • • • • • • Copyright
• • • • • • • • • Copyright © Ciena Corporation 2018. All rights reserved. Confidential & Proprietary. 23