Slide 1: Ciena Corporation Q3 fiscal 2019 Investor Presentation
Ciena Corporation Q3 fiscal 2019 Investor Presentation Quarterly Period ended July 31, 2019 September 5, 2019 Copyright © Ciena Corporation 2019. 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 41% of total • TTM Adjusted R&D* investment was revenue $527.0 million • Direct web-scale contributed over 26% • WaveLogic Ai has 128 total customers of total revenue with 16 new wins in Q3
Slide 4: Q3 fiscal 2019 financial highlights
Q3 fiscal 2019 financial highlights Adjusted Operating Margin* * A reconciliation of these non-GAAP measures to our GAAP results is included in the appendix to this presentation. Copyright © Ciena Corporation 2019. All rights reserved. Confidential & Proprietary. 4
Slide 5: Q3 fiscal 2019 comparisons (year-over-year)
Q3 fiscal 2019 comparisons (year-over-year) Revenue Adj. Gross Margin* Adj. Operating Margin* (in millions) Q3'18 Q3'19 Q3'18 Q3'19 Q3'18 Q3'19 44.7% 16.2% $960.6 43.4% 14.0% $818.8 Adj. EBITDA* Adj. EPS* (in millions) Q3'18 Q3'19 Q3'18 Q3'19 $0.71 $178.0 $0.48 $136.1 Copyright © Ciena Corporation 2
Slide 6: Revenue by segment
Revenue by segment (Amounts in millions) Q3 FY 2019 Q3 FY 2018 Revenue %** Revenue %** $1,000.0 44.7% 50.0% 44.7% Networking Platforms 43.4% 43.9% $900.0 42.2% 45.0% Converged Packet Optical $724.3 75.4 $592.8 72.4 $800.0 40.0% Packet Networking 71.8 7.5 84.6 10.4 $700.0 35.0% Total Networking Platf
Slide 7: Continued strength derived from non-telco revenue
Continued strength derived from non-telco revenue* Q3 FY 2019 Direct Webscale Cable Gov't, R&E & Enterprise 45% 40% 7% 35% 7.2% Direct Webscale 11% 8% 30% 8% 8% 7% 25% Cable 6% 7% 6.7% 9% 7% 20% 26.5% Gov't, R&E, Enterprise 15% 27% 10% 21% 21% 17% 19% 5% 0% Q3 FY2018 Q4 FY2018 Q1 FY2019 Q2 FY2019 Q3
Slide 8: Revenue by geographic region
Revenue by geographic region Q3 FY 2019 North America EMEA CALA APAC $1,000.0 $900.0 14% $800.0 19% 16% 4% North America 21% 4.1% 14.1% $700.0 6% 17% 5% 18% 3% 4% 13% Europe, Middle East $600.0 14% and Africa 15% 17% 17.6% Caribbean and Latin $500.0 64.2% America (Inmillions) $400.0 Asia Pacific $30
Slide 9: Q3 fiscal 2019 balance sheet and operating metrics
Q3 fiscal 2019 balance sheet and operating metrics DSO Copyright © Ciena Corporation 2019. 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 $50.0 $500.0 17% $45.0 $40.0 $480.0 16% $35.0 $460.0 15% $30.0 $440.0 14% $25.0 $420.0 13% $20.0 $15.0 $400.0 12% $10.0 $380.0 11% $5.0 $360.0 10% $0.0 2015 2016 2017 2018 Q3 FY18 Q4 FY18 Q1 FY19 Q2 FY19
Slide 11: Delivering consistent and differentiated financial performance
Delivering consistent and differentiated financial performance Normalized Revenue Normalized Adjusted OM Ciena Industry Avg1 Ciena Industry Avg1 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 2018 2014 2015 2016 2017 2018 *Industry Average: ACIA, ADTN, ADVA, CSCO, IN
Slide 12: Delivering profitability and total shareholder return
Delivering profitability and total shareholder return Adjusted EPS 1YR Stock Return* 22.3% CAGR $1.39 60.00% $1.14 40.00% $0.93 20.00% 0.00% -20.00% -40.00% -60.00% FY2016 FY2017 FY2018 Ciena Acacia Cisco Nokia ADVA Juniper ADTRAN Infinera *1 year represents 8/22/18-8/22/19 Copyright © Ciena Corpora
Slide 13: Business outlook and long-term targets
Business outlook and long-term targets Copyright © Ciena Corporation 2019. All rights reserved. Confidential & Proprietary. 13
Slide 14: Fiscal 2019 performance driven by strategic execution and favorable dynamics
Our extraordinary fiscal 2019 performance is driven by a combination of strategic execution and favorable dynamics Continued strategic execution • Favorable competitive dynamics • Customer trust in Ciena and strong relationships • Subscale vendors struggle financially and with innovation • Web-scale
Slide 15: 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 13, 2018, the date presented on the related earnings call. Actual results may differ material
Slide 16: Long-term financial targets
Long-term financial targets* Optical Systems Attached Services Packet Networking Blue Planet *Projections or outlook with respect to future operating results are only as of December 13, 2018, the date presented on the related earnings call. Actual results may differ materially from these forward loo
Slide 17: Q3 fiscal 2019 appendix
Q3 fiscal 2019 appendix Copyright © Ciena Corporation 2019. All rights reserved. Confidential & Proprietary. 17
Slide 18: Adjusted gross profit reconciliation
Q3 FY 2019 Q2 FY 2019 Q1 FY 2019 Q4 FY 2018 Q3 FY 2018 GAAP gross profit $424,352 $374,677 $323,341 $398,075 $351,543 Share-based compensation-products 781 702 637 705 783 Share-based compensation-services 783 907 770 651 618 Amortization of intangible assets 3,303 3,303 3,418 2,957 2,534 Total adju
Slide 19: Adjusted operating expense and income reconciliation
Q3 FY 2019 Q2 FY 2019 Q1 FY 2019 Q4 FY 2018 Q3 FY 2018 GAAP operating expense $299,051 $294,357 $275,398 $302,205 $266,269 Share-based compensation-research and development 3,560 4,083 3,391 3,385 3,082 Share-based compensation-sales and marketing 4,192 4,346 3,785 3,741 3,417 Share-based compensati
Slide 20: Adjusted net income reconciliation
Q3 FY 2019 Q2 FY 2019 Q1 FY 2019 Q4 FY 2018 Q3 FY 2018 GAAP net income $86,749 $52,738 $33,616 $63,977 $50,840 Exclude GAAP provision (benefit) for income taxes 30,198 17,867 9,139 (10,224) 19,280 Income before income taxes 116,947 70,605 42,755 53,753 70,120 Total adjustments related to income from
Slide 21: EBITDA reconciliation
Earnings Before Interest, Tax, Depreciation and Amortization (EBITDA) Q3 FY 2019 Q2 FY 2019 Q1 FY 2019 Q4 FY 2018 Q3 FY 2018 Net income (GAAP) $ 86,749 $ 52,738 $ 33,616 $ 63,977 $ 50,840 Add: Interest expense 9,404 9,471 9,441 14,873 13,611 Less: Interest and other income (loss), net 1,050 (244) 4,
Slide 22: Thank You
Thank You Copyright © Ciena Corporation 2019. All rights reserved. Confidential & Proprietary.