Slide 1: Ciena Corporation Q3 FY 2018 Investor Presentation
Ciena Corporation Q3 FY 2018 Investor presentation Quarterly Period ended July 31, 2018 August 30, 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 37% of total revenue ▪ Direct webscale was 20% of total revenue; one 10% customer ▪ EMEA was up 27% YoY ▪ APAC up 49% YoY; India revenue was 10% of total revenue at $83.6 million Forcing the pace of innovation with next ge
Slide 4: Q3 Fiscal 2018 Financial Highlights
Q3 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: Q3 Fiscal 2018 Comparisons (Year-over-Year)
Q3 Fiscal 2018 Comparisons (Year-over-Year) Revenue Adj. Gross Margin* Adj. Operating Margin* Q3'18 Q3'17 Q3'18 Q3'17 Q3'18 Q3'17 $818.8 45.5% 43.4% 14.0% 14.1% $728.7 Adj. EBITDA* Cash flow from Operations Adj. EPS* Q3'18 Q3'17 Q3'18 Q3'17 Q3'18 Q3'17 $133.4 $88.1 $0.48 $0.35 $50.6 $122.8 Copyright
Slide 6: Q3 Fiscal 2018 Comparisons (Revenue by Segment)
Q3 Fiscal 2018 Comparisons (Revenue by Segment) (in millions) $900.0 $800.0 $100.2 $700.0 $41.2 $94.1 $600.0 $42.3 $500.0 $400.0 $677.4 $300.0 $592.3 $200.0 $100.0 $0.0 Q3'18 Q3'17 Networking Platforms Software & Software-Related Services Global Services Copyright © Ciena Corporation 2018. All right
Slide 7: Q3 Fiscal 2018 Revenue by Segment
Q3 Fiscal 2018 Revenue by Segment (Amounts in millions) Q3 FY 2018 Q3 FY 2017 Revenue %* Revenue %* Networking Platforms Converged Packet Optical $592.8 72.5 $510.2 70.0 Packet Networking 84.6 10.3 82.1 11.3 Total Networking Platforms 677.4 82.8 592.3 81.3 Software and Software-Related Services Soft
Slide 8: U.S. and International Revenue
U.S. and International Revenue (Amounts in millions) Revenue Q3 FY 2018 Q2 FY 2018 Q1 FY 2018 Q4 FY 2017 Q3 FY 2017 United States $469.2 $392.8 $383.4 $418.2 $438.1 International 349.6 337.2 $262.7 $326.2 $290.6 Total $818.8 $730.0 $646.1 $744.4 $728.7 % of Total Revenue Q3 FY 2018 Q2 FY 2018 Q1 FY
Slide 9: Q3 Fiscal 2018 Revenue by Geographic Region
Q3 Fiscal 2018 Revenue by Geographic Region 21.0% North America 3.4% Europe, Middle East and Africa Caribbean and Latin America 14.9% 60.7% 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 Q3 FY 2018 Q2 FY 2018 Q1 FY 2018 Q4 FY 2017 Q3 FY 2017 North America $497.0 $431.2 $402.9 $440.5 $465.2 Europe, Middle East and Africa 122.2 121.7 97.8 110.7 $96.1 Caribbean and Latin America 27.5 25.1 34.6 43.5 $51.7 Asia Pacific 172.1 152.
Slide 11: Q3 Fiscal 2018 Balance Sheet and Operating Metrics
Q3 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 E
Slide 15: Long-Term Targets
Long-Term Targets Copyright © Ciena Corporation 2018. All rights reserved. Confidential & Proprietary. 15
Slide 16: Long-term financial targets: strategic drivers
Long-term financial targets Ciena’s strategic drivers play a key role in our performance Optical Systems Attached Services Packet Networking Software and Related Services Components *Projections or outlook with respect to future operating results are only as of December 7, 2017, the date presented o
Slide 17: Long-term financial targets
Long-term financial targets Execution of our strategy will drive top-line growth, profitability and cash generation *Projections or outlook with respect to future operating results are only as of December 7, 2017, the date presented on the related earnings call. Actual results may differ materially
Slide 18: Convertible Debt Overview
Convertible Debt Overview Copyright © Ciena Corporation 2018. All rights reserved. Confidential & Proprietary. 18
Slide 19: Convertible Notes and Diluted 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 20: 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 21: Q3 Fiscal 2018 Appendix
Q3 Fiscal 2018 Appendix Copyright © Ciena Corporation 2018. All rights reserved. Confidential & Proprietary. 21
Slide 22: Q3 FY 2018 Q2 FY 2018 Q1 FY 2018 Q4 FY 2017 Q3 FY
Q3 FY 2018 Q2 FY 2018 Q1 FY 2018 Q4 FY 2017 Q3 FY 2017 GAAP gross profit $351,543 $293,307 $271,765 $325,685 $328,076 Share-based compensation-products 783 824 672 694 709 Share-based compensation-services 618 722 625 561 619 Amortization of intangible assets 2,534 2,289 2,289 2,332 2,417 Total adju
Slide 23: Q3 FY 2018 Q2 FY 2018 Q1 FY 2018 Q4 FY 2017 Q3 FY
Q3 FY 2018 Q2 FY 2018 Q1 FY 2018 Q4 FY 2017 Q3 FY 2017 GAAP operating expense $266,269 $261,241 $255,029 $269,886 $246,077 Share-based compensation-research and development 3,082 3,796 3,255 2,956 3,139 Share-based compensation-sales and marketing 3,417 3,760 3,328 3,218 3,242 Share-based compensati
Slide 24: Q3 FY 2018 Q2 FY 2018 Q1 FY 2018 Q4 FY 2017 Q3 FY
Q3 FY 2018 Q2 FY 2018 Q1 FY 2018 Q4 FY 2017 Q3 FY 2017 GAAP net income (loss) $50,840 $13,856 ($473,363) $1,160,056 $60,010 Exclude GAAP provision (benefit) for income taxes 19,280 6,475 477,940 (1,117,531) 7,726 Income before income taxes 70,120 20,331 4,577 42,525 67,736 Total adjustments related
Slide 25: Earnings Before Interest, Tax, Depreciation and Amortization (EBITDA)
Earnings Before Interest, Tax, Depreciation and Amortization (EBITDA) Q3 FY 2018 Q2 FY 2018 Q1 FY 2018 Q4 FY 2017 Q3 FY 2017 Net income (loss) (GAAP) $50,840 $13,856 ($473,363) $1,160,056 $60,010 Add: Interest expense 13,611 13,031 13,734 13,926 13,415 Less: Interest and other income (loss), net (1,
Slide 26: • • • • • • • • • Copyright
• • • • • • • • • Copyright © Ciena Corporation 2018. All rights reserved. Confidential & Proprietary. 26
Slide 27: Copyright
Copyright © Ciena Corporation 2018. All rights reserved. Confidential & Proprietary. 27