Slide 1: Ciena Corporation Earnings Presentation
Ciena Corporation Earnings Presentation Period ended August 1, 2020 September 3, 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: Safety and community, business continuity, financial strength
Safety and community Business continuity Financial strength • Prioritizing health of employees and • Supply chain design and business • We have a strong balance sheet and following CDC guidance for employers continuity planning has allowed us to solid cash flow generation continue to support custome
Slide 4: Balanced growth, innovation pace, shareholder value
Achieving balanced growth Driving the pace of innovation Delivering shareholder value . Non-telco represented 43% of total . TTM Adjusted R&D* investment was revenue $518M . Direct web-scale contributed 25% of . 535 100G+ total customers, which total revenue includes 37 new wins on WaveLogic Ai . MS
Slide 5: Financial highlights: Adjusted Operating Expense
Q3 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. 5
Slide 6: Year-over-year comparisons
Q3 FY 2020 comparisons (year-over-year) Revenue Adj. Gross Margin* Adj. Operating Margin* (in millions) Q3 FY'19 Q3 FY'20 Q3 FY'19 Q3 FY'20 Q3 FY'19 Q3 FY'20 48.2% $960.6 $976.7 22.4% 44.7% 16.2% Adj. OpEx* Adj. EBITDA* Adj. EPS* (in millions) (in millions) Q3 FY'19 Q3 FY'20 Q3 FY'19 Q3 FY'20 Q3 FY'
Slide 7: Revenue by segment
Revenue by segment (Amounts in millions) 48.2% 46.9% 50.0% Q3 FY 2020 Q3 FY 2019 44.7% 45.1% 1,000.0 43.8% 45.0% Revenue %** Revenue %** 40.0% Networking Platforms 800.0 35.0% Converged Packet Optical $722.5 74.0 $724.3 75.4 30.0% Packet Networking 79.8 8.1 71.8 7.5 600.0 22.4% 25.0% Total Networkin
Slide 8: Continued strength derived from non-telco revenue
Continued strength derived from non-telco revenue* Q3 FY 2020 Direct Webscale Cable Gov't, R&E & Enterprise 50% 45% 40% 7% 9% 9% 9.3% Direct Webscale 35% 11% 30% 7% 11% 10% 9% Cable 25% 25.1% 9% 8.7% Gov't, R&E, 20% 9% Enterprise 15% 27% 24% 25% 10% 20% 15% 5% *represents 43.1% of total revenue in Q
Slide 9: Revenue by geographic region
Revenue by geographic region Q3 FY 2020 Americas Europe, Middle East, Africa Asia Pacific $1,000.0 10% $900.0 10% 14% 12% $800.0 16% 16% 17% 10.4% Americas $700.0 18% 16% 16% 16.6% $600.0 Europe, Middle East and Africa $500.0 73.0% Asia Pacific (In millions) $400.0 74% 73% 68% 73% $300.0 69% $200.0
Slide 10: Balance sheet and operating metrics
Q3 FY 2020 balance sheet and operating metrics Free Cash Flow Copyright © Ciena Corporation 2020. All rights reserved. Confidential & Proprietary. 10
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 YTD Total Shareholder Return 31.4% CAGR 50.0% $2.11 40.0% 30.0% $1.39 20.0% $1.14 $0.93 10.0% 0.0% -10.0% -20.0% FY'16 FY'17 FY'18 FY'19 Ciena Nokia ADTRAN Acacia Juniper ADVA Infinera Cisco Source: company disclosures and S&P Capita
Slide 13: Q3 fiscal 2020 appendix
Q3 fiscal 2020 appendix Copyright © Ciena Corporation 2020. All rights reserved. Confidential & Proprietary. 13
Slide 14: Adjusted gross profit reconciliation
Q3 FY 2020 Q2 FY 2020 Q1 FY 2020 Q4 FY 2019 Q3 FY 2019 GAAP gross profit $464,681 $413,326 $370,535 $419,696 $424,352 Share-based compensation-products 960 827 671 748 781 Share-based compensation-services 1,007 1,036 842 715 783 Amortization of intangible assets 3,834 3,835 3,834 3,303 3,303 Total
Slide 15: Adjusted operating expense and income reconciliation
Q3 FY 2020 Q2 FY 2020 Q1 FY 2020 Q4 FY 2019 Q3 FY 2019 GAAP operating expense $276,645 $285,838 $292,578 $326,494 $299,051 Share-based compensation-research and development 4,286 4,822 3,849 3,287 3,560 Share-based compensation-sales and marketing 5,180 5,264 4,613 4,151 4,192 Share-based compensati
Slide 16: Adjusted net income reconciliation
Q3 FY 2020 Q2 FY 2020 Q1 FY 2020 Q4 FY 2019 Q3 FY 2019 GAAP net income $142,267 $91,655 $62,328 $80,331 $86,749 Exclude GAAP provision for income taxes 38,750 25,308 9,814 2,552 30,198 Income before income taxes 181,017 116,963 72,142 82,883 116,947 Total adjustments related to income from operation
Slide 17: EBITDA reconciliation
Earnings Before Interest, Tax, Depreciation and Amortization (EBITDA) Q3 FY 2020 Q2 FY 2020 Q1 FY 2020 Q4 FY 2019 Q3 FY 2019 Net income (GAAP) $ 142,267 $ 91,655 $ 62,328 $ 80,331 $ 86,749 Add: Interest expense 7,251 7,860 8,815 9,136 9,404 Less: Interest and other income (loss), net 232 (2,665) 3,6