Ciena Reports Fiscal Fourth Quarter 2023 Financial Results

Annual revenue increased 21%

Ciena^® Corporation (NYSE: CIEN), a networking systems, services and software company, today announced unaudited financial results for its fiscal fourth quarter ended October 28, 2023.

• Q4 Revenue: $1.13 billion
• Q4 Net Income per Share: $0.62 GAAP; $0.75 adjusted (non-GAAP)
• Share Repurchases: Repurchased approximately 4.2 million shares of common stock for an aggregate price of $188.8 million during the quarter

"Today we reported strong fiscal fourth quarter results, driven by positive demand dynamics, particularly with cloud provider customers. We delivered an outstanding fiscal year with 21% growth in revenue, gaining significant market share and further advancing our industry leadership position," said Gary Smith, president and CEO, Ciena. "Looking ahead, as we execute on our strategy to extend our market leadership in optical while expanding our opportunities in routing and switching, we expect to continue to grow revenue faster than the market and take share."

For fiscal fourth quarter 2023, Ciena reported revenue of $1.13 billion as compared to $971.0 million for the fiscal fourth quarter 2022. For fiscal year 2023, Ciena reported revenue of $4.39 billion, as compared to $3.63 billion for fiscal year 2022.

Ciena's GAAP net income for the fiscal fourth quarter 2023 was $91.2 million, or $0.62 per diluted common share, which compares to a GAAP net income of $57.6 million, or $0.39 per diluted common share, for the fiscal fourth quarter 2022. For fiscal year 2023, Ciena's GAAP net income was $254.8 million, or $1.71 per diluted common share, as compared to GAAP net income of $152.9 million, or $1.00 per diluted common share, for fiscal year 2022.

Ciena's adjusted (non-GAAP) net income for the fiscal fourth quarter 2023 was $111.2 million, or $0.75 per diluted common share, which compares to an adjusted (non-GAAP) net income of $90.9 million, or $0.61 per diluted common share, for the fiscal fourth quarter 2022. For fiscal year 2023, Ciena's adjusted (non-GAAP) net income was $406.3, or $2.72 per diluted common share, as compared to adjusted (non-GAAP) net income of $288.9, or $1.90 per diluted common share, for fiscal year 2022.

Performance Summary For Fiscal Fourth Quarter and Year Ended October 28, 2023

The tables below (in millions, except percentage data) provide comparisons of certain quarterly and annual results to the prior year. Appendices A and B set forth reconciliations between the GAAP and adjusted (non-GAAP) measures contained in this release.

Additional Performance Metrics for Fiscal Fourth Quarter and Year Ended October 28, 2023

• Two customers represented 10%-plus of revenue for the fiscal fourth quarter 2023, combining for a total of 29.7% of revenue. Two customers represented 10%-plus of revenue for the fiscal year 2023, combining for a total of 23.4% of revenue.
• Cash and investments at the end of fiscal year 2023 totaled $1.25 billion
• Cash flow from operations totaled $195.5 million and $168.3 million for the fiscal fourth quarter and the fiscal year 2023, respectively
• Average days' sales outstanding (DSOs) were 92 and 95 for the fiscal fourth quarter and the fiscal year 2023, respectively
• Accounts receivable, net balance was $1.00 billion
• Unbilled contract assets, net balance was $150.3 million
• Inventories totaled $1.05 billion, including:
  • Raw materials: $664.8 million
  • Work in process: $55.2 million
  • Finished goods: $314.2 million
  • Deferred cost of sales: $66.6 million
  • Reserve for excess and obsolescence: $(50.0) million
• Product inventory turns were 2.0 for both the fiscal fourth quarter and the fiscal year 2023.
• Headcount totaled 8,483 at the end of fiscal year 2023

Supplemental Materials and Live Web Broadcast of Unaudited Fiscal Fourth Quarter 2023 Results

Today, Thursday, December 7, 2023, in conjunction with this announcement, Ciena has posted to the Quarterly Results page of the Investor Relations section of its website certain related supporting materials for its unaudited fiscal fourth quarter 2023 results.

Ciena's management will also host a discussion today with investors and financial analysts that will include the Company's outlook. The live audio web broadcast beginning at 8:30 a.m. Eastern will be accessible via www.ciena.com. An archived replay of the live broadcast will be available shortly following its conclusion on the Investor Relations page of Ciena's website.

Notes to Investors

Forward-Looking Statements. You are encouraged to review the Investors section of our website, where we routinely post press releases, Securities and Exchange Commission ("SEC") filings, recent news, financial results, supplemental financial information, and other announcements. From time to time we exclusively post material information to this website along with other disclosure channels that we use. This press release contains certain forward-looking statements that involve risks and uncertainties. These statements are based on current expectations, forecasts, assumptions and other information available to the Company as of the date hereof. Forward-looking statements include statements regarding Ciena's expectations, beliefs, intentions or strategies regarding the future and can be identified by forward-looking words such as "anticipate," "believe," "could," "estimate," "expect," "intend," "may," "should," "will," and "would" or similar words. Forward-looking statements in this release include: "Today we reported strong fiscal fourth quarter results, driven by positive demand dynamics, particularly with cloud provider customers"; "We delivered an outstanding fiscal year with 21% growth in revenue, gaining significant market share and further advancing our industry leadership position"; "Looking ahead, as we execute on our strategy to extend our market leadership in optical while expanding our opportunities in routing and switching, we expect to continue to grow revenue faster than the market and take share."

Ciena's actual results, performance or events may differ materially from these forward-looking statements made or implied due to a number of risks and uncertainties relating to Ciena's business, including: the effect of broader economic and market conditions on our customers, their spending and their businesses and markets; our ability to execute our business and growth strategies; the impact of macroeconomic conditions and global supply chain constraints or disruptions including increased supply costs and lead times; the impact of the introduction of new technologies by us or our competitors; seasonality and the timing and size of customer orders, their delivery dates and our ability to recognize revenue relating to such sales; the level of competitive pressure we encounter; the product, customer and geographic mix of sales within the period; changes in foreign currency exchange rates; factors beyond our control such as natural disasters, climate change, acts of war or terrorism, geopolitical tensions or events, including but not limited to the ongoing conflicts between Ukraine and Russia, and Israel and Hamas, and public health emergencies or epidemics, including the COVID-19 pandemic; changes in tax or trade regulations, including the imposition of tariffs, duties or efforts to withdraw from or materially modify international trade agreements; cyberattacks, data breaches or other security incidents involving our enterprise network environment or our products; regulatory changes, litigation involving our intellectual property or government investigations; and the other risk factors disclosed in Ciena’s periodic reports filed with the Securities and Exchange Commission (SEC) including Ciena's Quarterly Report on Form 10-Q filed with the SEC on September 6, 2023 and its Annual Report on Form 10-K to be filed with the SEC. Ciena assumes no obligation to update any forward-looking information included in this press release.

Non-GAAP Presentation of Quarterly and Annual Results. This release includes non-GAAP measures of Ciena's gross profit, operating expense, income from operations, earnings before interest, tax, depreciation and amortization (EBITDA), Adjusted EBITDA, and measures of net income and net income per share. In evaluating the operating performance of Ciena's business, management excludes certain charges and credits that are required by GAAP. These items share one or more of the following characteristics: they are unusual and Ciena does not expect them to recur in the ordinary course of its business; they do not involve the expenditure of cash; they are unrelated to the ongoing operation of the business in the ordinary course; or their magnitude and timing is largely outside of Ciena's control. Management believes that the non-GAAP measures below provide management and investors useful information and meaningful insight to the operating performance of the business. The presentation of these non-GAAP financial measures should be considered in addition to Ciena's GAAP results and these measures are not intended to be a substitute for the financial information prepared and presented in accordance with GAAP. Ciena's non-GAAP measures and the related adjustments may differ from non-GAAP measures used by other companies and should only be used to evaluate Ciena's results of operations in conjunction with our corresponding GAAP results. To the extent not previously disclosed in a prior Ciena financial results press release, Appendices A and B to this press release set forth a complete GAAP to non-GAAP reconciliation of the non-GAAP measures contained in this release.

About Ciena. Ciena (NYSE: CIEN) is a global leader in networking systems, services, and software. We build the most adaptive networks in the industry, enabling customers to anticipate and meet ever-increasing digital demands. For three-plus decades, Ciena has brought our humanity to our relentless pursuit of innovation. Prioritizing collaborative relationships with our customers, partners, and communities, we create flexible, open, and sustainable networks that better serve all users—today and into the future. For updates on Ciena, follow us on Twitter @Ciena, LinkedIn, the Ciena Insights blog, or visit www.ciena.com.

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The adjusted (non-GAAP) measures above and their reconciliation to Ciena's GAAP results for the periods presented reflect adjustments relating to the following items:

• Share-based compensation - a non-cash expense incurred in accordance with share-based compensation accounting guidance.
• Significant asset impairments and restructuring costs - costs incurred as a result of restructuring activities taken to align resources with perceived market opportunities, and the redesign of business processes including restructuring certain real estate facilities.
• Amortization of intangible assets - a non-cash expense arising from the acquisition of intangible assets, principally developed technologies and customer-related intangibles, that Ciena is required to amortize over an expected useful life.
• Acquisition and integration costs - primarily consist of financial, legal and accounting advisors' costs and employment-related costs related to Ciena's acquisitions in fiscal 2022 and fiscal 2023.
• Loss on extinguishment and modification of debt - reflects extinguishment and debt modification expenses related to refinancing our then existing term loans which occurred during the fourth quarter of fiscal 2023.
• Gain on cost method equity investments, net - reflects changes in the carrying value of certain cost method equity investments due to triggering events.
• Legal settlements - costs incurred as a result of the settlement of certain patent infringement claims and the resolution of related legal proceedings during the fourth quarter of fiscal 2023.
• Non-GAAP tax provision - consists of current and deferred income tax expense commensurate with the level of adjusted income before income taxes and utilizes a current, blended U.S. and foreign statutory annual tax rate of 22.0% for the fiscal fourth quarter and fiscal year 2023 and 20.2% for the fiscal fourth quarter and fiscal year 2022. This rate may be subject to change in the future, including as a result of changes in tax policy or tax strategy.

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