CIENA CORP Q1 FY2025 earnings call

• Gary mentioned strong fiscal first quarter results with revenue of $1.07 billion, adjusted gross margin of 44.7%, and adjusted EPS of $0.64 per share. Positive demand dynamics drove strong order flow, with direct orders from cloud providers half of overall orders in Q1 and strong back-to-back orders from service providers. - Service provider inventory digestion impacts are largely complete, with revenue and orders improving in Q1, especially in North America. - Cloud providers: Broadening and deepening relationships, with AI driving scaling and provisioning of high-speed networks. - WaveLogic 6 Extreme is gaining momentum, with 20 new customers added in Q1. Pluggables momentum is strong, with Q1 being the highest orders quarter yet. - RLS and Waveserver solutions have significant customer counts, and interconnects portfolio is a growth opportunity.

Service providers: Q1 service provider revenue increased 14% year-over-year, comprising approximately 51% of total revenue. Cloud providers: Total direct cloud revenue comprised 32% of the total revenue in Q1, with five cloud providers in the top 10 customers for the quarter.

• Fiscal second quarter revenue expected in range of $1.05 billion to $1.13 billion. Q2 adjusted gross margin expected in low 40% range, adjusted operating expense approximately $355 million. - For fiscal 2025, increasingly confident in delivering revenue growth toward high-end of 8% to 11% guidance range. Adjusted gross margin expected in 42% to 44% range for the year, and adjusted operating expense to average $350 million to $360 million per quarter.

• Potential disruption in U.S. and international economy due to additional tariffs and retaliatory actions. Supply chain risks with fluidity and uncertainty around tariffs, but company has resilient supply chain and ability to mitigate.

Q: Andrew Spinola asked about gross margin movement.

A: Gary Smith said gross margin influenced by mix, currently lower than trend but expected to trend up over time, expecting mid-40s by 2027