Ciena second quarter 2016 profit, revenue beat estimates

Ciena Corp. (NYSE: CIEN) delivered good news to its shareholders today, announcing it had exceed analysts' expectations for both profit and revenue for its fiscal second quarter, which ended April 30, 2016. Revenue projections for the third quarter fell in line with pre-report estimates.

The optical transport and SDN/NFV technology vendor reported revenue of $640.7 million up from $621.6 million for the fiscal second quarter 2015 and $573.1 million in 1Q16. The most recent figure beat consensus by nearly $10 million.

GAAP net income for the quarter was $14.0 million ($0.10 per diluted common share), a decline from the year-ago quarter's GAAP net income of $20.7 million ($0.17 per diluted common share). Non-GAAP net income for the second quarter 2016 came in at $52.4 million ($0.34 per diluted common share), versus $47.3 million of non-GAAP net income ($0.35 per diluted common share), last fiscal year's second quarter. The non-GAAP income figure exceeded Street estimates by $0.07.

GAAP gross margin for the fiscal second quarter was 44.2% up both sequentially (versus 43.9%) and year-on-year (versus 43.8%). On a non-GAAP basis, Ciena reported gross margin of 45.1%, also an improvement sequentially (versus 44.7%) and over the year-ago quarter (versus 44.4%).

"This quarter's strong financial performance is a result of the investments we've made to diversify our business, in particular the expansion of our packet business and our momentum in key geographies," said Gary B. Smith, president and CEO of Ciena, via a press release. "As the industry shifts toward an on-demand networking model across an open ecosystem, we are confident in our ability to address those demands with a broader set of customers, applications and geographies to deliver sustainable long-term growth and increased profitability."

The networking platforms, software and software-related services, and global services businesses all recorded year-on-year growth; all but global services also saw sequential growth. Sales from all regions of the world grew sequentially, although North American and EMEA sales shrunk year-over-year.

Looking ahead, Ciena management forecasts the fiscal third quarter of the year will see revenues between $655 million and $685 million. They also predict non-GAAP gross margin in the mid-40s percentage range and non-GAAP operating expense of approximately $225 million (versus $222.6 million for the recently concluded quarter).

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