Ciena shares rise after earnings ‘Demand is strong,’ CEO says.

Ciena shares rose after the optical networking company reported better-than-expected financial results, driven by growing demand for the company’s hardware from cloud computing providers.

For the third fiscal quarter ended July 29, Ciena Corporation (stock symbol: CIEN) reported revenue of $1.07 billion, up 23% from the same quarter last year, upwards of Scope of guidance for the company From $1 billion to $1.08 billion and above consensus at $1.04 billion.

Adjusted earnings came in at 59 cents per share, beating consensus expectations of 51 cents. Under generally accepted accounting principles, or GAAP, the company earned 20 cents per share. Adjusted gross margin was 42.7%, up from 40% in the same period a year earlier.

CEO Gary Smith said in an interview Barron That “demand is strong and enduring” from both carriers and cloud giants. In recent quarters, business has been held up by “disruptions between supply and demand” related to the pandemic and supply chain shortages, Smith said, adding that the situation is “now becoming compliant.”

In Thursday’s trading, Ciena shares rose 14% to $49.33.

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For the fiscal fourth quarter, Ciena expects revenue of $1.06 billion to $1.14 billion, roughly in line with estimates, with adjusted growth margin in the low to mid 40s on a percentage basis. The company also repurchased $61.2 million of common stock in the quarter.

Ciena, which has historically been a primary provider to carriers, is growing its business with cloud providers. The company said non-telco customers generated a record 46% of revenue in the quarter Presentation to investors.

“We had excellent results for the third fiscal quarter, strong across all regions,” Smith added in a statement. “We are encouraged by increased customer activity which, when combined with our rising backlog, market leadership and addressable market expansion, we believe will drive growth and market share gains in the future.”

Some telecom suppliers, such as Ericsson (ERIC) and Nokia

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(NOK), recently reported disappointing results, citing weak demand from North American telecommunications companies. But Smith said the problem is not a lack of demand, but rather a need to accommodate acquired devices. “It’s not a question of asking,” he said. Barron. “They need things.”

Ciena’s backlog remains at unusually high levels, Smith noted. He expects Ciena to end the year with $2.7 billion in backlog, “more than double normal.” The hemorrhage of this backlog provided fuel for the recent strong growth. He said the company’s long-term growth rate will be in the 6% to 7% range, which is what it was before the pandemic.

As for cloud customers, Smith noted that revenue from this segment was up nearly 40% last quarter. Cloud customers have largely absorbed large inventories of hardware and are starting to “come back for orders,” he said. He said cloud players are building their capabilities in anticipation of artificial intelligence and machine learning.

Write to Eric J. Savitz at

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