SAN JOSE, Calif., Aug. 09, 2023 (GLOBE NEWSWIRE) -- Infinera Corporation ( INFN) today released financial results for its second quarter ended July 1, 2023.
GAAP revenue for the quarter was $376.2 million compared to $392.1 million in the first quarter of 2023 and $358.0 million in the second quarter of 2022.
GAAP gross margin for the quarter was 38.0% compared to 37.5% in the first quarter of 2023 and 30.5% in the second quarter of 2022. GAAP operating margin for the quarter was (3.8)% compared to (2.4)% in the first quarter of 2023 and (11.1)% in the second quarter of 2022.
GAAP net loss for the quarter was $(20.3) million, or $(0.09) per diluted share, compared to net loss of $(8.4) million, or $(0.04) per diluted share, in the first quarter of 2023, and net loss of $(55.7) million, or $(0.26) per diluted share, in the second quarter of 2022.
Non-GAAP gross margin for the quarter was 39.3% compared to 38.8% in the first quarter of 2023 and 36.1% in the second quarter of 2022. Non-GAAP operating margin for the quarter was 2.8% compared to 3.5% in the first quarter of 2023 and 0.4% in the second quarter of 2022.
Non-GAAP net loss for the quarter was $(0.7) million, or $(0.00) per diluted share, compared to non-GAAP net income of $5.7 million, or $0.02 per diluted share, in the first quarter of 2023, and non-GAAP net loss of $(10.1) million, or $(0.05) per diluted share, in the second quarter of 2022.
A further explanation of the use of non-GAAP financial information and a reconciliation of each of the non-GAAP financial measures to the most directly comparable GAAP financial measure can be found at the end of this press release.
Infinera CEO David Heard said, “The second quarter was another solid quarter in which revenue, margins, and earnings per share beat consensus estimates and came in above the mid-point of our outlook range. On a year-over-year basis, we grew revenue by 5% in the quarter and 10% in the first half of the year, and expanded quarterly gross margin by more than 300 basis points. We continued to win new strategic deals with major telecom service providers and hyperscale customers in the Systems business and have received additional orders for our Subsystems business as well.”
“While the second half industry outlook is cautious with customers working down inventory and slowing the pace of new technology investments, we remain confident in our plan to deliver earnings per share expansion in 2023 on our path to generating at least a $1 per share in earnings by 2025-2026,” continued Mr. Heard.
Financial Outlook
Infinera's outlook for the quarter ending September 30, 2023, is as follows:
- Revenue is expected to be $376 million +/- $15 million.
- GAAP gross margin is expected to be 37.5% +/- 150 bps. Non-GAAP gross margin is expected to be 39.0% +/- 150 bps.
- GAAP operating expenses are expected to be $161 million +/- $2 million. Non-GAAP operating expenses are expected to be $141 million +/- $2 million.
- GAAP operating margin is expected to be (5.5)% +/- 250 bps. Non-GAAP operating margin is expected to be 1.5% +/- 250 bps.
- GAAP net loss per share is expected to be $(0.13) +/- $0.04. Non-GAAP net loss per share is expected to be ($0.02) +/- $0.04.
Second Quarter 2023 Investor Slides Available Online
Investor slides reviewing Infinera's second quarter of 2023 financial results will be furnished to the U.S. Securities and Exchange Commission (SEC) on a Current Report on Form 8-K and published on Infinera's Investor Relations website at investors.infinera.com prior to the second quarter of 2023 earnings conference call. Analysts and investors are encouraged to review these slides prior to participating in the conference call webcast. A copy of this press release can be found at investors.infinera.com.
Conference Call Information
Infinera will host a conference call for analysts and investors to discuss its results for the second quarter of 2023 and its outlook for the third quarter of 2023 today at 5:00 p.m. Eastern Time (2:00 p.m. Pacific Time). Interested parties may register for the conference call at https://conferencingportals.com/event/Ekkapgtu. A live webcast of the conference call will also be accessible from the Events section of Infinera’s website at investors.infinera.com. Replay of the audio webcast will be available at investors.infinera.com approximately two hours after the end of the live call.
Contacts:
Media:
Anna Vue
Tel. +1 (916) 595-8157
[email protected]
Investors:
Amitabh Passi, Head of Investor Relations
Tel. +1 (669) 295-1489
[email protected]
About Infinera
Infinera is a global supplier of innovative open optical networking solutions and advanced optical semiconductors that enable carriers, cloud operators, governments, and enterprises to scale network bandwidth, accelerate service innovation, and automate network operations. Infinera solutions deliver industry-leading economics and performance in long-haul, submarine, data center interconnect, and metro transport applications. To learn more about Infinera, visit www.infinera.com, follow us on Twitter and LinkedIn, and subscribe for updates. Infinera and the Infinera logo are registered trademarks of Infinera Corporation.
Forward-Looking Statements
This press release contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements generally relate to future events or Infinera's future financial or operating performance. In some cases, you can identify forward-looking statements because they contain words such as "anticipate," "believe," "could," "estimate," "expect," "intend," "may," "should," "will," and "would" or the negative of these words or similar terms or expressions that concern Infinera's expectations, strategy, priorities, plans or intentions. Such forward-looking statements in this press release include, without limitation, Infinera’s future business plans, strategy and growth opportunities, including progress against strategic priorities and milestones; Infinera's expectations regarding future customer behavior; expectations regarding Infinera’s future performance; expectations regarding Infinera's earnings per share in 2023 and 2025-2026; and Infinera's financial outlook for the third quarter of 2023. These forward-looking statements are based on estimates and information available to Infinera as of the date hereof and are not guarantees of future performance; actual results could differ materially from those stated or implied due to risks and uncertainties. The risks and uncertainties that could cause Infinera’s results to differ materially from those expressed or implied by such forward-looking statements include demand growth for additional network capacity and the level and timing of customer capital spending and excess inventory held by customers beyond normalized levels; delays in the development, introduction or acceptance of new products or in releasing enhancements to existing products; aggressive business tactics by Infinera’s competitors and new entrants and Infinera's ability to compete in a highly competitive market; supply chain and logistics issues, including delays, shortages, components that have been discontinued and increased costs, and Infinera's dependency on sole source, limited source or high-cost suppliers; dependence on a small number of key customers; product performance problems; the complexity of Infinera's manufacturing process; Infinera's ability to identify, attract, upskill and retain qualified personnel; challenges with our contract manufacturers and other third-party partners; the effects of customer and supplier consolidation; dependence on third-party service partners; Infinera’s ability to respond to rapid technological changes; failure to accurately forecast Infinera's manufacturing requirements or customer demand; the effects of public health emergencies; Infinera’s future capital needs and its ability to generate the cash flow or otherwise secure the capital necessary to meet such capital needs; the effect of global and regional economic conditions on Infinera’s business, including effects on purchasing decisions by customers; the adverse impact inflation and higher interest rates may have on Infinera by increasing costs beyond what it can recover through price increases; restrictions to our operations resulting from loan or other credit agreements; the impacts of any restructuring plans or other strategic efforts on our business; our international sales and operations; the impacts of foreign currency fluctuations; the effective tax rate of Infinera, which may increase or fluctuate; potential dilution from the issuance of additional shares of common stock in connection with the conversion of Infinera's convertible senior notes; Infinera’s ability to protect its intellectual property; claims by others that Infinera infringes on their intellectual property rights; security incidents, such as data breaches or cyber-attacks; Infinera's ability to comply with various rules and regulations, including with respect to export control and trade compliance, environmental, social, governance, privacy and data protection matters; events that are outside of Infinera's control, such as natural disasters, violence or other catastrophic events that could harm Infinera's operations; and other risks and uncertainties detailed in Infinera’s SEC filings from time to time. More information on potential factors that may impact Infinera’s business are set forth in Infinera's periodic reports filed with the SEC, including its Annual Report on Form 10-K for the year ended December 31, 2022, as filed with the SEC on February 27, 2023, as well as subsequent reports filed with or furnished to the SEC from time to time. These reports are available on Infinera’s website at www.infinera.com and the SEC’s website at www.sec.gov. Infinera assumes no obligation to, and does not currently intend to, update any such forward-looking statements.
Use of Non-GAAP Financial Information
In addition to disclosing financial measures prepared in accordance with U.S. Generally Accepted Accounting Principles (GAAP), this press release and the accompanying tables contain certain non-GAAP financial measures that exclude in certain cases stock-based compensation expenses, amortization of acquired intangible assets, restructuring and other related costs, inventory related charges, warehouse fire loss (recovery), litigation charges, foreign exchange (gains) losses, net, and income tax effects. Infinera believes these adjustments are appropriate to enhance an overall understanding of its underlying financial performance and also its prospects for the future and are considered by management for the purpose of making operational decisions. In addition, the non-GAAP financial measures presented in this press release are the primary indicators management uses as a basis for its planning and forecasting of future periods. The presentation of this additional information is not meant to be considered in isolation or as a substitute for revenue, gross margin, operating expenses, operating margin, net income (loss) and net income (loss) per common share prepared in accordance with GAAP. Non-GAAP financial measures are not based on a comprehensive set of accounting rules or principles and are subject to limitations.
For a description of these non-GAAP financial measures and a reconciliation to the most directly comparable GAAP financial measures, please see the table titled “GAAP to Non-GAAP Reconciliations” and related footnotes.
Infinera has included forward-looking non-GAAP information in this press release, including an estimate of certain non-GAAP financial measures for the third quarter of 2023 that excludes stock-based compensation expense, amortization of acquired intangible assets and restructuring and other related costs. Please see the section titled “GAAP to Non-GAAP Reconciliation of Financial Outlook” below for specific adjustments.
| Infinera Corporation | |||||||||||||||
| Condensed Consolidated Statements of Operations | |||||||||||||||
| (In thousands, except per share data) | |||||||||||||||
| (Unaudited) | |||||||||||||||
| Three Months Ended | Six Months Ended | ||||||||||||||
| July 1, 2023 | June 25, 2022 | July 1, 2023 | June 25, 2022 | ||||||||||||
| Revenue: | |||||||||||||||
| Product | $ | 299,624 | $ | 284,852 | $ | 614,444 | $ | 552,305 | |||||||
| Services | 76,604 | 73,133 | 153,859 | 144,554 | |||||||||||
| Total revenue | 376,228 | 357,985 | 768,303 | 696,859 | |||||||||||
| Cost of revenue: | |||||||||||||||
| Cost of product | 188,166 | 204,122 | 386,840 | 387,009 | |||||||||||
| Cost of services | 41,733 | 38,421 | 84,680 | 76,380 | |||||||||||
| Amortization of intangible assets | 3,537 | 6,229 | 7,093 | 12,460 | |||||||||||
| Restructuring and other related costs | — | 13 | — | 163 | |||||||||||
| Total cost of revenue | 233,436 | 248,785 | 478,613 | 476,012 | |||||||||||
| Gross profit | 142,792 | 109,200 | 289,690 | 220,847 | |||||||||||
| Operating expenses: | |||||||||||||||
| Research and development | 79,346 | 78,635 | 160,388 | 152,046 | |||||||||||
| Sales and marketing | 41,624 | 35,329 | 83,331 | 71,153 | |||||||||||
| General and administrative | 31,159 | 30,150 | 60,394 | 58,040 | |||||||||||
| Amortization of intangible assets | 3,523 | 3,667 | 7,112 | 7,413 | |||||||||||
| Restructuring and other related costs | 1,431 | 1,133 | 2,221 | 8,403 | |||||||||||
| Total operating expenses | 157,083 | 148,914 | 313,446 | 297,055 | |||||||||||
| Loss from operations | (14,291 | ) | (39,714 | ) | (23,756 | ) | (76,208 | ) | |||||||
| Other income (expense), net: | |||||||||||||||
| Interest income | 717 | 104 | 1,188 | 157 | |||||||||||
| Interest expense | (7,387 | ) | (7,252 | ) | (14,187 | ) | (12,244 | ) | |||||||
| Other gain (loss), net | 7,170 | (3,520 | ) | 18,126 | 2,500 | ||||||||||
| Total other income (expense), net | 500 | (10,668 | ) | 5,127 | (9,587 | ) | |||||||||
| Loss before income taxes | (13,791 | ) | (50,382 | ) | (18,629 | ) | (85,795 | ) | |||||||
| Provision for income taxes | 6,472 | 5,339 | 10,044 | 11,776 | |||||||||||
| Net loss | $ | (20,263 | ) | $ | (55,721 | ) | $ | (28,673 | ) | $ | (97,571 | ) | |||
| Net loss per common share: | |||||||||||||||
| Basic | $ | (0.09 | ) | $ | (0.26 | ) | $ | (0.13 | ) | $ | (0.46 | ) | |||
| Diluted | $ | (0.09 | ) | $ | (0.26 | ) | $ | (0.13 | ) | $ | (0.46 | ) | |||
| Weighted average shares used in computing net loss per common share: | |||||||||||||||
| Basic | 225,922 | 215,509 | 224,159 | 213,846 | |||||||||||
| Diluted | 225,922 | 215,509 | 224,159 | 213,846 | |||||||||||
| Infinera Corporation | |||||||||||||||||||||||||||||||||||
| GAAP to Non-GAAP Reconciliations | |||||||||||||||||||||||||||||||||||
| (In thousands, except percentages) | |||||||||||||||||||||||||||||||||||
| (Unaudited) | |||||||||||||||||||||||||||||||||||
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||||||||||||||
| July 1, 2023 | April 1, 2023 | June 25, 2022 | July 1, 2023 | June 25, 2022 | |||||||||||||||||||||||||||||||
| Reconciliation of Gross Profit and Gross Margin: | |||||||||||||||||||||||||||||||||||
| GAAP as reported | $ | 142,792 | 38.0 | % | $ | 146,898 | 37.5 | % | $ | 109,200 | 30.5 | % | $ | 289,690 | 37.7 | % | $ | 220,847 | 31.7 | % | |||||||||||||||
| Stock-based compensation expense(1) | 2,881 | 2,276 | 2,594 | 5,157 | 4,483 | ||||||||||||||||||||||||||||||
| Amortization of acquired intangible assets(2) | 3,537 | ||||||||||||||||||||||||||||||||||
