Networking specialist Ciena has reported second-quarter revenues of $1.13 billion, up from $949.2 million in the year-ago period.
Gary Smith, Ciena’s president and CEO, called the results “outstanding” and noted that the company’s revenues outperformed expectations not only for the second quarter, but for the first half of the year. He attributed this to a fairly dramatic easing of supply chain-related issues, so the company was able to ship more products to more customers. “Supply chain improvements have enabled us to improve our lead times to customers by more than 50% year-to-date,” Smith said. On the downside, he followed up, that means customers are backing off on placing orders well in advance because they don’t feel the pressure of long lead times, which had been running at around 52 weeks.
“We are now clearly in a transitionary period, one that is moving from an environment where orders vastly outstrip supply to one where supply and order flow are beginning to come into some kind of balance,” he said. That doesn’t mean customers are cancelling orders, Smith was quick to add — but Ciena is seeing customers “pushing some existing orders into subsequent quarters to better align with their budgets and scheduling capabilities.” He said that Ciena is seeing this both with cloud provider customers but also in recent weeks, in North American Tier 1 service providers, both telcos and large cable companies.
“It’s more about their ability to absorb and deploy and deal with logistics with all of this stuff coming at a given point,” Smith explained on the company’s quarterly call. “It seems like the supply chain is really resolving fairly quickly, and that’s across not just our industry, but a number of other technology industries that they deal with.” Large service providers, who had the ability to place large orders for future use, are therefore seeing “a high influx of equipment and products” and manage and deploy all that influx, after the constraints and uncertainties of the last couple of years — what Smith called the “whiplash effect of supply and demand.” He clarified that there is still growth rather than contraction, but the supply chain effects are still settling out.
Ciena said that its service provider revenues for the second quarter were up 22% year-over-year and direct cloud-provider revenues were up 20% compared to the same period last year. Non-telco revenue accounted for 42% of its sales, Smith said.
Net income for the second quarter $57.7 million, up substantially from $38.9 million in the same period last year.
