Ciena posted record revenue in its fiscal Q1 2023 (ended January 28, 2023), as easing supply chain conditions allowed it to get more product out the door. As it hustles through the remainder of the year, executives said the company will continue working to trim its bulging backlog, which stood at $4.2 billion at the end of Ciena’s fiscal 2022 and remained elevated in FQ1.
Speaking on an earnings call, CEO Gary Smith noted a smaller backlog will actually be a good thing. While he did not provide an updated backlog number, he said of its inflated backlog more generally “We do not think this level of backlog is sustainable or frankly desirable. Customers want equipment. They do not want it sitting on our backlog.”
Smith added that even with its best efforts, Ciena expects to “go into '24 with a bigger backlog than we would normally take into any fiscal year” and he isn’t sure when or if things will return to normal or what a “new normal” backlog level might look like.
In terms of what it was able to get out the door in FQ1, Smith said the quarter was its biggest modem shipment quarter ever. It has now shipped more than 60,000 Wavelogic 5e modems. That compares to more than 50,000 in the previous quarter, nearly 25,000 in FQ4 2021 and 35,000 in FQ2 2022.
Ciena did not state during FQ1 2022 earnings how many modems it shipped so a year on year comparison is not available. But the aforementioned sequential figure indicates it shipped approximately 10,000 modems in FQ1 2023.
Scott McFeely, Ciena’s SVP of Global Products and Services, said during the call the company’s WaveLogic 5 products “were a big part” of the order growth Ciena has seen over the past 18 months. And while it just unveiled its WaveLogic 6 product suite, he said “it takes several cycles for next generation of technology to actually overtake the previous generation of technologies in terms of shipments or revenues.”
Metrics
Revenue jumped year on year from $844 million to $1.06 billion, with profit rising from $45.8 million to $76.2 million. Networking platforms accounted for $855.1 million in revenue, with $735.6 million of that coming from Ciena’s Converged Packet Optical business and $119.5 million from its Routing and Switching unit.
Sales increased across geographic segments, with the majority (72.4%) coming from the Americas. But Asia-Pacific revenue jumped 41% to account for 13.1% in FQ1, thanks in part to strength in India.
By vertical, 60% of Ciena’s revenue came from telcos, 24% from webscale, 9% from government and enterprise and 7% from cable.