Ciena in its second quarter earnings touted faster-than-expected supply chain improvements, which allowed the vendor to ship more products and reduce its lead times by “more than 50% year-to-date,” said CEO Gary Smith.
Ciena’s backlog, which stood at over $4 billion at the end of the first quarter, decreased by around $600 million during Q2.
“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,” Smith said on Tuesday’s earnings call.
He added Ciena has noticed “some pushouts of orders” from its cloud provider customers as well as “similar behavior” from some major North American ISP clients. However, Smith emphasized that “customers are not canceling orders.”
“They are pushing some existing orders into subsequent quarters to better align with their budgets and scheduling capabilities. And this is purely a matter of timing,” he said, and not due to capex cuts.
Therefore, Ciena expects to end fiscal year 2023 with a backlog that’s “at least double our historical levels on an absolute basis.”
As for which products it shipped in Q2, Smith said Ciena had “another record shipment quarter” for its Wavelogic 5 Extreme modems. To date, it’s now shipped around 75,000 of those modems.
Ciena in Q2 also added 14 new customers for its WaveLogic 5e offering. The company currently has 228 customers using the service, said Smith.
One upcoming product is Ciena’s WaveRouter platform, which is scalable from 6 Tbps to 192 Tbps and is designed for converged metro networks, Ciena CTO Steve Alexander told Fierce in April.
Ciena will launch WaveRouter sometime in Q3. Scott McFeely, SVP of Global Products and Services, said on the call revenue expectations for the product would “start flowing” in 2024.
Financials
Consolidated revenue was $1.13 billion, up 19.3% from $949.2 million in Q2 2022. The networking platforms segment accounted for around $915 million in revenue, with $785 million coming from Ciena’s Converged Packet Optical business and $130.4 million from its Routing and Switching unit.
Most of Ciena’s revenue (70.1%) came from the Americas, with revenue in the region totaling $794.4 million. EMEA revenue for Q2 stood at $173.4 million, while APAC revenue reached approximately $165 million.