Ciena Corporation (NYSE:CIEN) Q2 2019 Earnings Conference Call Transcript

Jun 06, 2019 • 08:30 am ET


Ciena Corporation (NYSE:CIEN) Q2 2019 Earnings Conference Call Transcript


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Gary B. Smith

believe that we represent the strongest and most stable partner to customers around the world. This combination in turn is driving consistent and differentiated financial performance, including better than expected performance in Q2, and is enabling us to significantly increase our revenue outlook for the remainder of the year.

Over the past few years, there have been several notable shifts happening in the communications industry, including evolutions in network design and technology, as well as changes to the profiles of the customer base on the competitive landscape. Our Q2 results illustrate the very positive impact on our business of how these shifts are playing out today for Ciena. Specifically, demand for capacity in its various forms remains robust across our customer segments, geographies and market verticals. And we are intensely focused on executing and delivering on this robust demand. Also, the industry structure continues to currently redefined really by a flight to quality, where customers are more intently seeking out vendors who offer leading innovation and engagement models, and who have the financial strength and sustainability to deliver on these over the long-term.

Other industry dynamics also continue to occur, but with perhaps less of an effect overall on our business. In particular, customers in certain geographic markets continue to evaluate rebalancing their network spend in the face of an over dependence on certain Chinese equipment vendors. Although the benefit of this to our business directly is difficult to discern; it has been a dynamic that has been in place for some time. And we believe it to be relatively minimal impact on our business at this stage.

As we have said consistently in addition to these favorable industry dynamics, it is also the strong execution of our strategy to deliver the industry's leading innovation, while diversifying our business, and leveraging our global scale, that is underpinning our success.

With respect to our innovation leadership, our competitive position continues to strengthen, particularly given our focused investments in optical packets and Blue Planet Automation software. And our strong financial results area a direct reflection of the fact that the market firmly believes Ciena has the strongest offering today and the most credible roadmap for the foreseeable future.

Our current portfolio as well as our roadmap, including feature sets and the timing of market introductions are frankly unmatched in the industry today. As we head into the second half of the year, demand for WaveLogic Ai continues to grow. And we will further extend that optical leadership with our WaveLogic 5 program, which remains on track to deliver single wave length 800-gig systems later this year. Just as importantly, this innovation and time to market leadership is enabled by our significant investment capacity, which ensures that we have the depth and flexibility in our development to remain ahead of the competition.

Moving to diversification. Q2 frankly was yet another great illustration of the breadth of our customer base and the benefit it provides to our business. We had a strong showing from