Infinera Corporation Reports Second Quarter 2010 Financial Results

Record Revenue of $111.4 Million, Representing 62% Year-Over-Year Revenue Growth; Non-GAAP Profit of $0.03 per Diluted Share; Non-GAAP Gross Margin at 44 Percent

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Contacts:

  

 

Press:

Jeff Ferry

  

Investors/Analysts:

Bob Blair

jferry@infinera.com

  

bblair@infinera.com

Infinera Corporation

  

Infinera Corporation

408-572-5213

  

408-716-4879

Sunnyvale, CA, July 22, 2010 – Infinera Corporation (Nasdaq: INFN), a leading provider of digital optical communications systems, today released financial results for the second quarter ended June 26, 2010.

  • GAAP revenues for the quarter were $111.4 million compared to $95.8 million in the first quarter of 2010 and $68.9 million in the second quarter of 2009. 
  • GAAP gross margins for the quarter were 42% compared to 39% in the first quarter of 2010 and 29% in the second quarter of 2009.  GAAP net loss for the quarter was $9.6 million, or $(0.10) per share, compared to $20.0 million, or $(0.21) per share, in the first quarter of 2010 and $27.1 million, or $(0.28) per share, in the second quarter of 2009.
  • Non-GAAP gross margins for the quarter were 44% compared to 41% in the first quarter of 2010 and 31% in the second quarter of 2009, excluding restructuring and other related costs and non-cash stock-based compensation.  Non-GAAP net income for the quarter was $3.0 million, or $0.03 per diluted share, compared to net loss of $7.0 million, or $(0.07) per share in the first quarter of 2010 and net loss of $18.2 million, or $(0.19) per share, in the second quarter of 2009.

Management Commentary

“I am delighted with the performance delivered by the Infinera team in the second quarter-- one of the strongest in the company’s history,” said Tom Fallon, president and chief executive officer. “We achieved new records for overall quarterly revenue and bookings, including increased shipments of tributary adapter modules, and we posted higher gross margins, achieved positive cash flow, and earned a profit on a non-GAAP basis. 

“The second quarter represents the company’s fifth consecutive quarter of improving revenue, our third straight quarter of increasing bookings and our fourth quarter of sequentially improving gross margins,” Fallon noted. “Demand remains robust for our PIC-based networks, which we believe provide the most efficient, flexible and cost-effective way to manage Internet bandwidth growth. Furthermore, we have been pleased with the broad-based positive customer reception that we have received to our recently announced plans to accelerate our PIC-based, 100-G transmission system development with planned volume production in 2012.

 “Our financial results and industry data provide clear evidence that Infinera is gaining share in both North America and on a worldwide basis and doing so in a rapidly growing market for long-haul DWDM networks,” said Fallon.

The company also noted the following developments in the second quarter:

  • Positive cash from operations of $11.2 million;
  • TAM Shipments of 2,400 units;
  • Strengthened DWDM market share positions in North America (#1 at 39%) and worldwide (#2 at 15%) based on Dell’Oro market data as of end of Q1 CY2010; and
  • Four greater than 10 percent customers including one of the world’s leading internet content providers as the top customer, two wholesale carriers, Level 3 and Global Crossing, and one of the largest cable companies in North America.

Conference Call Information:

Infinera will host a conference call for analysts and investors to discuss its second quarter results and third quarter outlook today at 5:00 p.m. Eastern Time (2:00 p.m. Pacific Time).  A live webcast of the conference call will also be accessible from the “Investor Relations” section of the company’s website at www.infinera.com.  Following the webcast, an archived version will be available on the website for 90 days. To hear the replay, parties in the United States and Canada should call 1-866-435-5408.  International parties can access the replay at 1-203-369-1028.

Infinera Q210 GAAP Condensed Consolidated Statements of Operations
Infinera Q210 GAAP to Non-GAAP Reconciliation
Infinera Q210 Condensed Consolidated Balance Sheets
Infinera Q210 Condensed Consolidated Statements of Cash Flows
Infinera Q210 Supplemental Financial Information 


About Infinera

Infinera provides Digital Optical Networking systems to telecommunications carriers worldwide.  Infinera’s systems are unique in their use of a breakthrough semiconductor technology: the photonic integrated circuit (PIC). Infinera’s systems and PIC technology are designed to provide customers with simpler and more flexible engineering and operations, faster time-to-service, and the ability to rapidly deliver differentiated services without reengineering their optical infrastructure. For more information, please visit www.infinera.com.

 

Forward-Looking Statements

This press release contains forward-looking statements, including statements about demand remains robust for our PIC-based networks, which we believe provide the most efficient, flexible and cost-effective way to manage Internet bandwidth growth; our belief that customer reception has been broad-based and positive for our recently announced plans to accelerate our PIC-based, 100-G transmission system development with planned volume production in 2012; and our belief that our financial results and industry data provide clear evidence that we are gaining share in both North America and on a worldwide basis and doing so in a rapidly growing market for long-haul DWDM networks. These forward-looking statements involve risks and uncertainties, as well as assumptions that if they do not fully materialize or prove incorrect, could cause our results to differ materially from those expressed or implied by such forward-looking statements. The risks and uncertainties that could cause our results to differ materially from those expressed or implied by such forward-looking statements include our ability to react to trends and challenges in our business and the markets in which we operate; our ability to anticipate market needs and develop new or enhanced products to meet those needs; the adoption rate of our products; our ability to establish and maintain successful relationships with our customers; our ability to reduce customer concentration; our ability to compete in our industry; fluctuations in demand, sales cycles and prices for our products and services; shortages or price fluctuations in our supply chain; our ability to protect our intellectual property rights; general political, economic and market conditions and events; and other risks and uncertainties described more fully in our documents filed with or furnished to the U.S. Securities and Exchange Commission (SEC).  More information about these and other risks that may impact Infinera’s business are set forth in our annual report on Form 10-K, which was filed with the SEC on March 1, 2010, as well as subsequent reports filed with the SEC. All forward-looking statements in this press release are based on information available to us as of the date hereof, and we assume no obligation to update these 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 measures that exclude non-cash stock-based compensation expenses and non-recurring restructuring and other related costs.  We believe these adjustments are appropriate to enhance an overall understanding of our underlying financial performance and also our prospects for the future and are considered by management for the purpose of making operational decisions. In addition, these results are the primary indicators management uses as a basis for our 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 net income or basic and diluted net income per 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 to the most directly comparable GAAP financial measures, please see the section titled, “GAAP to Non-GAAP Reconciliations.”  We anticipate disclosing forward-looking non-GAAP information in our conference call to discuss our second quarter 2010 results, including an estimate of non-GAAP earnings for the third quarter of 2010 that excludes non-cash stock-based compensation expenses. 

 

A copy of this press release can be found on the investor relations page of Infinera’s website at www.infinera.com.

 

Infinera Corporation and the Infinera logo are trademarks or registered trademarks of Infinera Corporation. All other trademarks used or mentioned herein belong to their respective owners.