Infinera Corporation Reports Third Quarter 2018 Financial Results 

Sunnyvale, Calif., November 6, 2018

Infinera Corporation, provider of Intelligent Transport Networks, today released financial results for its third quarter ended September 29, 2018.

GAAP revenue for the quarter was $200.4 million compared to $208.2 million in the second quarter of 2018 and $192.6 million in the third quarter of 2017.

GAAP gross margin for the quarter was 35.0% compared to 40.5% in the second quarter of 2018 and 35.2% in the third quarter of 2017. GAAP operating margin for the quarter was (12.6)% compared to (10.4)% in the second quarter of 2018 and (17.8)% in the third quarter of 2017.

GAAP net loss for the quarter was $(32.6) million, or $(0.21) per share, compared to a net loss of $(21.9) million, or $(0.14) per share, in the second quarter of 2018, and net loss of $(37.2) million, or $(0.25) per share, in the third quarter of 2017.

Non-GAAP gross margin for the quarter was 38.4% compared to 43.9% in the second quarter of 2018 and 39.1% in the third quarter of 2017. Non-GAAP operating margin for the quarter was (2.6)% compared to (0.7)% in the second quarter of 2018 and (7.8)% in the third quarter of 2017.

Non-GAAP net loss for the quarter was $(6.7) million, or $(0.04) per share, compared to a net loss of $(1.3) million, or $(0.01) per share, in the second quarter of 2018, and net loss of $(17.0) million, or $(0.11) per share, in the third quarter of 2017.

A further explanation of the use of non-GAAP financial information and a reconciliation of the non-GAAP financial measures to the GAAP equivalents can be found at the end of this release.

“In the third quarter we delivered financial results within our guidance ranges and now, with our acquisition of Coriant closed, are executing on our integration plan with intensity,” said Tom Fallon, Infinera CEO. “We remain committed to achieving substantial cost synergies, scaling our business by delivering compelling solutions to our extensive customer base of leading Tier-1s and ICPs, and driving vertical integration of our optical engine across our expanded end-to-end portfolio. While we have experienced a spending pause from certain customers as they evaluate the combined company, I believe this is temporary and that we will grow over the course of 2019. Newly armed with a breadth of significant customers and formidable scale, we are positioned to increasingly leverage our vertical integration advantage to drive profitability and a differentiated business model.”

Financial Outlook
Infinera’s outlook for the quarter ending December 29, 2018 is as follows:

  • Revenue is expected to be $325 million +/- $10 million.
  • GAAP gross margin is expected to be 28% +/- 200 bps. Non-GAAP gross margin is expected to be 30% +/- 200 bps.
  • GAAP operating expenses are expected to be $160 million +/- $5 million. Non-GAAP operating expenses are expected to be $140 million +/- $5 million.
  • GAAP operating margin is expected to be approximately (21)%. Non-GAAP operating margin is expected to be approximately (13)%.
  • GAAP EPS is expected to be $(0.43) +/- $0.02. Non-GAAP EPS is expected to be $(0.28) +/- $0.02.

Infinera’s Financial Outlook does not include the potential impact of any restructuring-related activities, purchase price allocation adjustments related to the Coriant acquisition, strategic investments and other significant transactions that may be completed or announced after November 6, 2018. Actual results may differ materially from Infinera’s Financial Outlook as a result of, among other things, the factors described under “Forward-Looking Statements” below.

Third Quarter 2018 Financial Commentary Available Online
A CFO Commentary reviewing Infinera’s third quarter of 2018 financial results will be furnished to the SEC on Form 8-K and published on Infinera’s Investor Relations website at investors.infinera.com. Analysts and investors are encouraged to review this commentary prior to participating in the conference call webcast.

Conference Call Information
Infinera will host a conference call for analysts and investors to discuss its results for the third quarter of 2018 and its outlook for the fourth quarter of 2018 today at 5:00 p.m. Eastern Time (2:00 p.m. Pacific Time). Interested parties may join the conference call by dialing 1-866-373-6878 (toll free) or 1-412-317-5101 (international). A live webcast of the conference call will also be accessible from the Events section of Infinera’s website at investors.infinera.com. Replay of the audio webcast will be available at investors.infinera.com approximately two hours after the end of the live call.

Contacts:
Media:
Anna Vue
Tel. +1 (916) 595-8157
avue@infinera.com

Investors:
Jeff Hustis
Tel. +1 (408) 213-7150
jhustis@infinera.com

About Infinera
Infinera provides Intelligent Transport Networks, enabling carriers, cloud operators, governments and enterprises to scale network bandwidth, accelerate service innovation and automate optical network operations. Infinera’s end-to-end packet-optical portfolio is designed for long-haul, subsea, data center interconnect and metro applications. To learn more about Infinera visit www.infinera.com, follow us on Twitter @Infinera and read our latest blog posts at www.infinera.com/blog.

Forward-Looking Statements
This press release contains certain forward-looking statements based on current expectations, forecasts and assumptions that involve risks and uncertainties. Such forward-looking statements include, without limitation, Infinera’s expectations regarding the execution of its integration plan; Infinera’s ability to achieve substantial cost synergies, scale its business, and drive vertical integration of its optical engine across its expanded end-to-end portfolio; Infinera’s ability to grow over the course of 2019 and to drive profitability; Infinera’s expectations regarding the potential impact of restructuring-related activities and purchase price allocation adjustments related to the Coriant acquisition; and Infinera’s expectations regarding its financial outlook for the fourth quarter of 2018.

Forward-looking statements can also be identified by forward-looking words such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “should,” “will,” and “would” or similar words. These statements are based on information available to Infinera as of the date hereof and actual results could differ materially from those stated or implied due to risks and uncertainties. The risks and uncertainties that could cause Infinera’s results to differ materially from those expressed or implied by such forward-looking statements include, the combined company’s ability to promptly and effectively integrate the businesses; Infinera’s ability to realize synergies in a timely manner; market acceptance of the combined company’s end-to-end portfolio; the diversion of management time on issues related to the acquisition and integration; delays in the development and introduction of new products or updates to existing products and market acceptance of these products; fluctuations in demand, sales cycles and prices for products and services, including discounts given in response to competitive pricing pressures, as well as the timing of purchases by Infinera’s key customers; the effect that changes in product pricing or mix, and/or increases in component costs could have on Infinera’s gross margin; the effects of customer consolidation; Infinera’s ability to respond to rapid technological changes; aggressive business tactics by Infinera’s competitors; Infinera’s reliance on single and limited source suppliers; Infinera’s ability to protect Infinera’s intellectual property; claims by others that Infinera infringes their intellectual property; the effect of global macroeconomic conditions on Infinera’s business; war, terrorism, public health issues, natural disasters and other circumstances that could disrupt the supply, delivery or demand of Infinera’s products; and other risks and uncertainties detailed in Infinera’s SEC filings from time to time. More information on potential factors that may impact Infinera’s business are set forth in its Quarterly Report on Form 10-Q for the quarter ended on June 30, 2018 as filed with the SEC on August 8, 2018, as well as subsequent reports filed with or furnished to the SEC from time to time. These reports are available on Infinera’s website at www.infinera.com and the SEC’s website at www.sec.gov. Infinera assumes no obligation to, and does not currently intend to, update any such 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 restructuring and related costs (credits), non-cash stock-based compensation expenses, amortization of debt discount on Infinera’s convertible senior notes, impairment charge and the gain on the sale related to non-marketable equity investments, amortization and impairment of acquired intangible assets, acquisition and integration costs related to Infinera’s acquisitions of Coriant and Transmode AB, and certain purchase accounting adjustments related to Infinera’s acquisition of Transmode AB, along with related tax effects. For a description of these non-GAAP financial measures and a reconciliation to the most directly comparable GAAP financial measures, please see the section titled, “GAAP to Non-GAAP Reconciliations.”

Infinera has included forward-looking non-GAAP information in this press release, including an estimate of certain non-GAAP financial measures for the fourth quarter of 2018 that exclude non-cash stock-based compensation expenses, acquisition and integration costs related to Infinera’s acquisition of Coriant, and amortization of acquired intangible assets and related tax effects. Please see the section titled, “GAAP to Non-GAAP Reconciliations of Financial Outlook” below on specific adjustments.

Infinera believes these adjustments are appropriate to enhance an overall understanding of its underlying financial performance and also its 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 its 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 gross margin, operating margin, net loss, or basic and diluted net loss 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.

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

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