Infinera Corporation Reports Fourth Quarter and Fiscal Year 2019 Financial Results
Sunnyvale, Calif. – February 25, 2020, 4:03 p.m. ET – Infinera Corporation (NASDAQ: INFN) today released financial results for its fourth quarter and fiscal year ended December 28, 2019.
GAAP revenue for the quarter was $384.6 million compared to $325.3 million in the third quarter of 2019 and $332.1 million in the fourth quarter of 2018.
GAAP gross margin for the quarter was 29.0% compared to 26.7% in the third quarter of 2019 and 25.4% in the fourth quarter of 2018. GAAP operating margin for the quarter was (15.8)% compared to (21.3)% in the third quarter of 2019 and (34.4)% in the fourth quarter of 2018.
GAAP net loss for the quarter was $(66.6) million, or $(0.37) per share, compared to $(84.8) million, or $(0.47) per share, in the third quarter of 2019 and $(133.5) million, or $(0.76) per share, in the fourth quarter of 2018.
Non-GAAP revenue for the quarter was $386.5 million compared to $327.6 million in the third quarter of 2019 and $336.6 million in the fourth quarter of 2018.
Non-GAAP gross margin for the quarter was 35.2% compared to 33.1% in the third quarter of 2019 and 31.8% in the fourth quarter of 2018. Non-GAAP operating margin for the quarter was 2.3% compared to (5.7)% in the third quarter of 2019 and (10.5)% in the fourth quarter of 2018.
Non-GAAP net income for the quarter was $6.4 million, or $0.03 per diluted share, compared to net loss of $(30.5) million, or $(0.17) per share, in the third quarter of 2019, and $(44.3) million, or $(0.25) per share, in the fourth quarter of 2018.
GAAP revenue for the year was $1,298.9 million compared to $943.4 million in 2018. GAAP gross margin for the year was 25.1% compared to 34.0% in 2018. GAAP operating margin for the year was (27.0)% compared to (19.7)% in 2018. GAAP net loss for the year was $(386.6) million, or $(2.16) per share, compared to $(214.3) million, or $(1.36) per share, in 2018.
Non-GAAP revenue for the year was $1,316.6 million compared to $948.0 million in 2018. Non-GAAP gross margin for the year was 33.6% compared to 38.4% in 2018. Non-GAAP operating margin for the year was (6.3)% compared to (5.2)% in 2018. Non-GAAP net loss for the year was $(107.3) million, or $(0.60) per share, compared to net loss of $(59.6) million, or $(0.38) per share, in 2018.
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 fourth quarter, we delivered solid results and achieved significant bookings growth. We also completed the most challenging integration tasks, doubled our synergy savings commitments for the year and returned to non-GAAP operating profitability in the fourth quarter of 2019,” said Tom Fallon, Infinera CEO. “Major accomplishments this past year included strengthening our global customer base with 10 Tier 1 scale customer wins, significant growth in backlog, and continued progress in building our innovation pipeline as evidenced by announced DRX wins, the introduction of XR optics, and growing confidence in our plan to deliver 800G products to the market in 2020.”
Infinera’s outlook for the quarter ending March 28, 2020 is as follows:
- GAAP revenue is expected to be $323 million +/- $10 million. Non-GAAP revenue is expected to be $325 million +/- $10 million.
- GAAP gross margin is expected to be 29% +/- 150 bps. Non-GAAP gross margin is expected to be 32.5% +/- 150 bps.
- GAAP operating expenses are expected to be $153 million +/- $2 million. Non-GAAP operating expenses are expected to be $130 million +/- $2 million.
- GAAP operating margin is expected to be (18)% +/- 200 bps. Non-GAAP operating margin is expected to be (8)% +/- 200 bps.
- GAAP EPS is expected to be $(0.38) +/- $0.03. Non-GAAP EPS is expected to be $(0.18) +/- $0.03.
Infinera’s Financial Outlook above contemplates a projected $15 million revenue impact from the coronavirus.
Fourth Quarter 2019 Investor Slides Available Online
Investor slides reviewing Infinera’s fourth quarter of 2019 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 these slides prior to participating in the conference call webcast.
Conference Call Information
Infinera will host a conference call for analysts and investors to discuss its fourth quarter and fiscal year 2019 results and its outlook for the first quarter of 2020 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.
The full press release, including the GAAP Condensed Consolidated Statements of Operations, GAAP to Non-GAAP Reconciliations, Condensed Consolidated Balance Sheets, Supplemental Financial Information, and GAAP to Non-GAAP Reconciliation of Financial Outlook is also available.
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Lauren Sloane, The Blueshirt Group for Infinera
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Infinera is a global supplier of innovative networking solutions that enable carriers, cloud operators, governments, and enterprises to scale network bandwidth, accelerate service innovation, and automate network operations. The Infinera end-to-end packet-optical portfolio delivers industry-leading economics and performance in long-haul, submarine, data center interconnect, and metro transport applications. To learn more about Infinera, visit www.infinera.com, follow us on Twitter @Infinera and read Infinera’s latest blog posts at www.infinera.com/blog.
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 its continued progress in building its innovation pipeline; Infinera’s ability to deliver 800G products to the market in 2020; and its financial outlook for the first quarter of 2020, including the projected revenue impact of the coronavirus for the first quarter of 2020.
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, Infinera’s future capital needs and its ability to generate the cash flow or otherwise secure the capital necessary to make anticipated capital expenditures; Infinera’s ability to service its debt obligations and pursue its strategic plan; delays in the development and introduction of new products or updates to existing products; market acceptance of Infinera’s end-to-end portfolio; Infinera’s reliance on single and limited source suppliers; the effects of the coronavirus on the supply chain and our ability meet customer demand; Infinera’s ability to successfully integrate its enterprise resource planning system and other management systems; the diversion of management time on issues related to the integration and the implementation of its enterprise resource planning system; 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; Infinera’s ability to respond to rapid technological changes; aggressive business tactics by Infinera’s competitors; the effects of customer consolidation; Infinera’s ability to protect Infinera’s intellectual property; claims by others that Infinera infringes their intellectual property; the effect of global macroeconomic conditions, including tariffs, 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 September 28, 2019 as filed with the SEC on November 12, 2019, 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 acquisition-related deferred revenue and inventory adjustments, other customer related charges, non-cash stock-based compensation expenses, amortization of acquired intangible assets, acquisition and integration costs, restructuring and related costs (credits), litigation charges, amortization of debt discount on Infinera’s convertible senior notes, gain on non-marketable equity investments, impairment charge of non-marketable equity investments, accretion of financing lease obligation and certain purchase accounting adjustments related to Infinera’s acquisitions, 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 first quarter of 2020 that exclude acquisition-related deferred revenue adjustments, non-cash stock-based compensation expenses, acquisition and integration costs related to Infinera’s acquisition of Coriant, restructuring and related expenses, amortization of acquired intangible assets, amortization of debt discount on Infinera’s convertible senior notes 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 income (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.