Infinera Corporation, provider of Intelligent Transport Networks, today released financial results for its first quarter ended March 30, 2019.
GAAP revenue for the quarter was $292.7 million compared to $332.1 million in the fourth quarter of 2018 and $202.7 million in the first quarter of 2018.
GAAP gross margin for the quarter was 22.7% compared to 25.4% in the fourth quarter of 2018 and 40.5% in the first quarter of 2018. GAAP operating margin for the quarter was (38.2)% compared to (34.4)% in the fourth quarter of 2018 and (12.2)% in the first quarter of 2018.
GAAP net loss for the quarter was $121.6 million, or $(0.69) per share, compared to a net loss of $133.5 million, or $(0.76) per share, in the fourth quarter of 2018, and net loss of $26.3 million, or $(0.17) per share, in the first quarter of 2018.
Non-GAAP revenue for the quarter was $295.6 million compared to $336.6 million in the fourth quarter of 2018 and $202.7 million in the first quarter of 2018.
Non-GAAP gross margin for the quarter was 35.3% compared to 31.8% in the fourth quarter of 2018 and 43.7% in the first quarter of 2018. Non-GAAP operating margin for the quarter was (11.9)% compared to (10.5)% in the fourth quarter of 2018 and (3.4)% in the first quarter of 2018.
Non-GAAP net loss for the quarter was $41.2 million, or $(0.23) per share, compared to a net loss of $44.2 million, or $(0.25) per share, in the fourth quarter of 2018, and net loss of $7.2 million, or $(0.05) per share, in the first quarter of 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 first quarter of 2019, we made significant progress on the integration of our new company and in executing on our committed synergies,” said Tom Fallon, Infinera CEO. “While a significant deployment did not progress as expected, I am encouraged by the strong bookings outlook we see for second quarter of 2019 and our continued trend of building backlog and engaging with a much larger customer base. We are committed to capitalizing on this momentum and expect to return to non-GAAP profitability in the fourth quarter of this year.”
Infinera’s outlook for the quarter ending June 29, 2019 is as follows:
- GAAP revenue is expected to be $298 million +/- $10 million. Non-GAAP revenue is expected to be $300 million +/- $10 million.
- GAAP gross margin is expected to be 25% +/- 200 bps. Non-GAAP gross margin is expected to be 30% +/- 200 bps.
- GAAP operating expenses are expected to be $156 million +/- $3 million. Non-GAAP operating expenses are expected to be $135 million +/- $3 million.
- GAAP operating margin is expected to be approximately (27)%. Non-GAAP operating margin is expected to be approximately (15)%.
- GAAP EPS is expected to be $(0.51) +/- $0.02. Non-GAAP EPS is expected to be $(0.28) +/- $0.02.
Separately, Brad Feller, the Chief Financial Officer (“CFO”) of Infinera, informed Infinera of his intention to resign as CFO effective as of a date still to be determined no later than the end of the third quarter of fiscal 2019. Infinera has agreed with Mr. Feller that he will continue to serve as CFO during this transition period while Infinera conducts a search for his successor.
“On behalf of the board of directors and executive team, I would like to thank Brad for his selfless service and valuable contributions to Infinera over the past five years, including his leadership in helping us with the strategic acquisition and integration of Coriant,” said Tom Fallon. “We all wish him well in his future endeavors.”
First Quarter 2019 Financial Commentary Available Online
A CFO Commentary reviewing Infinera’s first 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 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 first quarter of 2019 and its outlook for the second quarter of 2019 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.
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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 s1-infinera.glgenv.com, follow us on Twitter @Infinera and read our latest blog posts at s1-infinera.glgenv.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 bookings outlook for the second quarter of 2019; trends in the business; returning to non-GAAP profitability in the fourth quarter of 2019; and its financial outlook for the second quarter of 2019.
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 integration; Infinera’s future capital needs and its ability to generate the cash flow or otherwise secure the capital necessary to make anticipated capital expenditures; service its debt obligations and pursue its strategic plan; 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; Infinera’s ability to recruit a successor as CFO before the end of the transition period; 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 Annual Report on Form 10-K for the year ended on December 29, 2018 as filed with the SEC on March 14, 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 s1-infinera.glgenv.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, restructuring and related costs (credits), non-cash stock-based compensation expenses, amortization of debt discount on Infinera’s convertible senior notes, impairment charge of non-marketable equity investments, accretion of financing lease obligation, amortization of acquired intangible assets, acquisition and integration costs, and certain purchase accounting adjustments related to Infinera’s acquisitions of Coriant and 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 second quarter of 2019 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 s1-infinera.glgenv.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.