Infinera Corporation (NASDAQ: INFN) today released preliminary
financial results for its first quarter ended March 30, 2024.
Although presented with numerical specificity, all amounts in this
press release are preliminary and based on management’s current
expectations as of the date of this press release. These results
are subject to all aspects of the final quarterly review process
and may change as a result of new information that arises, or new
determinations that are made, in this process.
GAAP revenue for the quarter was $306.9 million compared to
$453.5 million in the fourth quarter of 2023 and $392.1
million in the first quarter of 2023.
GAAP gross margin for the quarter was 36.0% compared to 38.6% in
the fourth quarter of 2023 and 37.5% in the first quarter of 2023.
GAAP operating margin for the quarter was (14.0)% compared to 2.5%
in the fourth quarter of 2023 and (2.4)% in the first quarter of
2023.
GAAP net loss for the quarter was $(61.4) million, or $(0.27)
per diluted share, compared to net income of $12.9 million, or
$0.06 per diluted share, in the fourth quarter of 2023, and net
loss of $(8.4) million, or $(0.04) per diluted share, in the first
quarter of 2023.
Non-GAAP gross margin for the quarter was 36.6% compared to
39.6% in the fourth quarter of 2023 and 38.8% in the first quarter
of 2023. Non-GAAP operating margin for the quarter was (8.4)%
compared to 7.2% in the fourth quarter of 2023 and 3.5% in the
first quarter of 2023.
Non-GAAP net loss for the quarter was $(38.3) million, or
$(0.17) per diluted share, compared to non-GAAP net income of $28.6
million, or $0.12 per diluted share, in the fourth quarter of 2023,
and non-GAAP net income of $5.7 million, or $0.02 per diluted
share, in the first quarter of 2023.
Generated $24.0 million of operating cash flow and free cash
flow of $16.0 million for the quarter, and ended the quarter with
cash, cash equivalents and restricted cash at $192.2 million.
A further explanation of the use of non-GAAP financial
information and a reconciliation of each of the non-GAAP financial
measures to the most directly comparable GAAP financial measure can
be found at the end of this press release.
Infinera CEO, David Heard said, “Q1 2024 was an important
quarter for us marked by significant customer, RFP, and design-win
momentum, but also a quarter where the industry was challenged as
customers held back spending and pushed out projects. Our bookings
were up year-over-year, and met our plan, with the multi-year
revenue opportunity associated with our design wins representing
potentially the largest in the company’s history. During the
quarter, we gained further traction with our new GX line system,
won major awards with our ICE-X pluggables, and launched ICE-D, a
new line of intra-datacenter solutions with the potential to drive
dramatic power reductions, especially for artificial intelligence
(AI) workloads.”
“On the operational front, our preliminary expectation is that
revenue came in 4% below our outlook range, while all other key
financial metrics were within the outlook range. We believe that
the first half of the year represents the bottom of a demand cycle
for the optical industry, and we expect to see improvements in the
back half of the year leading to a very strong demand cycle in
2025. With key industry trends that include the penetration of
fiber optics deeper into networks, proliferation of datacenters and
AI workloads, and a record number of cables being laid underneath
the ocean, we believe optical networking and related technologies
have never been more important.”
Financial Outlook
Infinera's outlook for the quarter ending June 29, 2024, is
as follows:
- Revenue is expected to be $330 million
+/- $20 million.
- GAAP gross margin is expected to be
38.5% +/- 150 bps. Non-GAAP gross margin is expected to be 39.5%
+/- 150 bps.
- GAAP operating expenses are expected to
be $162.5 million +/- $1.5 million. Non-GAAP operating
expenses are expected to be $139.5 million +/- $1.5
million.
- GAAP operating margin is expected to be
(11.5)% +/- 300 bps. Non-GAAP operating margin is expected to be
(3.5)% +/- 300 bps.
- GAAP net loss per share is expected to
be $(0.21) +/- $0.04. Non-GAAP net loss per share is expected to be
$(0.09) +/- $0.04.
First Quarter
2024 Investor Slides to be Made Available
Online After the Filing of Form 10-Q
Investor slides reviewing Infinera's first quarter of 2024
financial results will be furnished to the U.S. Securities and
Exchange Commission (SEC) on a Current Report on Form 8-K and
published on Infinera's Investor Relations website after filing its
Form 10-Q.
Conference Call InformationInfinera will host a
conference call for analysts and investors to discuss its
preliminary results for the first quarter of 2024 and its outlook
for the second quarter of 2024 today at 5:00 p.m. Eastern Time
(2:00 p.m. Pacific Time). Interested parties may register for the
conference call at
https://events.q4inc.com/attendee/155487025 or dial in at
(888) 330-2398, conference ID 60869. 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 VueTel. +1 (916) 595-8157avue@infinera.com
Investors:Amitabh Passi, Head of Investor RelationsTel. +1 (669)
295-1489apassi@infinera.com
About Infinera
Infinera is a global supplier of innovative open optical
networking solutions and advanced optical semiconductors that
enable carriers, cloud operators, governments, and enterprises to
scale network bandwidth, accelerate service innovation, and
automate network operations. Infinera solutions deliver
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 X
and LinkedIn, and subscribe for updates.
Infinera and the Infinera logo are registered trademarks of
Infinera Corporation.
Forward-Looking Statements
This press release contains certain forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. Forward-looking
statements generally relate to future events or Infinera's future
financial or operating performance. In some cases, you can identify
forward-looking statements because they contain words such as
"anticipate," "believe," "could," "estimate," "expect," "intend,"
"may," "should," "will," and "would" or the negative of these words
or similar terms or expressions that concern Infinera's
expectations, strategy, priorities, plans or intentions.
Forward-looking statements in this press release include, but are
not limited to, statements regarding the Company's preliminary
financial results for the first quarter of fiscal 2024; Infinera's
future business plans, strategy and growth opportunities;
statements about design wins; expectations regarding industry
demand and key industry trends; expectations regarding Infinera’s
future performance; and Infinera’s financial outlook for the second
quarter of 2024.
Infinera’s financial results for the first quarter of fiscal
year 2024 are subject to all aspects of the final quarterly review
process and may change as a result of new information that arises,
or new determinations that are made, in this process.
These forward-looking statements are based on estimates and
information available to Infinera as of the date hereof and are not
guarantees of actual or future performance; 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 demand growth
for additional network capacity and the level and timing of
customer capital spending and excess inventory held by customers
beyond normalized levels; delays in the development, introduction
or acceptance of new products or in releasing enhancements to
existing products; aggressive business tactics by Infinera’s
competitors and new entrants and Infinera's ability to compete in a
highly competitive market; supply chain and logistics issues,
including delays, shortages, components that have been discontinued
and increased costs, and Infinera's dependency on sole source,
limited source or high-cost suppliers; dependence on a small number
of key customers; product performance problems; the complexity of
Infinera's manufacturing process; Infinera's ability to identify,
attract, upskill and retain qualified personnel; challenges with
our contract manufacturers and other third-party partners; the
effects of customer and supplier consolidation; dependence on
third-party service partners; Infinera’s ability to respond to
rapid technological changes; failure to accurately forecast
Infinera's manufacturing requirements or customer demand; the
effects of public health emergencies; Infinera’s future capital
needs and its ability to generate the cash flow or otherwise secure
the capital necessary to meet such capital needs; the effect of
global and regional economic conditions on Infinera’s business,
including effects on purchasing decisions by customers; the adverse
impact inflation and higher interest rates may have on Infinera by
increasing costs beyond what it can recover through price
increases; restrictions to our operations resulting from loan or
other credit agreements; the impacts of any restructuring plans or
other strategic efforts on our business; Infinera’s international
sales and operations; the impacts of foreign currency fluctuations;
the effective tax rate of Infinera, which may increase or
fluctuate; potential dilution from the issuance of additional
shares of common stock in connection with the conversion of
Infinera's convertible senior notes; Infinera’s ability to protect
its intellectual property; claims by others that Infinera infringes
on their intellectual property rights; security incidents, such as
data breaches or cyber-attacks; Infinera's ability to comply with
various rules and regulations, including with respect to export
control and trade compliance, environmental, social, governance,
privacy and data protection matters; events that are outside of
Infinera's control, such as natural disasters, acts of war or
terrorism, or other catastrophic events that could harm Infinera's
operations; Infinera’s ability to remediate its recently disclosed
material weaknesses in internal control over financial reporting in
a timely and effective manner, and other risks and uncertainties
detailed in Infinera’s SEC filings from time to time; and
statements of assumptions underlying any of the foregoing. More
information on potential factors that may impact Infinera’s
business are set forth in Infinera’s period reports filed with the
SEC, including its Annual Report on Form 10-K for the year ended
December 31, 2022, filed with the SEC on February 27, 2023, and
amended February 29, 2024, and its Quarterly Report on Form 10-Q
for the quarter ended September 30, 2023, filed with the SEC on
February 29, 2024, as well as subsequent reports filed with or
furnished to the SEC from time to time. These SEC filings 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 financial measures that exclude in certain cases
stock-based compensation expense, amortization of acquired
intangible assets, restructuring and other related costs, warehouse
fire recovery, foreign exchange (gains) losses, net, and income tax
effects. 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, the non-GAAP financial measures presented
in this press release 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 expenses, operating margin, net income (loss) and net
income (loss) per common 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 and a
reconciliation to the most directly comparable GAAP financial
measures, please see the table titled “GAAP to Non-GAAP
Reconciliations” and related footnotes.
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 2024 that excludes
stock-based compensation expense, amortization of acquired
intangible assets and restructuring and other related costs. Please
see the section titled “GAAP to Non-GAAP Reconciliation of
Financial Outlook” below for specific adjustments.
Infinera CorporationCondensed
Consolidated Statements of Operations(In
thousands, except per share
data)(Unaudited)
|
Three months ended |
|
March 30, 2024 |
|
April 1, 2023 |
|
(Preliminary) |
|
Revenue: |
|
|
|
Product |
$ |
235,324 |
|
|
$ |
314,820 |
|
Services |
|
71,598 |
|
|
|
77,255 |
|
Total revenue |
|
306,922 |
|
|
|
392,075 |
|
Cost of revenue: |
|
|
|
Cost of product |
|
156,265 |
|
|
|
198,674 |
|
Cost of services |
|
40,243 |
|
|
|
42,947 |
|
Amortization of intangible assets |
|
— |
|
|
|
3,556 |
|
Restructuring and other related costs |
|
(27 |
) |
|
|
— |
|
Total cost of revenue |
|
196,481 |
|
|
|
245,177 |
|
Gross profit |
|
110,441 |
|
|
|
146,898 |
|
Operating expenses: |
|
|
|
Research and development |
|
77,262 |
|
|
|
81,042 |
|
Sales and marketing |
|
40,745 |
|
|
|
41,707 |
|
General and administrative |
|
32,847 |
|
|
|
29,235 |
|
Amortization of intangible assets |
|
2,256 |
|
|
|
3,589 |
|
Restructuring and other related costs |
|
314 |
|
|
|
790 |
|
Total operating expenses |
|
153,424 |
|
|
|
156,363 |
|
Loss from operations |
|
(42,983 |
) |
|
|
(9,465 |
) |
Other income (expense), net: |
|
|
|
Interest income |
|
1,122 |
|
|
|
471 |
|
Interest expense |
|
(8,629 |
) |
|
|
(6,800 |
) |
Other gain (loss), net |
|
(6,212 |
) |
|
|
10,956 |
|
Total other income (expense), net |
|
(13,719 |
) |
|
|
4,627 |
|
Loss before income taxes |
|
(56,702 |
) |
|
|
(4,838 |
) |
Provision for income taxes |
|
4,693 |
|
|
|
3,572 |
|
Net loss |
$ |
(61,395 |
) |
|
$ |
(8,410 |
) |
Net loss per common share: |
|
|
|
Basic |
$ |
(0.27 |
) |
|
$ |
(0.04 |
) |
Diluted |
$ |
(0.27 |
) |
|
$ |
(0.04 |
) |
Weighted average shares used
in computing net loss per common share: |
|
|
|
Basic |
|
231,533 |
|
|
|
222,393 |
|
Diluted |
|
231,533 |
|
|
|
222,393 |
|
|
|
|
|
|
|
|
|
Infinera CorporationGAAP to Non-GAAP
Reconciliations(In thousands, except
percentages)(Unaudited)
|
|
Three months ended |
|
|
March 30, 2024 |
|
|
|
December 30, 2023 |
|
|
|
April 1, 2023 |
|
|
|
|
(Preliminary) |
|
|
|
|
|
|
|
|
Reconciliation of
Gross Profit and Gross Margin: |
|
|
|
|
|
|
|
|
|
|
|
|
GAAP as reported |
|
$ |
110,441 |
|
|
36.0 |
% |
|
$ |
174,902 |
|
38.6 |
% |
|
$ |
146,898 |
|
|
37.5 |
% |
Stock-based compensation
expense(1) |
|
|
1,893 |
|
|
|
|
|
2,328 |
|
|
|
|
2,276 |
|
|
|
Amortization of acquired
intangible assets(2) |
|
|
— |
|
|
|
|
|
— |
|
|
|
|
3,556 |
|
|
|
Restructuring and other
related costs(3) |
|
|
(27 |
) |
|
|
|
|
2,218 |
|
|
|
|
— |
|
|
|
Warehouse fire
recovery(4) |
|
|
— |
|
|
|
|
|
— |
|
|
|
|
(510 |
) |
|
|
Non-GAAP as adjusted |
|
$ |
112,307 |
|
|
36.6 |
% |
|
$ |
179,448 |
|
39.6 |
% |
|
$ |
152,220 |
|
|
38.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of
Operating Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
GAAP as reported |
|
$ |
153,424 |
|
|
|
|
$ |
163,641 |
|
|
|
$ |
156,363 |
|
|
|
Stock-based compensation
expense(1) |
|
|
12,638 |
|
|
|
|
|
10,429 |
|
|
|
|
13,375 |
|
|
|
Amortization of acquired
intangible assets(2) |
|
|
2,256 |
|
|
|
|
|
2,256 |
|
|
|
|
3,589 |
|
|
|
Restructuring and other
related costs(3) |
|
|
314 |
|
|
|
|
|
4,096 |
|
|
|
|
790 |
|
|
|
Non-GAAP as adjusted |
|
$ |
138,216 |
|
|
|
|
$ |
146,860 |
|
|
|
$ |
138,609 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of
Income (Loss) from Operations and Operating Margin: |
|
|
|
|
|
|
|
|
|
|
|
|
GAAP as reported |
|
$ |
(42,983 |
) |
|
(14.0)% |
|
$ |
11,261 |
|
2.5 |
% |
|
$ |
(9,465 |
) |
|
(2.4)% |
Stock-based compensation
expense(1) |
|
|
14,531 |
|
|
|
|
|
12,757 |
|
|
|
|
15,651 |
|
|
|
Amortization of acquired
intangible assets(2) |
|
|
2,256 |
|
|
|
|
|
2,256 |
|
|
|
|
7,145 |
|
|
|
Restructuring and other
related costs(3) |
|
|
287 |
|
|
|
|
|
6,314 |
|
|
|
|
790 |
|
|
|
Warehouse fire
recovery(4) |
|
|
— |
|
|
|
|
|
— |
|
|
|
|
(510 |
) |
|
|
Non-GAAP as adjusted |
|
$ |
(25,909 |
) |
|
(8.4)% |
|
$ |
32,588 |
|
7.2 |
% |
|
$ |
13,611 |
|
|
3.5 |
% |
|
|
Three months ended |
|
|
March 30, 2024 |
|
December 30, 2023 |
|
April 1, 2023 |
|
|
(Preliminary) |
|
|
Reconciliation of Net
Income (Loss): |
|
|
|
|
|
|
GAAP as reported |
|
$ |
(61,395 |
) |
|
$ |
12,873 |
|
|
$ |
(8,410 |
) |
Stock-based compensation
expense(1) |
|
|
14,531 |
|
|
|
12,757 |
|
|
|
15,651 |
|
Amortization of acquired
intangible assets(2) |
|
|
2,256 |
|
|
|
2,256 |
|
|
|
7,145 |
|
Restructuring and other
related costs(3) |
|
|
287 |
|
|
|
6,314 |
|
|
|
790 |
|
Warehouse fire
recovery(4) |
|
|
— |
|
|
|
— |
|
|
|
(510 |
) |
Foreign exchange (gains)
losses, net(5) |
|
|
6,448 |
|
|
|
(4,852 |
) |
|
|
(9,383 |
) |
Income tax effects(6) |
|
|
(383 |
) |
|
|
(780 |
) |
|
|
399 |
|
Non-GAAP as adjusted |
|
$ |
(38,256 |
) |
|
$ |
28,568 |
|
|
$ |
5,682 |
|
|
|
|
|
|
|
|
Reconciliation of
Adjusted EBITDA
(7): |
|
|
|
|
|
|
Non-GAAP net income
(loss) |
|
$ |
(38,256 |
) |
|
$ |
28,568 |
|
|
$ |
5,682 |
|
Add: Interest expense,
net |
|
|
7,507 |
|
|
|
7,832 |
|
|
|
6,329 |
|
Less: Other gain (loss),
net |
|
|
236 |
|
|
|
(113 |
) |
|
|
1,573 |
|
Add: Income tax effects |
|
|
5,076 |
|
|
|
(3,925 |
) |
|
|
3,173 |
|
Add: Depreciation |
|
|
13,189 |
|
|
|
17,125 |
|
|
|
12,457 |
|
Non-GAAP as
adjusted |
|
$ |
(12,720 |
) |
|
$ |
49,713 |
|
|
$ |
26,068 |
|
|
|
|
|
|
|
|
Net Income (Loss) per
Common Share: GAAP |
|
|
|
|
|
|
Basic |
|
$ |
(0.27 |
) |
|
$ |
0.06 |
|
|
$ |
(0.04 |
) |
Diluted(8) |
|
$ |
(0.27 |
) |
|
$ |
0.06 |
|
|
$ |
(0.04 |
) |
|
|
|
|
|
|
|
Weighted Average Shares
Used in Computing GAAP Net Income (Loss) per Common
Share: |
|
|
|
|
|
|
Basic |
|
|
231,533 |
|
|
|
230,509 |
|
|
|
222,393 |
|
Diluted(8) |
|
|
231,533 |
|
|
|
233,090 |
|
|
|
222,393 |
|
|
|
|
|
|
|
|
Net Income (Loss) per
Common Share: Non-GAAP |
|
|
|
|
|
|
Basic |
|
$ |
(0.17 |
) |
|
$ |
0.12 |
|
|
$ |
0.03 |
|
Diluted(9) |
|
$ |
(0.17 |
) |
|
$ |
0.12 |
|
|
$ |
0.02 |
|
|
|
|
|
|
|
. |
Weighted Average
Shares Used in Computing Non-GAAP Net Income (Loss) per Common
Share: |
|
|
|
|
|
|
Basic |
|
|
231,533 |
|
|
|
230,509 |
|
|
|
222,393 |
|
Diluted(9) |
|
|
231,533 |
|
|
|
259,210 |
|
|
|
229,404 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
Stock-based compensation expense is calculated in accordance with
the fair value recognition provisions of Financial Accounting
Standards Board Accounting Standards Codification Topic 718,
Compensation – Stock Compensation effective January 1, 2006.
The following table summarizes the effects of stock-based
compensation related to employees and non-employees (in
thousands): |
|
|
|
|
Three months ended |
|
|
March 30, 2024 |
|
December 30, 2023 |
|
April 1, 2023 |
|
|
(Preliminary) |
|
|
Cost of revenue |
|
$ |
1,893 |
|
$ |
2,328 |
|
$ |
2,276 |
Total cost of revenue |
|
|
1,893 |
|
|
2,328 |
|
|
2,276 |
Research and development |
|
|
5,112 |
|
|
4,917 |
|
|
5,623 |
Sales and marketing |
|
|
3,287 |
|
|
2,328 |
|
|
3,594 |
General and administration |
|
|
4,239 |
|
|
3,184 |
|
|
4,158 |
Total operating expenses |
|
|
12,638 |
|
|
10,429 |
|
|
13,375 |
Total stock-based compensation
expense |
|
$ |
14,531 |
|
$ |
12,757 |
|
$ |
15,651 |
|
|
|
|
|
|
|
|
|
|
(2) |
Amortization of acquired intangible assets consists of developed
technology and customer relationships acquired in connection with
the acquisitions of Coriant and Transmode AB. GAAP accounting
requires that acquired intangible assets are recorded at fair value
and amortized over their useful lives. As this amortization is
non-cash, Infinera has excluded it from its non-GAAP gross profit,
operating expenses and net income measures. Management believes the
amortization of acquired intangible assets is not indicative of
ongoing operating performance and its exclusion provides a better
indication of Infinera's underlying business performance. |
|
|
(3) |
Restructuring and other related
costs are primarily associated with the reduction of headcount and
the reduction of operating costs. In addition, this includes
accelerated amortization on operating lease right-of-use assets due
to the cessation of use of certain facilities. Management has
excluded the impact of these charges in arriving at Infinera's
non-GAAP results as they are non-recurring in nature and its
exclusion provides a better indication of Infinera's underlying
business performance. |
|
|
(4) |
Warehouse fire losses were
incurred due to inventory destroyed in a warehouse fire in the
third quarter of fiscal year 2022. Recoveries are recorded when
they are probable of receipt. Management has excluded the impact of
this loss and subsequent recoveries in arriving at Infinera's
non-GAAP results as it is non-recurring in nature and its exclusion
provides a better indication of Infinera's underlying business
performance. |
|
|
(5) |
Foreign exchange (gains) losses,
net, have been excluded from Infinera's non-GAAP results because
management believes that this expense is not indicative of ongoing
operating performance and its exclusion provides a better
indication of Infinera's underlying business performance. |
|
|
(6) |
The difference between the GAAP
and non-GAAP tax provision is due to the net tax effects of above
non-GAAP adjustments. Management believes the exclusion of these
tax effects provides a better indication of Infinera's underlying
business performance. |
|
|
(7) |
Adjusted EBITDA is a non-GAAP
supplemental measure of operating performance that does not
represent and should not be considered an alternative to operating
loss or cash flow from operations, as determined by GAAP.
Infinera's adjusted EBITDA is calculated by excluding the above
non-GAAP adjustments, interest expense, net, other gain (loss),
net, income tax effects and depreciation expenses. Management
believes that adjusted EBITDA is an important financial measure for
use in evaluating Infinera's financial performance, as it measures
the ability of our business operations to generate cash. |
|
|
(8) |
The GAAP diluted shares include
potentially dilutive securities from Infinera's stock-based benefit
plans and convertible senior notes. These potentially dilutive
securities are added for the computation of diluted net income per
share on a GAAP basis in periods when Infinera has net income on a
GAAP basis, as its inclusion provides a better indication of
Infinera's underlying business performance. |
|
|
|
For purposes of calculating GAAP
diluted earnings per share, we used the following net income (loss)
and weighted average common shares outstanding (in thousands,
except per share data): |
|
|
|
|
Three months ended |
|
|
March 30, 2024 |
|
December 30, 2023 |
|
April 1, 2023 |
|
|
(Preliminary) |
|
|
GAAP net income (loss) for basic earnings per share |
|
$ |
(61,395 |
) |
|
$ |
12,873 |
|
$ |
(8,410 |
) |
Interest expense related to the convertible senior notes, net of
tax |
|
|
— |
|
|
|
104 |
|
|
— |
|
GAAP net income (loss) for
diluted earnings per share |
|
$ |
(61,395 |
) |
|
$ |
12,977 |
|
$ |
(8,410 |
) |
|
|
|
|
|
|
|
Weighted average basic common
shares outstanding |
|
|
231,533 |
|
|
|
230,509 |
|
|
222,393 |
|
Dilutive effect of restricted and performance share units |
|
|
— |
|
|
|
682 |
|
|
— |
|
Dilutive effect of 2024 convertible senior notes(a) |
|
|
— |
|
|
|
1,899 |
|
|
— |
|
Dilutive effect of 2027 convertible senior notes(b) |
|
|
— |
|
|
|
— |
|
|
— |
|
Dilutive effect of 2028 convertible senior notes(c) |
|
|
— |
|
|
|
— |
|
|
— |
|
Weighted average dilutive
common shares outstanding |
|
|
231,533 |
|
|
|
233,090 |
|
|
222,393 |
|
|
|
|
|
|
|
|
GAAP net income (loss) per
common share: |
|
|
|
|
|
|
Basic |
|
$ |
(0.27 |
) |
|
$ |
0.06 |
|
$ |
(0.04 |
) |
Diluted |
|
$ |
(0.27 |
) |
|
$ |
0.06 |
|
$ |
(0.04 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) |
For the three- months ended March 30, 2024 and April 1,
2023, there were 1.9 million and 10.4 million shares, respectively,
excluded from the calculation of diluted net income (loss) per
share, due to their anti-dilutive effect. |
|
|
|
|
(b) |
For each of the three- months
ended March 30, 2024, December 30, 2023 and April 1,
2023, there were 26.1 million shares excluded from the calculation
of diluted net income (loss) per share, due to their anti-dilutive
effect. |
|
|
|
|
(c) |
For the three- months ended
March 30, 2024, and December 30, 2023, there were no
shares excluded from the calculation of diluted net income (loss)
per share. For the three- months ended April 1, 2023, there
were 3.6 million shares excluded from the calculation of diluted
net income (loss) per share, due to their anti-dilutive
effect. |
(9) |
The non-GAAP diluted shares include the potentially dilutive
securities from Infinera's stock-based benefit plans and
convertible senior notes. These potentially dilutive securities are
added for the computation of diluted net income per share on a
non-GAAP basis in periods when Infinera has net income on a
non-GAAP basis as its inclusion provides a better indication of
Infinera's underlying business performance. Refer to the diluted
earnings per share reconciliation presented below. |
|
|
|
For purposes of calculating
non-GAAP diluted earnings per share, we used the following net
income and weighted average common shares outstanding (in
thousands, except per share data): |
|
|
|
|
Three months ended |
|
|
March 30, 2024 |
|
December 30, 2023 |
|
April 1, 2023 |
|
|
(Preliminary) |
|
|
Non-GAAP net income (loss) for basic earnings per share |
|
$ |
(38,256 |
) |
|
$ |
28,568 |
|
$ |
5,682 |
Interest expense related to the convertible senior notes, net of
tax |
|
|
— |
|
|
|
1,652 |
|
|
— |
Non-GAAP net income (loss) for
diluted earnings per share |
|
$ |
(38,256 |
) |
|
$ |
30,220 |
|
$ |
5,682 |
|
|
|
|
|
|
|
Weighted average basic common
shares outstanding |
|
|
231,533 |
|
|
|
230,509 |
|
|
222,393 |
Dilutive effect of restricted and performance share units |
|
|
— |
|
|
|
682 |
|
|
3,428 |
Dilutive effect of 2024 convertible senior notes(a) |
|
|
— |
|
|
|
1,899 |
|
|
— |
Dilutive effect of 2027 convertible senior notes(b) |
|
|
— |
|
|
|
26,120 |
|
|
— |
Dilutive effect of 2028 convertible senior notes(c) |
|
|
— |
|
|
|
— |
|
|
3,583 |
Weighted average dilutive
common shares outstanding |
|
|
231,533 |
|
|
|
259,210 |
|
|
229,404 |
|
|
|
|
|
|
|
Non-GAAP net income (loss) per
common share: |
|
|
|
|
|
|
Basic |
|
$ |
(0.17 |
) |
|
$ |
0.12 |
|
$ |
0.03 |
Diluted |
|
$ |
(0.17 |
) |
|
$ |
0.12 |
|
$ |
0.02 |
|
(a) |
For the three- months ended March 30, 2024, and April 1,
2023, there were 1.9 million and 10.4 million shares, respectively,
excluded from the calculation of diluted net income (loss) per
share, due to their anti-dilutive effect. |
|
|
|
|
(b) |
For each of the three- months
ended March 30, 2024, and April 1, 2023, there were 26.1
million shares excluded from the calculation of diluted net income
(loss) per share, due to their anti-dilutive effect. |
|
|
|
|
(c) |
For the three- months ended
March 30, 2024, and December 30, 2023, there were no
shares excluded from the calculation of diluted net income (loss)
per share. |
|
|
|
Infinera CorporationGAAP to Non-GAAP
Reconciliations(In
thousands)(Unaudited)
Free Cash Flow
We define free cash flow as net cash provided by (used in)
operating activities in the period minus the purchase of property
and equipment made in the period.
Free cash flow is considered a non-GAAP financial measure under
the SEC’s rules. Management believes that free cash flow is an
important financial measure for use in evaluating Infinera's
financial performance, as it measures our ability to generate
additional cash from our business operations. Free cash flow should
be considered in addition to, rather than as a substitute for, net
loss as a measure of our performance or net cash provided by (used
in) operating activities as a measure of our liquidity.
Additionally, our definition of free cash flow is limited and does
not represent residual cash flows available for discretionary
expenditures due to the fact that the measure does not deduct the
payments required for debt service and other obligations.
Therefore, we believe it is important to view free cash flow as
supplemental to our entire statement of cash flows.
|
|
Three months ended |
|
|
March 30, 2024 |
|
December 30, 2023 |
|
April 1, 2023 |
|
|
(Preliminary) |
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) operating activities |
|
$ |
24,026 |
|
|
$ |
79,652 |
|
|
$ |
(1,769 |
) |
Purchase of property and
equipment |
|
|
(8,076 |
) |
|
|
(21,414 |
) |
|
|
(16,809 |
) |
Free cash flow |
|
$ |
15,950 |
|
|
$ |
58,238 |
|
|
$ |
(18,578 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Infinera CorporationCondensed
Consolidated Balance Sheets(In thousands, except
par values)(Unaudited)
|
March 30,2024 |
|
December 30,2023 |
|
(Preliminary) |
|
ASSETS |
|
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
$ |
190,841 |
|
|
$ |
172,505 |
|
Short-term restricted cash |
|
492 |
|
|
|
517 |
|
Accounts receivable, net |
|
265,072 |
|
|
|
381,981 |
|
Inventory |
|
420,667 |
|
|
|
431,163 |
|
Prepaid expenses and other current assets |
|
137,321 |
|
|
|
129,218 |
|
Total current assets |
|
1,014,393 |
|
|
|
1,115,384 |
|
Property, plant and equipment,
net |
|
206,765 |
|
|
|
206,997 |
|
Operating lease right-of-use
assets |
|
37,574 |
|
|
|
39,973 |
|
Intangible assets |
|
22,563 |
|
|
|
24,819 |
|
Goodwill |
|
229,655 |
|
|
|
240,566 |
|
Long-term restricted cash |
|
830 |
|
|
|
837 |
|
Other long-term assets |
|
53,383 |
|
|
|
50,662 |
|
Total assets |
$ |
1,565,163 |
|
|
$ |
1,679,238 |
|
LIABILITIES AND
STOCKHOLDERS’ EQUITY |
|
|
|
Current liabilities: |
|
|
|
Accounts payable |
$ |
239,241 |
|
|
$ |
299,005 |
|
Accrued expenses and other current liabilities |
|
103,139 |
|
|
|
110,758 |
|
Accrued compensation and related benefits |
|
88,915 |
|
|
|
85,203 |
|
Short-term debt, net |
|
25,381 |
|
|
|
25,512 |
|
Accrued warranty |
|
16,074 |
|
|
|
17,266 |
|
Deferred revenue |
|
141,553 |
|
|
|
136,248 |
|
Total current liabilities |
|
614,303 |
|
|
|
673,992 |
|
Long-term debt, net |
|
659,583 |
|
|
|
658,756 |
|
Long-term accrued warranty |
|
15,418 |
|
|
|
15,934 |
|
Long-term deferred revenue |
|
24,646 |
|
|
|
21,332 |
|
Long-term deferred tax
liability |
|
1,683 |
|
|
|
1,805 |
|
Long-term operating lease
liabilities |
|
44,617 |
|
|
|
47,464 |
|
Other long-term liabilities |
|
43,371 |
|
|
|
43,364 |
|
Commitments and
contingencies |
|
|
|
Stockholders’ equity: |
|
|
|
Preferred stock, $0.001 par valueAuthorized shares – 25,000 and no
shares issued and outstanding |
|
— |
|
|
|
— |
|
Common stock, $0.001 par valueAuthorized shares - 500,000 as of
March 30, 2024 and December 30, 2023Issued and
outstanding shares - 231,962 as of March 30, 2024 and 230,994
as of December 30, 2023 |
|
232 |
|
|
|
231 |
|
Additional paid-in capital |
|
1,990,537 |
|
|
|
1,976,014 |
|
Accumulated other comprehensive loss |
|
(43,026 |
) |
|
|
(34,848 |
) |
Accumulated deficit |
|
(1,786,201 |
) |
|
|
(1,724,806 |
) |
Total stockholders' equity |
|
161,542 |
|
|
|
216,591 |
|
Total liabilities and stockholders’ equity |
$ |
1,565,163 |
|
|
$ |
1,679,238 |
|
Infinera CorporationCondensed
Consolidated Statements of Cash Flows(In
thousands) (Unaudited)
|
Three months ended |
|
March 30, 2024 |
|
April 1, 2023 |
|
(Preliminary) |
|
Cash Flows from Operating
Activities: |
|
|
|
Net loss |
$ |
(61,395 |
) |
|
$ |
(8,410 |
) |
Adjustments to reconcile net loss
to net cash provided by (used in) operating activities: |
|
|
|
Depreciation and amortization |
|
15,445 |
|
|
|
19,602 |
|
Non-cash restructuring charges and other related costs |
|
29 |
|
|
|
136 |
|
Amortization of debt issuance costs and discount |
|
908 |
|
|
|
847 |
|
Operating lease expense |
|
2,215 |
|
|
|
2,148 |
|
Stock-based compensation expense |
|
14,531 |
|
|
|
15,651 |
|
Other, net |
|
(465 |
) |
|
|
(1,037 |
) |
Changes in assets and liabilities: |
|
|
|
Accounts receivable |
|
115,440 |
|
|
|
86,239 |
|
Inventory |
|
10,164 |
|
|
|
(38,555 |
) |
Prepaid expenses and other current assets |
|
(14,821 |
) |
|
|
1,004 |
|
Accounts payable |
|
(64,643 |
) |
|
|
(27,969 |
) |
Accrued expenses and other current liabilities |
|
(2,642 |
) |
|
|
(44,749 |
) |
Deferred revenue |
|
9,260 |
|
|
|
(6,676 |
) |
Net cash provided by (used in) operating activities |
|
24,026 |
|
|
|
(1,769 |
) |
Cash Flows from Investing
Activities: |
|
|
|
Purchase of property and equipment |
|
(8,076 |
) |
|
|
(16,809 |
) |
Net cash used in investing activities |
|
(8,076 |
) |
|
|
(16,809 |
) |
Cash Flows from Financing
Activities: |
|
|
|
Payment of debt issuance cost |
|
— |
|
|
|
(154 |
) |
Repayment of mortgage payable |
|
(131 |
) |
|
|
(127 |
) |
Principal payments on finance lease obligations |
|
(99 |
) |
|
|
(227 |
) |
Payment of term license obligation |
|
(2,590 |
) |
|
|
(2,323 |
) |
Proceeds from issuance of common stock |
|
— |
|
|
|
8,738 |
|
Tax withholding paid on behalf of employees for net share
settlement |
|
(202 |
) |
|
|
(1,100 |
) |
Net cash (used in) provided by financing activities |
|
(3,022 |
) |
|
|
4,807 |
|
Effect of exchange rate changes
on cash, cash equivalents and restricted cash |
|
5,376 |
|
|
|
(5,698 |
) |
Net change in cash, cash
equivalents and restricted cash |
|
18,304 |
|
|
|
(19,469 |
) |
Cash, cash equivalents and
restricted cash at beginning of period |
|
173,859 |
|
|
|
189,203 |
|
Cash, cash equivalents and
restricted cash at end of period(1) |
$ |
192,163 |
|
|
$ |
169,734 |
|
|
|
|
|
|
|
|
|
Infinera CorporationCondensed
Consolidated Statements of Cash Flows(In
thousands) (Unaudited)
|
Three months ended |
|
March 30, 2024 |
|
April 1, 2023 |
Supplemental disclosures
of cash flow information: |
(Preliminary) |
|
|
|
|
|
Cash paid for income taxes, net |
$ |
9,827 |
|
$ |
1,963 |
Cash paid for interest |
$ |
12,869 |
|
$ |
10,931 |
Supplemental schedule of
non-cash investing and financing activities: |
|
|
|
Property and equipment included in accounts payable and accrued
liabilities |
$ |
5,531 |
|
$ |
10,229 |
Transfer of inventory to fixed assets |
$ |
167 |
|
$ |
1,099 |
Unpaid term licenses (included in accounts payable, accrued
liabilities and other long-term liabilities) |
$ |
21,078 |
|
$ |
7,134 |
|
|
|
|
|
|
(1) |
Reconciliation
of cash, cash equivalents and restricted cash to the condensed
consolidated balance sheets (in thousands): |
|
|
|
March 30, 2024 |
|
April 1, 2023 |
|
(Preliminary) |
|
|
|
|
|
Cash and cash equivalents |
$ |
190,841 |
|
$ |
163,765 |
Short-term restricted cash |
|
492 |
|
|
3,873 |
Long-term restricted cash |
|
830 |
|
|
2,096 |
Total cash, cash equivalents and restricted cash |
$ |
192,163 |
|
$ |
169,734 |
|
|
|
|
|
|
Infinera CorporationSupplemental
Financial Information(Unaudited)
|
|
Q2'22 |
|
Q3'22 |
|
Q4'22 |
|
Q1'23 |
|
Q2'23 |
|
Q3'23 |
|
Q4'23 |
|
Q1'24 |
|
|
|
|
|
|
|
|
|
(Preliminary) |
GAAP Revenue $(Mil) |
|
$ |
358.0 |
|
|
$ |
390.4 |
|
|
$ |
485.9 |
|
|
$ |
392.1 |
|
|
$ |
376.2 |
|
|
$ |
392.4 |
|
|
$ |
453.5 |
|
|
$ |
306.9 |
|
GAAP Gross Margin % |
|
|
30.5 |
% |
|
|
34.4 |
% |
|
|
37.1 |
% |
|
|
37.5 |
% |
|
|
38.0 |
% |
|
|
40.3 |
% |
|
|
38.6 |
% |
|
|
36.0 |
% |
Non-GAAP Gross Margin
%(1) |
|
|
36.1 |
% |
|
|
37.8 |
% |
|
|
38.7 |
% |
|
|
38.8 |
% |
|
|
39.3 |
% |
|
|
41.9 |
% |
|
|
39.6 |
% |
|
|
36.6 |
% |
GAAP Revenue
Composition: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Domestic % |
|
|
51 |
% |
|
|
57 |
% |
|
|
61 |
% |
|
|
60 |
% |
|
|
58 |
% |
|
|
59 |
% |
|
|
67 |
% |
|
|
54 |
% |
International % |
|
|
49 |
% |
|
|
43 |
% |
|
|
39 |
% |
|
|
40 |
% |
|
|
42 |
% |
|
|
41 |
% |
|
|
33 |
% |
|
|
46 |
% |
Customers >10% of
Revenue |
|
|
1 |
|
|
|
1 |
|
|
|
1 |
|
|
|
— |
|
|
|
1 |
|
|
|
1 |
|
|
|
1 |
|
|
|
— |
|
Cash Related
Information: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash from Operations
$(Mil) |
|
$ |
(72.4 |
) |
|
$ |
19.6 |
|
|
$ |
(0.6 |
) |
|
$ |
(1.8 |
) |
|
$ |
1.4 |
|
|
$ |
(29.7 |
) |
|
$ |
79.6 |
|
|
$ |
24.0 |
|
Capital Expenditures
$(Mil) |
|
$ |
10.6 |
|
|
$ |
11.0 |
|
|
$ |
8.3 |
|
|
$ |
16.8 |
|
|
$ |
10.8 |
|
|
$ |
13.3 |
|
|
$ |
21.4 |
|
|
$ |
8.1 |
|
Depreciation &
Amortization $(Mil) |
|
$ |
21.1 |
|
|
$ |
21.3 |
|
|
$ |
19.8 |
|
|
$ |
19.6 |
|
|
$ |
19.8 |
|
|
$ |
20.0 |
|
|
$ |
19.4 |
|
|
$ |
15.4 |
|
DSOs(2) |
|
|
77 |
|
|
|
66 |
|
|
|
79 |
|
|
|
78 |
|
|
|
79 |
|
|
|
76 |
|
|
|
77 |
|
|
|
79 |
|
Inventory
Metrics: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Raw Materials $(Mil) |
|
$ |
50.4 |
|
|
$ |
43.5 |
|
|
$ |
48.7 |
|
|
$ |
67.6 |
|
|
$ |
85.4 |
|
|
$ |
110.4 |
|
|
$ |
133.6 |
|
|
$ |
132.5 |
|
Work in Process $(Mil) |
|
$ |
58.9 |
|
|
$ |
62.6 |
|
|
$ |
66.6 |
|
|
$ |
71.8 |
|
|
$ |
71.9 |
|
|
$ |
69.9 |
|
|
$ |
68.4 |
|
|
$ |
68.6 |
|
Finished Goods $(Mil) |
|
$ |
200.3 |
|
|
$ |
224.9 |
|
|
$ |
259.6 |
|
|
$ |
273.6 |
|
|
$ |
270.1 |
|
|
$ |
276.6 |
|
|
$ |
229.2 |
|
|
$ |
219.6 |
|
Total Inventory
$(Mil) |
|
$ |
309.6 |
|
|
$ |
331.0 |
|
|
$ |
374.9 |
|
|
$ |
413.0 |
|
|
$ |
427.4 |
|
|
$ |
456.9 |
|
|
$ |
431.2 |
|
|
$ |
420.7 |
|
Inventory Turns(3) |
|
|
3.0 |
|
|
|
3.0 |
|
|
|
3.4 |
|
|
|
2.4 |
|
|
|
2.2 |
|
|
|
2.1 |
|
|
|
2.5 |
|
|
|
1.8 |
|
Worldwide
Headcount |
|
|
3,186 |
|
|
|
3,199 |
|
|
|
3,267 |
|
|
|
3,351 |
|
|
|
3,365 |
|
|
|
3,369 |
|
|
|
3,389 |
|
|
|
3,323 |
|
Weighted Average
Shares Outstanding (in thousands): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
215,509 |
|
|
|
217,620 |
|
|
|
219,921 |
|
|
|
222,393 |
|
|
|
225,922 |
|
|
|
228,077 |
|
|
|
230,509 |
|
|
|
231,533 |
|
Diluted |
|
|
285,968 |
|
|
|
268,927 |
|
|
|
258,030 |
|
|
|
229,404 |
|
|
|
262,712 |
|
|
|
257,219 |
|
|
|
259,210 |
|
|
|
260,980 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
Non-GAAP adjustments include stock-based compensation expense,
amortization of acquired intangible assets, restructuring and other
related costs and warehouse fire recovery. For a description of
this non-GAAP financial measure, please see the section titled,
“GAAP to Non-GAAP Reconciliations” of this press release for a
reconciliation to the most directly comparable GAAP financial
measures. For reconciliations of prior periods that are not
otherwise provided herein, see the prior period earnings releases
available on our Investor Relations webpage. |
|
|
(2) |
Infinera calculates DSO based on
91 days. Fiscal year 2022 was 53 weeks and the fourth quarter of
fiscal year 2022 was 98 days. When calculation is based on 98 days,
DSO was 85 days for the fourth quarter of fiscal year 2022. |
|
|
(3) |
Infinera calculates non-GAAP
inventory turns as annualized non-GAAP cost of revenue, which is
calculated as GAAP cost of revenue less stock-based compensation
expense, amortization of acquired intangible assets, restructuring
and other related costs and warehouse fire recovery, as illustrated
in the reconciliation of gross profit above, divided by the average
inventory for the quarter. |
|
|
Infinera CorporationGAAP to Non-GAAP
Reconciliation of Financial Outlook(In millions,
except percentages)(Unaudited)
The following amounts represent the midpoint of the expected
range:
|
|
Q2'24 |
|
|
Outlook |
Reconciliation of Gross
Margin: |
|
|
GAAP |
|
|
38.5 |
% |
Stock-based compensation
expense |
|
|
0.7 |
% |
Restructuring and other related
costs |
|
|
0.3 |
% |
Non-GAAP |
|
|
39.5 |
% |
|
|
|
Reconciliation of
Operating Expenses: |
|
|
GAAP |
|
$ |
162.5 |
|
Stock-based compensation
expense |
|
|
(17.2 |
) |
Amortization of acquired
intangible assets |
|
|
(2.3 |
) |
Restructuring and other related
costs |
|
|
(3.5 |
) |
Non-GAAP |
|
$ |
139.5 |
|
|
|
|
Reconciliation of
Operating Margin: |
|
|
GAAP |
|
(11.5)% |
Stock-based compensation
expense |
|
|
6.0 |
% |
Amortization of acquired
intangible assets |
|
|
0.6 |
% |
Restructuring and other related
costs |
|
|
1.4 |
% |
Non-GAAP |
|
(3.5)% |
|
|
|
Reconciliation of Net
Loss per Common Share - Basic: |
|
|
GAAP |
|
$ |
(0.21 |
) |
Stock-based compensation
expense |
|
|
0.09 |
|
Amortization of acquired
intangible assets |
|
|
0.01 |
|
Restructuring and other related
costs |
|
|
0.02 |
|
Non-GAAP |
|
$ |
(0.09 |
) |
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