Ciena exceeds revenue & historical order volumes; warns of backlog volatility
Mar 8th 2023, 8:51 pm
Analysis of Performance: Ciena Corp reported unprecedented order volumes for their products and services from Q2 FY2021 through Q3 FY2022, exceeding their revenue and historical order volumes. However, order growth relative to revenue began to moderate in Q4 FY2022 due to the dynamics of the COVID-19 pandemic. The company believes that some portion of these orders were delayed pre-pandemic design wins, while some were customer acceleration of future orders to address supply constraints. Ciena Corp also reported a backlog of customer orders of $1.4 billion at the end of FY2022. Moreover, as supply chain conditions improve, they expect their backlog to reduce as FY2023 progresses. However, the company has cautioned that their backlog should not necessarily be viewed as an accurate indicator of revenue for any particular period. Analysis of Forward-Looking Statements: Ciena Corp has indicated that their order growth relative to revenue is expected to continue to moderate and they do not expect the very high level of orders they experienced during the pandemic to continue. However, they believe that certain trends and shifts in business and consumer behaviors, such as 5G, enterprise, and consumer cloud network adoption, increasing demands on the network edge, and network operator focus on resilience and automation, represent positive, long-term opportunities for their business. The company also notes that their results can be more significantly impacted by availability of supply, as well as any order cancellations or customer delivery deferrals of the existing backlog. Therefore, the timing and degree to which they make shipments to fulfill their backlog will have a significant impact on their rate of revenue growth and could cause some volatility in their results of operations. The company has also highlighted the risks related to their backlog as an inaccurate indicator of their level and timing of future revenues. Overall, investors should be cautious and analyze the company's competitive position, management statements, current trends in their industry, and any other relevant factors that could impact their future performance.