Executive Summary

Strong beat on both revenue and non-GAAP EPS: Q3 revenue $1.219B vs $1.174B consensus* and adjusted EPS $0.67 vs $0.53 consensus*, with better-than-guided gross margin driven by favorable mix and lower net tariff impacts .
Order momentum and AI exposure accelerating: record quarterly orders “considerably above revenue,” two 10% customers (one hyperscaler, one Tier-1 SP), and first-of-its-kind “scale across” AI training network win expected to ramp to “hundreds of millions” over coming quarters .
Q4 outlook constructive; FY26 brought forward: Q4 revenue guided to $1.24–$1.32B; adj GM 42–43%; adj OpEx $390–$400M; FY26 view ~17% y/y revenue growth, GM ~~43%±1pt, OpEx flat (~~$1.5B), and operating margin target 15–16% pulled forward to FY26 (from FY27) .
Portfolio focus sharpened toward AI networking: redirecting R&D from residential broadband (25G PON) to coherent optical, interconnects, coherent routing and DCOM; Q4 to include ~$90M non-cash IPR&D impairment and ~$20M restructuring (4–5% headcount) (both adjusted out) .

What Went Well and What Went Wrong

What Went Well
- Demand and orders: “Q3 order book…set a new quarterly record,” with broad-based demand across hyperscalers and service providers; two 10% customers underscore momentum .
- AI-led wins: Dedicated AI “scale across” training network (RLS + WL6n 800G ZR) now shipping; expected to reach hundreds of millions over next several quarters; DCOM inside-DC management solution co-developed with hyperscaler is ramping .
- Margin execution vs guidance: Adj GM 41.9% beat guidance by ~90 bps, helped by sales of previously reserved material and lower net tariff impacts; adj op margin expanded 270 bps y/y to 10.7% .
What Went Wrong
- Gross margin still below prior-year levels: GAAP GM 41.3% (-160 bps y/y) and adj GM 41.9% (-180 bps y/y) despite the sequential improvement .
- Higher OpEx vs plan: Q3 adj OpEx of ~$380M was higher than expected due to incentive compensation tied to strong orders/performance (management reiterates full-year base OpEx track) .
- Near-term restructuring and focus shift: Ceasing further 25G PON development to focus on AI networking will drive a ~$90M non-cash IPR&D charge and ~$20M restructuring in Q4; headcount down 4–5% (both adjusted) .

Financial Results

Metric	Q3 2024	Q1 2025	Q2 2025	Q3 2025	Q3 2025 Consensus*
Revenue ($B)	$0.942	$1.072	$1.126	$1.219	$1.1745*
GAAP Diluted EPS ($)	$0.10	$0.31	$0.06	$0.35	—
Adjusted Diluted EPS ($)	$0.35	$0.64	$0.42	$0.67	$0.525*
GAAP Gross Margin (%)	42.9	44.0	40.2	41.3	—
Adj Gross Margin (%)	43.7	44.7	41.0	41.9	—
GAAP Operating Margin (%)	2.9	7.5	2.9	6.1	—
Adj Operating Margin (%)	8.0	12.3	8.2	10.7	—
EBITDA ($M)	$59.7	$114.1	$66.7	$109.2	$142.1*
Adjusted EBITDA ($M)	$98.5	$156.5	$116.7	$158.0	—

KPIs and Balance/Cash Flow
- Cash & investments: $1.39B; CFO referenced ~$1.4B .
- Cash from operations: $174.3M in Q3; free cash flow margin 11% (per CFO) .
- Working capital: DSOs 88; AR $1.03B; inventories $860.4M; product turns 2.7 .
- Buybacks: 1.0M shares for $81.8M in Q3; YTD $245M; plan ~$85M in Q4 to reach ~$330M FY total .

Revenue by Segment ($M)	Q3 2024	Q3 2025
Optical Networking	606.8	815.5
Routing & Switching	92.7	125.9
Total Networking Platforms	699.5	941.4
Platform Software & Services	83.2	90.0
Blue Planet Automation S&S	25.8	27.8
Maintenance Support & Training	74.4	80.7
Installation & Deployment	46.5	65.9
Consulting & Network Design	12.9	13.6
Total Global Services	133.8	160.2
Total	942.3	1,219.4

Revenue by Geography ($M)	Q3 2024	Q3 2025
Americas	718.6	923.6
EMEA	135.0	186.0
APAC	88.7	109.8
Total	942.3	1,219.4

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue	Q4 FY25	N/A	$1.24B–$1.32B	Initiated
Adjusted Gross Margin	Q4 FY25	N/A	42%–43%	Initiated
Adjusted OpEx	Q4 FY25	N/A	$390M–$400M	Initiated
IPR&D Impairment (non-cash)	Q4 FY25	N/A	~$(90)M (GAAP-only)	New item
Restructuring Expense	Q4 FY25	N/A	~$(20)M (GAAP-only)	New item
Revenue Growth (y/y)	FY26	“High end of 3-yr CAGR target by FY27” (prior)	~17% y/y in FY26	Pulled forward growth trajectory
Gross Margin	FY26	N/A	~43% ±100 bps	Initiated
OpEx	FY26	N/A	Flat vs FY25 (~$1.5B)	Initiated
Operating Margin	FY26	15–16% by FY27 (prior)	15–16% in FY26	Timeline accelerated by 1 year

Note: Non-GAAP tax provision uses 22% blended rate for non-GAAP calculations .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q1 & Q2)	Current Period (Q3)	Trend
AI infrastructure demand	“Well positioned to benefit from global investment to scale for cloud and AI” (Q1); “accelerating demand driven by cloud and AI” (Q2)	Record orders; “scale across” AI training network win; DCOM inside-DC solution; interconnects to double in 2025 and likely again in 2026	Strongly rising
Gross margin trajectory	Q1/Q2 adj GM 44.7%/41.0% (pressure y/y)	Q3 adj GM 41.9%, 90 bps above guidance; Q2 called “the floor”; path to ~43% in FY26	Improving sequentially
Tariffs	Limited prior specifics	Net impact “immaterial”; 20–30 bps GM tailwind in Q3 as clarity improved	Risk moderating
Product performance	WL6E ramping; broad portfolio momentum implied	WL6E at 60 customers; ports doubled q/q; RLS “de facto standard” at hyperscalers; 400ZR+ lead at a hyperscaler	Accelerating
Customer mix	“Balanced growth across segments” (Q1); broad momentum (Q2)	Two 10% customers (cloud and Tier-1 SP); three of top five were service providers	Hyperscaler + SP both strong
Supply chain/capacity	Risks cited broadly in disclosures	Capacity still a constraint, but scaling to reduce lead times; investments across ecosystem	Improving
Portfolio focus	—	Shift R&D from residential broadband (25G PON) to AI networking (coherent optical, interconnects, routing, DCOM)	Strategic refocus

Management Commentary

“We delivered another strong quarterly performance…as the network becomes fundamental to the underpinning, growth, and monetization of AI.” — Gary Smith, CEO .
“Q3 revenue was $1.22B above the top end of our guidance…adjusted EPS of $0.67 up 60% sequentially and 91% y/y…order book…set a new quarterly record.” — Gary Smith .
“Adjusted gross margin in Q3 was 41.9%, 90 bps above our guidance, primarily driven by benefits from sales of previously reserved material and lower net tariff impacts.” — Marc Graff, CFO .
“We expect to record a non-cash charge in Q4 against in-process R&D (~~$90M)…and a Q4 restructuring expense (~~$20M)…We now believe we will accelerate our longer-term goal of 15–16% operating margin by one year from 2027 to 2026.” — Marc Graff .

Q&A Highlights

Gross margin path: Industry structure and CIEN’s tech lead support mid-40s GM potential over time; Q2 marked the floor; sequential improvement expected .
AI “scale across” and DCOM: First dedicated AI training network (RLS + WL6n 800G ZR) to ramp to “multiple hundreds of millions”; DCOM at a hyperscaler is “hundreds of millions” with initial orders; both aid scale and margins .
Interconnects/pluggables: Best quarter ever; plug ports up ~20% q/q and ~140% y/y; confident of doubling interconnect revenue in 2025 and likely doubling again in 2026 .
Portfolio realignment: Redirecting R&D toward coherent optical, interconnects, coherent routing, and DCOM; limiting future investment in higher-capacity PON (25G/100G) .
Supply capacity: Supply remains a governor on revenue, but CIEN is investing to expand capacity with potential to reduce lead times into 2026 .

Estimates Context

Beat vs consensus*: Q3 revenue $1.219B vs $1.1745B; adjusted EPS $0.67 vs $0.525; GAAP EBITDA $109.2M vs $142.1M consensus (miss), while adjusted EBITDA was $158.0M (company metric) .
Q4 setup*: Consensus revenue ~$1.288B vs company guide $1.24–$1.32B; implies results likely judged on execution/mix and margin delivery .
FY25 EPS/Revenue*: FY25 EPS consensus ~2.49 and revenue ~$4.708B provide the baseline for revisions after the Q3 beat and raised confidence in Q4/FY26 outlook.

Values retrieved from S&P Global.*

Key Takeaways for Investors

AI network monetization is the core narrative: record orders, first dedicated AI “scale across” win, and DCOM ramp point to a multiyear, durable demand cycle that should support revenue growth and operating leverage into FY26 .
Mix and scale are improving margins: sequential GM improvement above guidance and expected tailwinds from scaling RLS/WL6 and interconnects support the path to ~43% GM in FY26 and 15–16% op margin in FY26 .
Portfolio focus should enhance returns: shifting R&D away from PON into AI-centric platforms tightens strategic alignment; near-term GAAP charges are non-cash/adjusted, but cost actions (4–5% headcount) support FY26 OpEx flat y/y .
Watch execution on AI projects: the “hundreds of millions” ramps (scale across, DCOM) and interconnect doubling (again) are key stock catalysts over the next 3–6 quarters .
Service provider recovery adds durability: three of top five customers were SPs; MOFN and edge AI workloads should augment hyperscaler-led growth .
Tariffs/supply risks moderating: tariff impact expected to be immaterial; supply capacity investments aim to reduce lead times into 2026, supporting backlog conversion .
Near-term print hinges on Q4 margin/OpEx: Guide brackets consensus on revenue with clear margin/OpEx guardrails; clean execution on adj GM 42–43% and OpEx $390–$400M will be scrutinized .

Appendix: Additional Relevant Press Releases (Q3 context)

Quantum-secure networking collaboration with REDIMadrid using 6500 photonic line system (QKD coexistence on DWDM) .
DFA trial: 1.6 Tbps per wavelength with WaveRouter and WaveLogic 6 Extreme in South Africa (world-first trial) .
EXA Infrastructure U.S. Ashburn–Atlanta route leveraging RLS and WL5e; future-ready for WL6 .

Citations:
Press release Q3 results and appendices . Q2 press release and appendices . Q1 press release and appendices . Q3 earnings call transcript . Additional Q3-related press releases .

Footnote: *Values retrieved from S&P Global.

CIENA CORP (CIEN)·Q3 2025 Earnings Summary