Executive Summary

Q4 revenue of $1.12B was roughly flat year over year (-0.5%), while adjusted EPS of $0.54 declined versus $0.75 in Q4 FY23; sequentially, revenue rose from Q3 ($942M) as cloud orders accelerated and book-to-bill exceeded 1 again .
Mix shift and a $39M excess & obsolescence (E&O) charge reduced adjusted gross margin by ~200 bps to 41.6% in Q4, though management expects margins to trend higher through FY25 as mix normalizes from line systems to capacity adds .
Strategic momentum: WaveLogic 6 Extreme (industry’s first 1.6T coherent solution) reached commercial availability with revenue shipments; Q4 saw the largest quarter ever for line systems shipments, strong cloud and India demand, and 17% YoY growth in Blue Planet .
Guidance catalyst: Ciena raised its long-term revenue growth target to ~8–11% (from 6–8%) for FY25–27 and targets 15–16% adjusted operating margin by FY27; FY25 revenue growth of 8–11% and Q1 revenue of $1.01–$1.09B guide to continued acceleration, supported by a $2.1B year-end backlog and H2 book-to-bill >1 .
Note on estimates: S&P Global consensus estimates were unavailable at time of retrieval due to data access limits; we cannot assess beats/misses this quarter (see Estimates Context).

What Went Well and What Went Wrong

What Went Well
- “WaveLogic 6 Extreme became generally available,” making Ciena the only provider of 1.6T coherent modems; Q4 included revenue shipments to multiple customers (e.g., Verizon, euNetworks, One New Zealand) .
- Q4 was “our largest quarter ever for shipments of line systems,” driven by RLS demand from large cloud providers; book-to-bill >1 for Q3 and Q4, with backlog ending FY24 at $2.1B (up ~$150M in H2) .
- Execution breadth: non-telco was 48% of Q4 revenue; direct cloud provider revenue +53% q/q; India +49% q/q; Blue Planet revenue +17% YoY, evidencing diversified growth vectors .
What Went Wrong
- Margins: Q4 adjusted gross margin fell to 41.6% due to a $39M E&O charge (~200 bps impact) and heavy line-systems mix; GAAP gross margin declined to 40.9% (from 43.1% in Q4 FY23) .
- Segment/composition pressure: Routing & Switching revenue declined YoY (Q4: $79.4M vs $128.9M last year) and APAC mix contracted YoY to 10.8% of Q4 revenue from 14.5% .
- EPS compression: GAAP diluted EPS fell to $0.25 (from $0.62) and adjusted EPS to $0.54 (from $0.75) vs Q4 FY23, reflecting margin headwinds and operating leverage not yet realized .

Financial Results

Sequential performance (oldest → newest)

Metric	Q2 FY2024	Q3 FY2024	Q4 FY2024
Revenue ($M)	$910.8	$942.3	$1,124.1
GAAP Diluted EPS ($)	(0.12)	0.10	0.25
Adjusted Diluted EPS ($)	0.27	0.35	0.54
GAAP Gross Margin (%)	42.7%	42.9%	40.9%
Adjusted Gross Margin (%)	43.5%	43.7%	41.6%
GAAP Operating Margin (%)	(0.4%)	2.9%	5.3%
Adjusted Operating Margin (%)	6.8%	8.0%	10.0%
Adjusted EBITDA ($M)	$85.8	$98.5	$136.7

Year-over-year comparison (Q4 FY2023 → Q4 FY2024)

Metric	Q4 FY2023	Q4 FY2024
Revenue ($M)	$1,129.5	$1,124.1
GAAP Diluted EPS ($)	0.62	0.25
Adjusted Diluted EPS ($)	0.75	0.54
GAAP Gross Margin (%)	43.1%	40.9%
Adjusted Gross Margin (%)	43.7%	41.6%
GAAP Operating Margin (%)	8.1%	5.3%
Adjusted Operating Margin (%)	13.8%	10.0%

Segment revenue (YoY)

Segment ($M)	Q4 FY2023	Q4 FY2024
Optical Networking	$748.0	$779.6
Routing & Switching	$128.9	$79.4
Platform Software & Services	$82.1	$99.6
Blue Planet Automation S&S	$20.0	$23.5
Maintenance Support & Training	$74.4	$77.2
Installation & Deployment	$60.1	$51.4
Consulting & Network Design	$16.0	$13.4
Total	$1,129.5	$1,124.1

Key operating metrics

KPI	Q3 FY2024	Q4 FY2024
Cash & Investments ($B)	$1.20	$1.33
Cash from Operations ($M)	(159.4) used	349.3
DSOs (days)	100	89
Inventory ($M)	937.4	820.4
Product Inventory Turns (x)	1.8	2.7
10%+ Customers (count)	Two (26.6% revenue)	Two (31.2% revenue)
Book-to-Bill > 1?	Yes (H2 trend emerging)	Yes (Q3+Q4; H2 overall)
Backlog ($B)	—	2.1 (year-end)

Non-GAAP adjustments and impact: Q4 adjusted gross margin was reduced by ~200 bps due to a higher-than-typical E&O charge of $39M; management expects E&O charges to normalize going forward and margins to trend up as mix shifts from line systems to capacity adds .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue Growth (%)	FY2025	—	8%–11%	Introduced
Adjusted Gross Margin (%)	FY2025	—	42%–44%; starts low-40s, exits mid-40s	Introduced
Adjusted OpEx ($M/quarter)	FY2025	—	$350–$360 average; lower 1H, rises through year	Introduced
Share Repurchases ($M)	FY2025	—	~$330 during FY25 under new $1B plan	Introduced
Revenue ($B)	Q1 FY2025	—	$1.01–$1.09	Introduced
Adjusted Gross Margin (%)	Q1 FY2025	—	Low 40s	Introduced
Adjusted OpEx ($M)	Q1 FY2025	—	~ $350	Introduced
Long-term Revenue CAGR (%)	FY2025–FY2027	6%–8%	8%–11%	Raised
Adjusted Operating Margin (%)	FY2027	—	15%–16%	Introduced
FCF as % of Adj Op Income	FY2025–FY2027	—	~55%–60%	Introduced
Inventory Turns (x)	By end FY2026	—	Target 4.0–4.5 (path dependent)	Introduced

Earnings Call Themes & Trends

Topic	Previous Mentions (Q-2 & Q-1)	Current Period (Q4 FY2024)	Trend
AI/Cloud demand	“Strength… amid service providers working through inventory” (Q2) and “growing momentum with cloud providers” (Q3)	Cloud & AI are lead demand drivers; WaveLogic 6E GA with revenue; RLS line systems becoming de facto standard; orders > revenue for second straight quarter	Accelerating
Supply chain/inventory	Inventory digestion by service providers (Q2); improving mix/exec (Q3)	$39M E&O charge impacts Q4 GM; improved visibility from supply chain transformation; E&O expected to normalize	Near-term headwind, improving visibility
Product performance	Optical leadership emphasized (Q2/Q3)	Largest-ever quarter for line systems; coherent plugs momentum (43k+ WL5n shipped to date); WL6E shipments to multiple customers	Strong product cycle
Regional trends	Americas ~73%+ in Q2/Q3	India revenue +49% q/q; Americas 75.8% mix; EMEA/APAC decline YoY	Mix tilting to Americas/cloud
Regulatory/tariffs	—	Tariff exposure exists (e.g., potential Mexico); not in guidance	Watchlist risk
R&D/OpEx execution	Continued investment through headwinds (Q2/Q3)	Headcount down vs midyear plan; FY25 OpEx up on normalized incentives/merit; leverage targeted to 15–16% op margin by FY27	Operating leverage inflection targeted
MOFN vs direct	—	MOFN rising as cloud scale stretches direct builds; regulatory constraints in some countries; both vectors active	Parallel demand channels expanding

Management Commentary

“WaveLogic 6 Extreme became generally available… locking our position as the only provider of 1.6 terabit capable coherent modems… We also took revenue for WaveLogic 6E in Q4,” highlighting tech leadership and commercialization .
“Adjusted gross margin… reflects a $39 million charge for excess and obsolescence… [with] ~200 basis points reduction,” tied to mix toward cloud/line systems and better inventory visibility; management expects normalization and upward margin trend as mix evolves .
“We now expect average annual revenue growth of approximately 8% to 11% over the next 3 years… [and] are targeting adjusted operating margin of 15% to 16% for fiscal year 2027,” signalling a higher long-term growth and profitability framework .
“Book-to-bill was above 1 for the entire second half of fiscal 2024 and our backlog grew by approximately $150 million… ending backlog of $2.1 billion,” supporting forward revenue visibility .

Q&A Highlights

Cloud vs telco demand: Service provider demand coming back into balance; cloud and AI layering on top drive outsized growth; stability in North America, steady improvement internationally, with India strength .
MOFN vs direct: Cloud prefers direct, but MOFN rising due to scale/regulatory limits; both channels used to accelerate deployment .
Margins/E&O: E&O normally ~$10–12M/quarter; Q4 was elevated due to mix, supply chain visibility; expected to normalize; margin trajectory largely mix-driven with line systems heavy early FY25 .
Concentration: Expect 1–2 (sometimes 3) 10% customers per quarter; specific names rotate among 2 telcos and 2 clouds .
Short-reach coherent roadmap: Campus (2–20km) use cases with WL6 “coherent-lite” DSP expected to enter customer networks late FY25 and contribute in FY26; inside-DC coherent further out .
Pluggables margin: Below average today (WL5n), improving with volume and WL6n 800G ramps; pluggable volumes may double in FY25 .
Tariffs: No tariff impacts assumed; exposure exists (e.g., Mexico), would mitigate if needed .

Estimates Context

S&P Global (Capital IQ) consensus estimates for revenue/EPS/EBITDA and target price were unavailable at the time of retrieval due to access limits; therefore, we cannot assess beat/miss versus Street for Q4 FY2024 (S&P Global data unavailable).

Key Takeaways for Investors

Structural cloud/AI demand plus telco normalization underpin a higher long-term growth framework (8–11% CAGR FY25–27) and improved operating leverage toward 15–16% adjusted operating margin by FY27 .
Near-term gross margin pressure from line-systems mix and a one-time-elevated E&O should abate; mix is expected to improve sequentially through FY25 as capacity adds ramp, supporting margin expansion .
Product cycle is robust: WL6E commercial shipments, record line systems quarter, and rapidly scaling coherent pluggables (WL5n today, WL6n 800G next), positioning Ciena for share gains across DCI, metro/campus, and future inside-DC opportunities .
Order momentum and visibility are improving: H2 book-to-bill >1, FY-end backlog at $2.1B, and strong Q1 order start; guidance calls for Q1 revenue $1.01–$1.09B despite typical seasonality .
Balanced demand vectors: non-telco at 48% of Q4 revenue, direct cloud +53% q/q, India +49% q/q, and Blue Planet +17% YoY support diversification and software-led transformation exposure .
Capital returns: New $1B buyback (FY25–27) with ~~$330M planned for FY25, supported by a strong balance sheet (~~$1.33B cash/investments) and targeted FCF of ~55–60% of adjusted operating income over three years .
Watch items: Customer concentration (two 10%+ customers accounted for 31.2% of Q4 revenue) and potential tariff exposure (e.g., Mexico) merit monitoring, though not embedded in guidance .

Appendix: Additional Data Points

Q4 headline results: Revenue $1.12B; GAAP EPS $0.25; adjusted EPS $0.54; GAAP GM 40.9%; adjusted GM 41.6%; adjusted operating margin 10.0% .
FY2024 highlights: Revenue $4.01B; adjusted gross margin 43.6%; adjusted EBITDA $481.0M; adjusted EPS $1.82; cash & investments ~$1.33B .
Governance update: Lawton W. Fitt appointed as independent Chair; Dr. Patrick Nettles to retire after 2025 AGM .

CIENA CORP (CIEN)·Q4 2024 Earnings Summary