Infinera Corporation

Greetings and welcome to the Infineira Third Quarter Earnings Conference Call. During the presentation, all participants will be in a listen-only mode. Afterwards, we'll conduct a question-and-answer session. At that time, if you have a question, please press the 1 followed by the 4 on your telephone. If at any time during the conference you need to reach an operator, please press star 0. As a reminder, this conference is being recorded Thursday, November 5, 2020. I would now like to turn the conference over to Amitabh Pasi, Head of IR. Please go ahead.

Thank you, Operator, and good afternoon. Welcome to InfoNero's third quarter fiscal 2020 conference call. My name is Amitav Pasi, and I'm excited to have joined InfoNero recently as the head of investor relations. I look forward to working with all of you. A copy of today's earnings and investor slides are available on the investor relations section of the website. Additionally, this call is being recorded and will be available for replay from our website. Today's call will include projections and estimates that constitute forward-looking statements. including, but not limited to, statements about our business plans, including a product roadmap, sales, growth, market opportunities, manufacturing operations, products, technology and strategy, statements regarding the impact of COVID-19 on our business plans and results of operation, as well as statements regarding future financial performance, including our financial outlook for the fourth quarter of our fiscal year 2020. These statements are subject to risks and uncertainties that could cause Infinera's results to differ materially from management's current expectations. Actual results may differ materially as a result of various risk factors, including those set forth in our annual report on Form 10-K for the year ended in December 28, 2019, as filed with the SEC on March 4, 2020, and a quarterly report on Form 10-Q for the quarter ended June 27, 2020, as filed with the SEC on August 6, 2020, as well as the earnings released and investor slides furnished with our Form 10-8-K file today. Please be reminded that all statements are made as of today, and INFINERA undertakes no obligation to update or revise any forward-looking statements to reflect events or circumstances that may arise after the date of this call. Today's conference call includes certain non-GAAP financial measures. Pursuant to Regulation G, we've provided reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measures and our third quarter fiscal year 2020 earnings release and investor slides, each of which is available on the investor relations section of our website. I'll now turn the call over to our Chief Executive Officer, Tom Fallon.

Good afternoon, and thank you for joining us. I'll begin with a brief review of the quarter before discussing the longer-term opportunities we see ahead. I'll then turn the call over to David and Nancy. some of the specifics and our outlook for Q3. We delivered a very strong Q3 during a typically slower seasonal period for the industry. Most notably, in Q3, we achieved non-GAAP operating profitability with non-GAAP revenue, gross margin, and operating margin growing both sequentially and year-over-year. The operational improvements we have made over the past several quarters are evidenced by our resulting margin expansion and expense reduction. Despite the near-term macroeconomic uncertainties that the broader market and our industry are facing, I continue to be optimistic about the opportunities for the company. Dollar per bit per mile has been and will continue to be the enabler of unbounded bandwidth growth, and innovation remains the key to helping our customers realize step function improvements in the cost of transmission. During my tenure at the company, Infinera has played a pivotal role in identifying and advancing the the core technologies that are powering high-speed connectivity services around the world. Today, our innovation pipeline remains robust, and I am confident Infinera's thought leadership and innovative solutions are well-positioned to enable cost-effective network services in the future. Over the years, it has become increasingly clear that as networks scale to 400 gig and beyond, significant improvements in cost and optical performance will come from innovations that require deep vertical integration. We believe we are one of only two commercially viable vendors capable of delivering 800 gig and greater solutions in the near term, a stark contrast to the numerous suppliers addressing earlier generations of optical solutions. Concurrently, we are observing that ICP and CSP transport network architectures are transitioning to open and disaggregated models that accelerate adoption of industry innovation, break vendor lock-in, and ease insertion of best-in-class solutions for many vendors. Importantly for customers, our open optical solutions can be deployed on the optical infrastructure that is often already in place. Infineura pioneered this capability with our CX and XT products, and we are poised to significantly raise the bar with our I6-enabled Groove GX platform. Looking further out, we believe it is inevitable that coherent optical networks, like all other communications networks, will evolve from point-to-point architectures to point-to-multipoint architectures that are enabled by subcarrier-based intelligent pluggables. After deep engagement with numerous global service providers, we are confident that operators can realize CapEx and OpEx savings of greater than 50% with XR pluggables, a potential catalyst for redefining how access and aggregation networks will be built. The mandate for vertical integration, the market shift to open networks, and the evolution to point-to-multipoint networks are starting to meaningfully alter the competitive landscape. These shifts are laying the foundation for a healthy industry that will be led by providers of the best transponder. Furthermore, growing concerns over infrastructure network security from solutions provider Huawei are likely to accelerate these fundamental trends. I am confident in Infonera's position today and our opportunity tomorrow. On our last earnings call, I announced that I will be transitioning out of my CEO role by the end of the year. and that David Hurd will succeed me as CEO. This transition is fully on track, so this will be my final earnings call. I would like to thank all the Infinera employees who have inspired me daily with their commitment, courage, and passion. I deeply appreciate the support of our customers, supply partners, and stockholders over the years. I will now turn the call over to David to share additional details on Q3 and our outlook for Q4.