Ciena Corporation

Good day, and welcome to Ciena's fiscal first quarter 2026 financial results conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on a touch-tone phone. To withdraw your question, please press star and then two. Please note this event is being recorded. I would now like to turn the conference over to Greg Lance, Vice President of Investor Relations. Please go ahead.

Thank you, Dave. Good morning, and welcome to Ciena's 2026 Fiscal First Quarter Conference Call. On the call today is Gary Smith, President and CEO, and Mark Graff, CFO. Scott McFeely, Executive Advisor, is also with us for Q&A. In addition to this call and the press release, we've posted to the investor section of our website an accompanying investor presentation that reflects this discussion as well as certain highlighted items from the quarter. Our comments today speak to our recent performance, our view on current market dynamics and drivers of our business, as well as a discussion of our financial outlook. Today's discussion includes certain adjusted or non-GAAP measures of Ciena's results of operations. A reconciliation of these nine GAAP measures to our GAAP results is included in today's press release. Before turning the call over to Gary, I'll remind you that during this call, we'll be making certain follow-through statements. Such statements, including our quarterly and annual guidance, commentary and market dynamics, and this, excuse me, the discussion of our opportunities and strategy are based on current expectations, forecasts, and assumptions regarding the company and its markets, which include risks and uncertainties that could cause actual results to differ materially from the statements discussed today. Assumptions relating to our outlook, whether mentioned on this call or included in the investor presentation that we posted earlier today, are an important part of such forward-looking statements, and we encourage you to consider them. Our forward-looking statements should also be viewed in the context of the risk factors detailed in our most recent 10-K and our forthcoming 10-Q. Ciena assumes no obligation to update the information discussed in this conference call whether as a result of new information, future events, or otherwise. As always, we'll allow for as much Q&A as possible today, though we ask that you limit yourselves to one question and one follow-up. With that, I'll turn the call over to Gary.

Thanks, Greg, and good morning, everyone. Today, we reported strong fiscal first quarter financial performance. We delivered revenue of 1.43 billion in the quarter, our highest ever, and at the top end of our guidance, reflecting strong execution across the business. Demand is incredibly strong, with exceptional order activity in the quarter. This, along with long-term planning conversations with customers, gives us confidence in the durability of demand and our ability to drive growth as we move through the year and into 2027 and beyond. Adjusted gross margin came in at 44.7%, which was ahead of expectations. And we continue to drive increased profitability, illustrated in part by our adjusted earnings per share of $1.35, which is more than double our EPS in Q1 of last year. These record results reflect Siena's market leadership and reinforce our role as a critical provider of the high-speed optical systems and interconnects that enable AI workloads to scale and to be monetized. In fact, we are taking meaningful share of the increases in AI-driven connectivity spend as customers trust our technology leadership, deep collaboration, and proven execution. To this end, we believe 2025 will ultimately stand out as one of our strongest years of market share gains, and we believe it will be even stronger in 2026. With our recent inclusion in the S&P 500, we may have new listeners on the call, so allow me to begin with a brief summary of our business. At the highest level, Sienna is the global leader in high-speed connectivity. We build solutions that move enormous amounts of data across cities, data center campuses, countries, and oceans quickly, reliably, and at massive scale. Through industry-leading optical systems and interconnect solutions along with automation software and services, we power the world's most advanced networks, helping service providers, cloud companies, hyperscalers, governments, and enterprises meet explosive connectivity demands especially in an increasingly AI-driven world. Our foundational business has always been to address connectivity needs in the Wide Area Network, or WAN, spanning subsea, long-haul, metro, and data center interconnect, or DCI. We remain the undisputed global leader in this domain. Today, much of this business is driven by the continued adoption of cloud services across our global customer base and the network infrastructure required to support them. It is also increasingly fueled by the rise of large-scale AI data centers that need to be interconnected with DCI solutions linking data centers across campuses, regions, and continents. Additionally, service providers around the world have begun reinvesting in their optical transport infrastructure alongside autonomous networking capabilities, both to support surging AI-driven traffic growth across their networks and to improve operating efficiencies. And service providers and cloud provider customers are increasingly working together to deliver connectivity through managed optical fiber networks, or MOFNs. as they navigate regulatory requirements and capacity needs in the U.S. and in other new and emerging geographies around the world. By way of example, our orders in India were up 40% year-over-year, reflecting ongoing high demand specifically for MOFIN in that country. Together, we view these as structural, multi-year demand drivers that reinforce the critical need to serve WAN connectivity requirements, fueling both our growth and continued momentum. We expect revenue from the MOFON application will continue to be an important contributor to overall service provider growth going forward. and we are uniquely well-positioned to further strengthen our leadership in high-speed WAN connectivity for service providers, cloud providers, and the growing group of neo-scalers from whom we saw increased momentum in the quarter for both direct and MOFON-related design wins. In parallel to this, we are focused on the significant expansion of our addressable market opportunities in and around the data center. It is now well understood that cloud providers are investing heavily in data centers to deliver on both the current and future promises of AI. In just the last few weeks, we've seen announcements from the four largest global hyperscalers that outlined a step function increase in their 2026 CapEx to more than $600 billion in aggregate. Driven by infrastructure needs related to AI training and inference workloads, at massive scale. These build-outs involve several areas of opportunity for Ciena, not only in the WAN, but increasingly in and around the data center, including scale across, scale out, scale up, and our unique data center out-of-band management solution, or DCOM. I'll start first to discuss the Scale Across, which is really an application supported in part by our interconnects portfolio, which is emerging as AI data centers grow in size and begin to hit power and space limitations. To overcome these constraints, customers are distributing compute across multiple sites. and using high-speed performance optical networks to interconnect them, effectively creating one single AI training environment that operates across distance. We believe that we are in the very early stages of this wave of opportunity, and we are already experiencing extraordinary demand, with three hyperscalers choosing to use our optical solutions for their training applications across distance, which we've talked to you about in recent quarters. And all three hyperscalers are significantly ramping, including additional orders for multiple additional clusters from the first hyperscaler we announced in Q3 2025. We are addressing this demand for scale across solutions with our RLS platform, the de facto industry line system standard for cloud providers, as well as our 800 ZR pluggable optics. To underscore this, we realized a second consecutive record quarter for RLS shipments and revenue. We expect to expand our role in scalar cross applications with the introduction of our new RLS HyperRail solution. HyperRail delivers an order of magnitude increase in fiber density within existing rack footprints. helping customers scale traffic while reducing and in some cases avoiding costs and complexity associated with adding substantial numbers of amplifier huts. The solution developed in close collaboration with our hyperscaler and service provider customers represents another inflection point for Ciena and we expect to be first to market again. In fact, we will be demoing the first prototype of our HyperRail system at the OFC trade show in a few weeks' time. The solution we expect will begin standardization at the end of 26 and will ramp in 2027, allowing us to capture share and incremental value as these distributed AI training expands across regional clusters and moves to further distances. In addition to scale across, we see meaningful opportunities inside the data center, including the scale-out connectivity between racks and scale-up connectivity within racks. As we know, the physics of copper inside the data center is reaching its limits. While there will be a place for copper solutions with shorter distance scale-up interconnects, network architectures will include more optical co-packaged interconnects. And over time, as data rates and bandwidth requirements continue to increase, coherent optical connections will overtake IMDD ones for shorter reaches to address going capacity volumes inside the data center. And as the world's leading high-speed connectivity company, we are investing meaningfully to intersect these important use cases. And we continue to demonstrate progress towards our in and around the data center growth objectives. And our expanding interconnects portfolio, including ZR and ZR plus pluggables and optical components, is well positioned to address the rising power and space constraints associated with those evolving scale up and scale out architectures. We've just reached an important milestone with our first product introduction following the Nubis acquisition last fall, which addresses scale-out and scale-up needs. Last week, we announced the Vesta 206.4T optical engine, which is the industry's first high-density, low-power, open-ecosystem, pluggable CPO solution. Samples of the Vesta product will be available in calendar Q2, 2026. And we are actively discussing Vesta, as you'd expect, with our cloud provider customers and partners. And we're excited to be showcasing it at OSC again in a few weeks' time. For scale-up opportunities inside the rack, where XPUs are getting faster and driving heat and power concerns, we are advancing the Nitro Linear Redriver technology, also from our Nubis acquisition. We believe this is a critical element to active copper cabling solutions, which extend the distance that signals can travel and reduce power by up to 80% versus AEC-type solutions. We also expect samples of the Nitro Redriver to be available in calendar Q2, 2026. Finally, our data center out-of-band management, or DCOM solution, continues to represent another significant opportunity inside the data center. Leveraging our XGSG PON and routing and switching platforms, DCOM was initially designed with Meta to meet hyperscale provisioning and configuration requirements. We continue to work with them and are engaged in technical discussions with two other major global hyperscalers. Let me summarize by emphasizing that demand in Q126 was unprecedented, reflected in very strong order intake and a meaningfully higher backlog. We executed well and demonstrated strong performance on both the top and bottom lines. This exceptional demand was broad-based across service providers, hyperscalers, and an expanding set of neoscalers. Opportunity continues to build in waves, from our traditional and expanding WAN business to multiple applications in and around the data center. Furthermore, to monetize AI for both training and inference workloads, the latter of which represents another significant growth vector still in its infancy, The foundational requirement is, again, high-speed connectivity. These dynamics, combined with our deep, collaborative customer relationships that improve our long-term visibility, plus our continued focus on execution, give us increased confidence for multi-years of strong growth and profitability ahead. With that, I'll turn over to Mark to cover our financial performance and guidance in more detail. Thank you, Mark.