Ciena Corporation

Hello, everyone. Thank you for joining us and welcome to Ciena's Fiscal Q2 2026 Financial Results Conference Call. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. I will now hand the conference over to Greg Lampf, Vice President of Investor Relations. Please go ahead.

Thank you, Tracy. Good morning. And welcome to Ciena's 2026 Fiscal Second 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 Investors 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 discussions of our financial outlook. Today's discussion includes certain adjusted or non-GAAP measures of CM's results of operations. A reconciliation of these non-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 forward-looking statements. Such statements, including our quarterly and annual guidance, commentary on market dynamics, and the discussion of opportunities and strategy are based on current expectations, forecasts, and assumptions regarding a 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, 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 risk factors detailed in our most recent 10-K and our forthcoming 10-Q. CN 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 do 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. Our Q2 performance was once again very strong, reflecting our continued technology leadership, deep customer relationships, and the strength of our business model. In the quarter, we grew the business 40% year-on-year with revenues of $1.57 billion. We expanded adjusted gross margin to 44.9%. and we nearly quadrupled the year ago adjusted earnings per share to $1.64. And I'd remind everybody that we delivered these results while navigating unprecedented demand and a constrained supply environment. With the combination of a strong and growing backlog driving strong visibility fueled by AI-led demand from both cloud and service providers, Coupled with our leading technology portfolio, we are well-positioned to gain share and deliver long-term value to our customers and our owners. The breadth and depth of our portfolio positions us to intersect this market growth as AI drives new opportunities across the WAN and in and around the data center. Our portfolio spans systems, interconnects, software, and of course, services. Specifically, systems includes our optical systems as well as our routing and switching platforms. Interconnects is comprised of modules for inter and intra data center connectivity, inclusive of our WaveLogic modems and pluggables, as well as co-packaged optics and critical technology components that serve as foundational network building blocks. And of course, our software and services, which helps customers install, automate, operate, and optimize their networks at scale. Taken together, CNO's portfolio delivers our customers innovative products to meet a wide variety of high-speed connectivity solutions in the WAN and in and around the data center with an unmatched competitive offering. So since we spoke to you last in March, the largest hyperscalers have increased their 2026 capital expenditures with indications of continued expansion into 2027 and beyond. Given the priority to monetize somewhat constrained compute investments, we expect an increasingly larger proportion of that spend will be directed towards network infrastructure. Importantly, service providers are also reinvesting in network infrastructure after several years. This is creating net new opportunities with service providers across long-haul metro and managed optical fiber networks, or MOFN. In fact, they were up 28% for us year on year. Simply put, all customers are prioritizing high-capacity, low-latency, and high-speed connectivity. underpinned by the need to transport data for AI, including model training, data ingestion, and inference. To that end, our latest view is that the addressable market will approximately double over the next several years to roughly $50 billion by 2029. And to be clear, this significant market growth includes our traditional WAN markets and the high-growth markets in and around the data center. both of which we've been strategically investing into in recent years. With that, let me add some color on how these dynamics are driving the demand for our line systems specifically. The first generation of our intelligent line system, our RLS platform, set the standard for high-speed, low-latency, and power-efficient connectivity. The large global installed base of RLS have given us years of deep insights into technology requirements, as well as significant operational expertise and integration experience across both cloud and service provider environments. The resulting collaboration from these experiences has directly informed the development of our next generation intelligent line system, the RLS HyperRail. This is a multi-rail solution developed for both the leading hyperscalers and service providers to specifically address the growing capacity and efficiency demands for data center interconnect, scale across architectures, and inferencing. Co-created with multiple hyperscalers and built on an innovative photonic design, RLS HyperRail supports multiple fiber pairs in parallel over hundreds of kilometers using advanced amplification. The result is significantly higher density with materially improved space and power efficiency, which is particularly important at intermediary amplifier sites where space and power is limited. Notably, this morning, I am pleased to announce that we've been awarded the industry's first multirail order from a leading hyperscaler, validating early market demand for our RLS hyperrail platform and cementing Ciena's position as the industry standard. We are also engaged in discussions with multiple additional hyperscalers, neoscalers, and service providers, both domestically and internationally. who continue to lean in and show a level of interest which is exceeding our expectations. I also want to touch on our data center out-of-band management solution, or DCOM, which combines products from our routing and switching portfolio with our industry-leading PON technology. DCOM, as you can see, is ramping extremely well, which contributed to the 88% year-on-year revenue growth in our routing and switching segment. We are also expanding the customer base. In addition to meta, we've received initial orders from a second hyperscaler customer. And lab qualifications are progressing well with a third hyperscaler customer. As AI is driving demand for our systems, it is also creating momentum across our interconnects portfolio. And we are pleased to share with you that we recently secured a new win with a major hyperscaler for our high-performance coherent modules. These will be deployed in scalar cross in both metro and long-haul DCI networks, supporting both WAN and in and around the data center applications. This technology solution was developed in close collaboration with the customer and marks a competitive takeaway win. I also believe it is evidence of our strategy to leverage our systems capability into modules and component forms and addresses the broad range of consumption models that our technology can address. We also continue to see strong demand from hyperscalers for our 400-gig and 800-gig pluggables, and we remain on track to more than double our pluggable revenue from 2025. Additionally, we have another first win with a major switch OEM to use our market-leading WaveLogic 5 and 6 nano plugs. This, again, is a demonstrable further proof point of extending go-to-market and consumption models for our technology. We will continue expanding our InterConnex portfolio with strong momentum behind our Nubis assets across both scale-up and scale-out use cases. First, Nitro, our linear redriver. We received the final chip back, and it is performing extremely well, and therefore we are on track for general availability this summer. Turning to Vesta 206.4T, the optical engine for CPO use cases, over the past 90 days, we've seen increased industry momentum and demand for open ecosystems. reinforcing our hypothesis and the strategic value of the Nubis acquisition. Given the breadth and depth of our portfolio, Ciena is uniquely positioned as the only focused supplier of high-speed connectivity solutions, enabling our customers to deploy across multiple use cases with best-in-class technology, software, and services, from complete systems to modules to components. Before I close, I want to touch briefly on customer co-creation, which we've talked about in the last few quarters and referenced several times today. It is a meaningful differentiator for Ciena, exemplifying the trust that customers place in both our innovation leadership and our ability to execute complex programs across multiple technology generations. Customers bring us in early on new requirements and architectures, and they trust us for engineering systems insights and to innovate new approaches that help evolve their networks. The resulting solutions are fit for purpose and deployable both at scale and upon pace on launch. For Ciena, it sharpens our roadmap decisions, increases win rates, gives us visibility into demand, and builds highly differentiated expertise, people, processes, and capabilities. And that's reflected in our growing market momentum. The bottom line is our deep customer relationships and our sustainable technology leadership support our confidence in continued share gains, durable growth, and increasing profitability over the next several years. With that, I'll turn it over to Mark to walk through the quarter's financial results and our outlook. Mark.