Ciena Corporation

Thank you for joining us and welcome to the Siena Fiscal Q3 2026 Financial Results 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 1 to raise your hand. To withdraw your question, press star 1 again. I will now hand the conference over to Gregg Lampf, Vice President, Investor Relations. Gregg, please go ahead.

Thank you, Jennifer. Good morning, and welcome to Ciena's 2026 fiscal third quarter conference call. On the call today is Gary Smith, President and CEO, and Marc 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 views 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 Siena's results of operations. The reconciliation of these non-GAAP measures to our GAAP results is included in today's 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 discussion of 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. I'll hand the call over to Gary.

Thanks, Gregg. and good morning everybody. Today we reported record financial results across the board. We demonstrated outstanding third quarter performance, including revenues of 1.7 billion, another quarterly record, and up 37% year on year. Adjusted operating margin of 22.5, exceeding guidance was more than doubling year on year and the highest ever achieved for the company. Our adjusted earnings per share are up 215% year-on-year to a record $2.11. We delivered results in the context of an extraordinary industry demand environment that continues to accelerate. We continue to see strong momentum in customer demand and order flow, with a Q3 book-to-bill ratio that was significantly greater than 1%, which resulted in a substantial quarterly increase in our backlog. And we also expect backlog to grow at an even greater rate in Q4. In fact, just one quarter, sorry, one month into this quarter, we are approaching a level of orders booked equal to the entirety of Q3. As a result, we are currently projecting to exit fiscal 2026 with over $10 billion in backlog. Overall, our outstanding Q3 performance reflects Siena's essential role in the fundamental re-architecting of network infrastructure. And looking at these industry dynamics, I would remind everybody that we remain in the very early stages of a multi-year, highly durable network investment era. This is springboarding and caused by the large and growing investments in data center infrastructure. AI is starting to build on the previous eras of communications, including those driven first by the internet and then by the cloud. But it is doing so at a massive scale. As a result, AI is currently driving and will continue to drive significant increases in both bandwidth connectivity demand and network traffic growth. In that context, high speed, low latency optical connectivity has become a critical enabler to not only operationalizing the AI driven investments in the network and the data center, but also monetizing those investments over time. And because of the increasing demands for higher capacity, faster speed, greater density, improved reliability, reduced space, and lower power and cost, optics have become the indispensable element for next generation AI architectures. And this is manifesting across all three of our primary markets. First, you call it the traditional network or the wide area network, the WAN, encompasses the network backbone, network edge, and network operations. It includes optical connectivity for long-haul, subsea, metro, regional applications that people are familiar with. And it has also been impacted by AI in a number of ways, from challenges of fiber availability in the backbone to quality of service demands at the edge. to the requirements of automation to address the increasing complexity of network operations. Second is a market that we are referring to as AI WAN. It includes both data center interconnect, or DCI, for the WAN backbone, and scale across, currently used for distributed training across data centers and subsequently to be used for inferencing. Here the fundamental challenges are related to power caused by the increasing GPU compute capacity and energy load required to train large language models at scale and the high volume low price demands of deploying modems at much greater scale. The third is of course the data center themselves which includes the fabric connectivity domains of scale up and scale out as well as data center operations. and as AI continues to drive up the data rates and bandwidth requirements inside the data center, new optical technologies and applications are required to provide the needed improvements in capacity and density for short reach, low power connections. Given the acceleration and projected increase in the compounding waves of spend on network infrastructure across these markets, We continue to believe that the total addressable market for our business will effectively double over the next three years, growing from approximately 25 billion today to approximately 50 billion by 2029. Moreover, given our growing competitive advantages, we expect our share of that TAM to continue to increase over that time frame. More specifically, Ciena's long established technology leadership in optical networking positions us to capture a growing share of wallet as optical connectivity expands its role throughout the WAN and inside the data center. Across generations of coherent technology, Ciena's first to market benchmarks have set the bar for the industry and continue to do so. Ciena was the first to commercialize coherent optics decades ago. and we continue to lead the industry in optical innovation backed by very focused R&D, deep expertise and proven deployment at scale. Moving forward, performance gains will increasingly depend on precisely these capabilities. Because of our leadership position and value proposition, we've developed a high degree of competitive differentiation across our portfolio. with the clearest proof being the customer adoption that we're seeing across our portfolio in each of the primary market segments. So starting with both the traditional WAN market, as I outlined, and the AI WAN, today's market dynamics are driving higher adoption rates for our WaveLogic 6 Extreme platform, which after 18 months is still the only 1.6 terabit high-performance modem on the market today. Notably, its ramp has already exceeded that of our prior generation WaveLogic 5E. Separately, customer adoption and scaling of our intelligent line systems remains exceptionally strong. RLS is basically the industry standard in disaggregated optical line systems, where Ciena's first mover advantage has driven a leading installed base where roughly we have 70% market share. In addition to serving cloud providers and service providers in the network backbone and cloud providers for DCI in the AI WAN, RLS is the industry's first system deployed for scale across applications. And the next generation of RLS, HyperRail, is our second generation of RLS and represents our sixth generation of photonic line systems leadership. Co-created with the hyperscalers, it dramatically increases the density of existing optical amplifier infrastructure and as such is purpose-built to address the needs to distribute AI training workloads in data centers across greater distances. With customer orders ramping, we remain on track for initial customer standardization for RLS HyperRail by the end of 2026. and scaling to material revenue as we move throughout 2027. Turning to our interconnects portfolio, we're applying our optical leadership to a growing portfolio of connectivity solutions that address surging bandwidth demands inside and around the data center and the performance limitations, of course, of today's short-reach technologies. Starting with our WaveLogic 5 nano-pluggable optics, We are seeing strong market adoption as we continue to ramp into production volume. In fact, in Q3, we shipped more than twice the volume of 800 ZR plugs than in the previous quarter. In addition, during the quarter, we made strong progress with the components portion of our interconnects portfolio. We are seeing strong market receptivity to Nitro, a linear re-driver for active copper cable solutions. And I'm pleased to report that we received sample orders from several anchor customers in the ecosystem for Vesta, our open co-packaged optical or CPX solution. This represents another important step towards the commercialization of our open ecosystem approach towards short-reach data center optics. And we believe this is gaining meaningful industry momentum, most importantly with potential customers. As any new growth sector, our CPX business will continue to strengthen over time, with revenue expected to begin in 2027 and ramping into 2028. And finally, it's worth noting that last quarter we announced a significant win with a major hyperscaler that integrates our WaveLogic 6E coherent technology into their own platform. This solution goes well beyond the modem and combines our DSP, drivers, TIAs, and coherent expertise into a complete module that will be deployed broadly across the customer's global optical network via their own optical platform. I think this win demonstrates our ability to deliver for our customers across multiple consumption models with our best-in-class portfolio and this represents a significant takeaway from a component competitor. At the highest level, the current and future waves of AI-driven demands on bandwidth and network traffic will require industry-leading high-speed optical connectivity. We remain focused on managing the business with this long-term view supported by durable demand, a broad set of co-creation opportunities and customer design wins, Robust Orders, and a backlog that extends well into fiscal 2028. Looking forward, the strength of our market position and the breadth of our portfolio provide us with growing confidence and visibility into a multi-year runway of growth, operating leverage, and increasing profitability. As a result, and to add to this level of confidence, We recently secured a significant increase in customer commitments that extend through 2029. At the same time, as Marc will discuss in a few moments, we've also secured incremental supply capacity for critical components, optical components, to service that multi-year demand. So in summary, Sienna's unmatched combination of leading optical technologies, incumbency, portfolio breadth, and deep expertise across systems, components, software, and services gives us a powerful and sustainable competitive advantage. And really is the only pure play optical systems and interconnects vendor operating at scale We are uniquely positioned to convert AI-driven demand into durable top-line growth with increasing operating leverage and earnings power over multiple years, delivering differentiated value for our customers and our shareholders. With that, I'll hand the call over to Marc for an update on our financials and our outlook.