Shares of Finisar Corporation (FNSR) jumped as much as 18.4% early Friday, then settled to trade up 13.3% as of 3:30 p.m. EDT, after the fiber-optic subsystems and components company released stronger-than-expected fiscal first-quarter 2017 results. The move also extends last month's encouraging trend of rising optical networking stocks.
Quarterly revenue grew 8.7% year over year, to $341.3 million. Based on generally accepted accounting principles (GAAP), net income increased to $23.9 million, or $0.22 per share, compared to GAAP net income of $3.4 million, or $0.03 per share in last year's fiscal Q1. On an adjusted (non-GAAP) basis, Finisar's net income increased 70.5% year over year, to $41.8 million, and climbed 65.2% on a per-share basis, to $0.38.
For perspective, Finisar's guidance called for revenue in the range of $323 million to $343 million, with adjusted earnings per share of $0.27 to $0.33.
Finisar CEO Jerry Rawls explained:
This growth was primarily driven by strong demand for 100Gb/s transceivers in CFP, CFP2, CFP4, and QSFP28 form factors. In addition, demand for wavelength selective switches was strong. Our gross margins improved significantly due to favorable product mix and leverage of our vertically integrated manufacturing infrastructure over the larger volume. The combination of revenues being at the higher end of our guidance range and better than expected gross margins resulted in earnings per fully diluted share exceeding the upper end of our guidance range.
Finally, for the current quarter, Finisar expects revenue of $355 million to $375 million, and adjusted earnings per share of $0.44 to $0.50. By comparison, analysts' consensus estimates predicted fiscal Q2 revenue of $342.9 million, and adjusted earnings of only $0.32 per share.
In the end, this is a fairly straightforward beat-and-raise scenario for Finisar, and it's no surprise to see shares trading significantly higher today.