Infinera (INFN -2.51%) reported its first-quarter results on Wednesday, May 9. Management at the optical equipment provider told investors last quarter that revenue and margins were starting to rebound nicely from their 2017 lows. But did the company keep its momentum up in the first-quarter? Let's dig into the numbers to find out.
Infinera first-quarter results: The raw numbers
|
Metric |
Q1 2018 |
Q1 2017 |
Year-Over-Year Change |
|---|---|---|---|
|
Revenue |
$202.7 million |
$175.5 million |
15.5% |
|
Non-GAAP net income |
($7.2 million) |
($21.7 million) |
N/A |
|
Non-GAAP earnings per share |
($0.05) |
($0.15) |
N/A |
Data source: Infinera. GAAP = generally accepted accounting principles.
Image source: Getty Images.
What happened with Infinera this quarter?
- Revenue was $3 million lower than it would have been due to the recent adoption of ASC 606 revenue recognition standard. Even with that hit, the company was still able to report total revenue of $203 million, which was a bit above the midpoint of its guidance range.
- ICE4 products -- which are the company's newest and most profitable -- accounted for 30% of total revenue. That was up sharply from under 20% last quarter. Infinera added 10 new ICE4 customers during the quarter, bringing the total count to 27.
- Non-GAAP gross margin was 44%. That was 200 basis points more than management's guidance range. Management credited the strong margin to increasing sales of ICE4 products, which are more profitable.
- Non-GAAP net loss of $7.2 million, or $0.05 per share, was lower than management had projected.
What management had to say
CEO Tom Fallon was pleased that the company was able to outperform guidance during the first quarter. "Our financial performance in Q1 reflects continued strong growth from our next-generation products that offset typical seasonal weakness," Fallon said.
He also expressed optimism about the company's ability to continue posting improving results. "In 2018, we remain focused on winning new customers that will diversify our revenue base, drive multi-year growth and leverage our unique vertically integrated operating model," Fallon said. "We also remain committed to returning to profitability during the second half of 2018."
Looking ahead
CFO Brad Feller expects that the company's momentum will carry over into the upcoming quarter and that it will take yet another step toward returning to non-GAAP profitability.
|
Metric |
Q2 2018 Guidance |
Q2 2017 Actual |
|---|---|---|
|
Revenue |
$203 million to $213 million |
$176.8 million |
|
Non-GAAP gross margin |
40% to 44% |
36.7% |
|
Non-GAAP earnings per share |
($0.03) to ($0.07) |
($0.15) |
Data source: Infinera.
On the call with investors, Feller also shared some insights into how the remainder of the year is going to play out. Feller expects that revenue in the back half of the year will be "2% to 4% higher than the first half." Non-GAAP gross margin is expected to remain strong and expand to 43%. Finally, he expects that the company will return to non-GAAP profitability.
Fallon ended his prepared remarks on the conference call with analysts by stating that he believes that the company is well positioned to continue to execute against its turnaround plan:
I am pleased with how the first half is progressing and cautiously optimistic that we will grow in the second half. Longer term, I remain confident in our opportunity. Our product refresh is driving multi-year opportunities and laying a foundation for a more diversified, sustainable revenue base.
