What happened

In response to reporting fourth-quarter results and issuing guidance, shares of Infinera (NASDAQ:INFN), a supplier to the telecom industry, jumped 12% as of 1:41 p.m. EST.

So what

Here's a look of the headline numbers from the company's third quarter:

  • Revenue skyrocketed 72% to $336.6 million. This number exceeded guidance and was ahead of the $324.9 million Wall Street was expecting. The huge jump is largely attributable to the closing of its acquisition of Coriant in 2018.
  • Non-GAAP net loss was $43.8 million, or $0.25 per share. This was below the $0.27 loss the analyst community had predicted.
  • Cash balance stood at $269 million at quarter end.

Zooming out to the full year, here's a look back at the headline numbers from 2018:

  • Revenue grew 28% to $948 million.
  • Non-GAAP net loss was $59.1 million, or $0.37 per share.
A man in a suit giving two thumbs up

Image source: Getty Images.

Turning to guidance, management had previously told Wall Street that its first-quarter revenue would be basically flat with the fourth quarter of 2018. However, one of Infinera's customers pulled forward a significant order. That fact will cause revenue to show a slight sequential decline.

Keeping that in mind, here's a look at the guidance being shared for the quarter ahead:

Metric

Q1 2019 Guidance

Q1 2018 Actual

Revenue

$300 million to $320 million

$202.7 million 

Non-GAAP gross margin

29% to 33%

43.7%

Non-GAAP EPS 

($0.26) to ($0.30)

($0.05)

Data source: Infinera.

For context, Wall Street was expecting $327.5 million in revenue and a net loss of $0.20 in the upcoming quarter.

Much to my surprise, traders appear to be in an understanding mood even though near-term guidance came up short of expectations. 

Check out the latest Infinera earnings call transcript.

Now what

Infinera's management team stated that the accelerated customer order won't inhibit them from hitting their financial targets for the full year. In fact, CFO Brad Feller restated that Infinera will reach at least $1.4 billion in total revenue for the year, improve gross margin each quarter, and reach non-GAAP profitability by the end of the year.

While that is certainly welcome news, there's no doubt that this company still has a lot of work to do before it can declare victory. That's why I remain content to watch this turnaround story's progress from the safety of the sidelines.