Infinera (NASDAQ:INFN), a maker of equipment used in the telecommunications industry, reported its first-quarter results on Wednesday.

Top-line growth fell short of management's guidance range and declined sequentially. Infinera stated that its book of business remains on the upswing but that certain projects are not being deployed on the timeline that was expected. The delay is putting pressure on the company's near-term growth.

Infinera's first-quarter results: The raw numbers

Metric

Q1 2019

Q1 2018

Year-Over-Year Change

Non-GAAP revenue

$295.6 million

$202.7 million

44%

Non-GAAP net income

($41.2 million)

($7.2 million)

N/A

Non-GAAP earnings per share

($0.23)

($0.05)

N/A

Data source: Infinera. 

What happened with Infinera this quarter?

  • Non-GAAP gross margin was 35.3%, which was down 840 basis points from the year-ago quarter but above management's guidance. 
  • Non-GAAP net loss remains elevated but also was better than the company had predicted. 
  • Cash balance at quarter's end was $211 million, which was down about $58 million sequentially.

Looking beyond the numbers, management noted that it saw strong growth in bookings in international markets, particularly in the U.K. and Europe. However, the company saw some softness in some of its North American segment.

Infinera also said that it is making progress with realizing the cost benefits of its recent buyout of Coriant. Management expects to achieve $100 million in total savings in 2019.

City with orange lines connecting buildings

Image source: Getty Images.

What management had to say

CEO Tom Fallon explained the top-line miss: "In the first quarter of 2019, we made significant progress on the integration of our new company and in executing on our committed synergies. While a significant deployment did not progress as expected, I am encouraged by the strong bookings outlook we see for second quarter of 2019 and our continued trend of building backlog and engaging with a much larger customer base."

CFO Brad Feller also announced that he is resigning as soon as a replacement is found. That is expected to be no later than the third quarter.

Check out the latest Infinera earnings call transcript.

Looking ahead

On the call with analysts, Feller stated that Infinera expects bookings to remain strong in the current quarter. However, a lot of this new business is on large projects that take a long time to ramp up and translate into revenue.

What's more, management also stated that it has not yet fully realized the benefits of its cost-reduction efforts related to its acquisition of Coriant. 

When combined, the company believes that its revenue growth, gross margin, and bottom line will all remain under pressure.

Metric

Q2 2019 Guidance

Q2 2018 Actual

Revenue

$290 million to $310 million

$208.22 million 

Non-GAAP gross margin

28% to 32%

43.9%

Non-GAAP EPS

($0.30) to ($0.26)

($0.01)

Data source: Infinera.

Management also stated that Infinera's Q2 cash burn rate will approximate what happened in the first quarter. However, the burn rate is expected to decline substantially in Q3 and the company expects to return to generating cash by the fourth quarter.