What happened

Shares of networking systems and software provider Ciena (NYSE:CIEN) surged on Thursday following a fiscal second-quarter report that easily beat analyst expectations. Double-digit revenue growth and a big jump in earnings helped push the stock up 25.7% by noon EDT.

So what

Ciena reported second-quarter revenue of $865 million, up 18.5% year over year and nearly $47 million higher than the average analyst estimate. "Today we reported very strong quarterly performance, including continued market share gains, driven by our technology leadership and diversified customer base in high growth markets," said CEO Gary Smith.

A blue chart with orange lines going up.

Image source: Getty Images.

Networking platforms revenue was $697 million, up 17.8% year over year; software and software-related services revenue was $47.7 million, up 23.3% year over year; and global services revenue was $120.3 million, up 20.8% year over year.

Non-GAAP earnings per share came in at $0.48, up from $0.23 in the prior-year period and $0.07 higher than analysts were expecting. Gross margin jumped 3.1 percentage points to 43.3%, leading the company's operating margin to more than double. Operating margin was 9.3%, compared to just 4.4% in the prior-year period.

Now what

Ciena sees favorable industry dynamics and a growing competitive advantage driving growth for the rest of the year. Smith said that the company has strong visibility and increased confidence going into the second half.

One risk factor for Ciena is revenue concentration. A full 25% of its revenue came from just two customers in the second quarter. If either of those customers hits the brakes, Ciena's results will take an outsize hit.

With Ciena trouncing analyst estimates and presenting optimism about the second half, it's no surprise that investors are pushing up the stock.