Ciena (CIEN -0.86%) stock is sinking in Thursday's trading after the company published its latest quarterly results. The optical technologies and software specialist's share price is down 12.2% as of 12:15 p.m. ET.
Before the market opened this morning, Ciena published results for the second quarter of its current fiscal year, which ended May 3. While the business's sales for the period topped the market's expectations, earnings came in lower than anticipated.
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Ciena stock slumps despite Q2 sales beat
Ciena recorded non-GAAP (generally accepted accounting principles) adjusted earnings per share of $0.42 on sales of $1.13 billion in fiscal Q2. For comparison, the average Wall Street analyst estimate had called for the business to post adjusted earnings per share of $0.52 on revenue of $1.09 billion. Ciena's sales were up roughly 24% year over year in the period, and adjusted earnings per share were up roughly 56% compared to the prior-year period.
But while the business delivered a solid sales beat, investors aren't happy with lower-than-anticipated margins and softer forward guidance.
What's next for Ciena?
Ciena is guiding for sales to be between $1.13 billion and $1.21 billion in fiscal Q3 -- good for growth of roughly 24% at the midpoint of the target range. On the other hand, it looks like growth will decelerate significantly in the fourth quarter. Management expects the business to post full-year sales growth of roughly 14%.
Meanwhile, the company's gross margin for the year is now projected to come in at the low end of management's previous guidance for a gross margin between 42% and 44%. Ciena's fiscal Q2 results and forward guidance weren't terrible by any stretch, but they do suggest some unevenness as the company continues to pursue its expansion initiatives.
