What: Shares of Infinera (NASDAQ:INFN) jumped on Wednesday following the company's third-quarter earnings report. Both revenue and EPS came in above analyst expectations, and the company's guidance for the fourth quarter was stronger than expected. At 12:15 p.m. Wednesday, the stock was up nearly 13%.
So what: Infinera reported quarterly revenue of $232.5 million, up 34% year-over-year and about $8 million higher than analysts were expecting. Infinera's results include the impact of the acquisition of Transmode, which closed on Aug. 20.
Non-GAAP EPS was $0.22 for the quarter, up from $0.11 during the same period last year and $0.05 higher than the average analyst estimate. On a GAAP basis, EPS of $0.06 increased 50% year-over-year. Non-GAAP gross margin was 47.5%, up from 44.2% during the third quarter of 2014, while non-GAAP operating margin rose nearly six percentage points year-over-year to 14.4%.
CEO Tom Fallon praised the company's strong results: "Our excellent third quarter results reflect continued strength across our core business, including growing Cloud Xpress revenues as well as the initial contribution from the new metro business. Adding the recently announced metro core and long haul interconnect products along with Transmode's suite of metro solutions enables Infinera to further enhance the superior experience we deliver to our customers."
Now what: In addition to reporting strong third-quarter results, the company provided solid guidance for the fourth quarter. Revenue is expected to be in the range of $253 million to $263 million, up 39% at the midpoint and higher than the consensus analyst estimate of $250 million. Non-GAAP EPS is expected to come in at $0.21, plus or minus two cents, above the $0.19 analysts were expecting.
Infinera's strong report comes about a week after optical component vendor Oclaro (NASDAQ:OCLR) pre-announced a better-than-expected first quarter, news that sent shares of Infinera higher. Strong growth of Oclaro's 100G products drove the company's results, and earlier this month, Infinera announced a 100G product refresh.