Optical network equipment provider Infinera Corporation (INFN 6.85%) reported its fourth-quarter and full-year results after the bell on Feb. 11. Let's dig through the results to see how the company performed in some key areas.

The headline numbers
On its last earnings call, Infinera's management guided for fourth-quarter revenue of $258 million, plus or minus $5 million, and predicted that non-GAAP earnings per share would be roughly $0.21 per diluted share

Here's how the results shook out:

 MetricQ4 2015Q4 2014Change
Non-GAAP revenue $260.6 million $186.3 million


Non-GAAP net income $32 million $18 million 78%
Non-GAAP EPS $0.21 $0.13 62%

Data source: Infinera.

Infinera's results were right in line with management's guidance for the period, and its 40% growth rate continues to show that the company's products are gobbling up market share. For comparison, Ciena (CIEN 0.94%) -- the second-fastest grower in the networking equipment space -- is forecasting quarterly growth of roughly 9% for the same period. 

Tom Fallon, Infinera's CEO, stated: "With customers increasingly relying on optical transport as the foundation of their next generation networks, Infinera will continue to deliver the most innovative, scalable, and programmable Intelligent Transport solutions in the industry. We exited 2015 on a $1 billion annual revenue run rate and are well positioned to address the significant future opportunities associated with this optical networking transformation."

Integration updates
Last year, Infinera made a significant acquisition when it spent $350 million to acquire Transmode, a Swedish network equipment provider that specializes in metro packet-optical networking. Management's rationale for the deal was that it would help to bolster Infinera's suite of products and allow the company to approach new customers that otherwise would not have even allowed Infinera a seat at the table.

Here's CEO Fallon giving investors an update on how the acquisition is working out: "We had a solid uptick in Q4 of end-to-end RFPs that include both the TM and DTN-X platforms. As a reminder, these would have been opportunities that neither company would've been able to compete for prior to the acquisition."

He added later in the conference call: "I couldn't be happier with the integration of Transmode and progress to date. While it's too early to validate our assumptions on synergies, we are engaged in the right RFPs, are having the right discussions, and are starting to see the early traction that I expected."

Management also confirmed that fully integrating the Transmode acquisition remains a top priority for 2016. Fallon also restated that the company believes the deal will be accretive to earnings for the year.

Margins, margins, margins
Infinera has done a stellar job over the past few years at increasing the profitability of the business at a faster rate than overall revenue growth. Management had previously expected that the trend would continue into the quarter, guiding for non-GAAP gross margin to be "47% plus or minus 100 basis points."

Here's the actual results:

 MetricQ4 2015Q4 2014Change 
Non-GAAP gross margin 48.3% 46.1%


Non-GAAP operating margin 12.7% 11% 1.7%

Yet again the company did a nice job at leveraging its increased scale to gain additional profitability, as evidenced by the fact that both gross and operating margins expanded during the period.

Management credited the margin expansion gains to a combination of increased customer adoption of the company's instant bandwidth licenses program, strong growth in the higher-margin metro product line, and an uptick in the services business. 

Over the long term, management reaffirmed that it's targeting companywide gross margin of 50% and an operating margin of 15%.

Looking ahead
For the first quarter of 2016, management continues to expect strong year-over-year growth. It's guiding for revenue of $245 million, plus or minus $5 million, the midpoint of which represents 31% growth versus the same period in 2015. Gross margins are once again expected to expand, to 48.5%, plus or minus 100 basis points, but the company expects to make investments that will pressure the operating-margin line. In total, non-GAAP earnings per share are expected to be "$0.17 per diluted share, plus or minus a couple of pennies," which represents slight growth from the previous year's $0.16 in earnings per share for the period.

Overall, it was a great quarter for the company that capped off an exciting year. With the Transmode acquisition largely behind it, Infinera stands a good chance at continuing to win business away from competitors such as Ciena, and if the company can successfully reach its margin targets, then profit growth should come at a healthy pace moving forward.