CIEN Q3 Earnings & Sales Top, Stock Up on 91% Y/Y Bottom-Line Growth

Ciena Corporation (CIEN) reported third-quarter fiscal 2025 (ended Aug. 2) adjusted earnings per share (EPS) of 67 cents, which surpassed the Zacks Consensus Estimate by 28.9%. The bottom line grew 60% sequentially and 91% year over year, showcasing stronger profitability and operating leverage.

Quarterly revenues increased 30% year over year and 8% sequentially to $1.22 billion, surpassing the Zacks Consensus Estimate by 4%. The top line exceeded the upper end of guidance ($1.13-$1.21 billion), driven by strong demand for RLS optical gear and Routing and Switching solutions. Demand during the quarter remained broad-based and resilient, covering both Cloud Provider and Service Provider segments.

The company’s performance underscores its strong position in high-speed connectivity and its ability to capitalize on increased demand as networks become crucial for enabling AI growth and monetization. Although the environment remains fluid, the quarter was slightly better than expected as Ciena gained clearer insights into certain tariffs. It continues to collaborate closely with its supply chain and customers to monitor and respond to any tariff developments.

In response to a sharp increase in revenues and earnings, coupled with strategic share repurchases, CIEN soared 23.3% in trading and closed the session at $116.92 on Sept. 4. Shares of the company have risen 128.5% in the past year compared with the Zacks Communication-Components industry's growth of 69.7%.

Segmental Results

Total revenues in Networking Platforms (77.2% of total revenues) rose 34.6% year over year to $941.4 million. We expected the metric to be $877.7 million.

Platform Software and Services’ revenues (7.4%) totaled $90 million, up 8.2% year over year. We projected the metric to be $100.7 million.

Blue Planet Automation Software and Services’ revenues (2.3%) rose 7.8% to $27.8 million. We estimated the metric to be $44 million.

Total revenues in Global Services (13.1%) were $160.2 million, up 19.7% year over year. Our estimate for segmental revenues was $146.9 million.

Ciena Corporation Price, Consensus and EPS Surprise

Ciena Corporation price-consensus-eps-surprise-chart | Ciena Corporation Quote

Region-wise, revenues in the Americas totaled $923.6 million, up 28.5% year over year. Europe, the Middle East and Africa generated $186 million in revenues, up 37.8% from the prior-year levels. Revenues in the Asia Pacific totaled $109.8 million, up 23.8%.

Non-telecom customer revenues accounted for 53% of total revenues in the fiscal third quarter. Two 10%-plus customers represented 28.8% of the top line in the reported quarter.

Direct Cloud Provider revenues surged 94% year over year and accounted for 40% of total revenues. Cloud providers are rapidly investing in AI, with many recently indicating plans to increase AI spending in the coming quarters and years. Globally, more than $7 trillion is projected to be invested by 2030 in data centers, GPUs, power infrastructure and AI models, with networking capturing an increasing share of that investment.

Also, WaveLogic 6 deployments are accelerating, fueled by AI-driven network expansions, with 11 new customers added in the quarter, including a top-three neoscaler.

Other Details

Non-GAAP adjusted gross margin was 41.9% compared with 43.7% a year ago. However, the metric topped management’s guidance by 90 basis points, backed by sales of previously reserved inventory and reduced net tariff effects.

Adjusted operating expenses were $380.2 million, a 13.2% increase year over year and exceeded the guidance of an average of $360-$370 million due to incentive compensation linked to strong orders and financial results. Excluding this, Ciena remains on track with its full-year base OpEx goal.

Non-GAAP adjusted operating margin was 10.7% compared with 8% in the year-earlier quarter.

Non-GAAP adjusted EBITDA expanded 60.4% to $158 million.

Cash Flow & Liquidity

For the quarter that ended on Aug. 2, 2025, CIEN’s net cash flow from operating activities was $174.8 million against an outflow of $159 million in the prior-year period.

As of Aug. 2, the company had $1.39 billion in cash and investments and $1.52 billion in net long-term debt.

In the reported quarter, CIEN repurchased 1 million shares worth $81.8 million, bringing year-to-date repurchases to $245 million. The company plans to buy back another $85 million in the fiscal fourth quarter, totaling $330 million for the year, around one-third of its current authorization.

Fiscal Q4 Guidance

For the fourth quarter of fiscal 2025, CIEN expects revenues to be in the range of $1.24-$1.32 billion. The adjusted gross margin is estimated between 42% and 43%, with growth expected in the upcoming quarters. Adjusted operating expenses are projected to be between $390 million and $400 million, driven by strong orders and performance-linked incentives.

Ciena has shifted R&D focus to Coherent Optical, Interconnects, Routing and DCOM, ending 25G PON development. This will result in a roughly $90 million noncash charge, excluded from GAAP earnings.

It is cutting 4–5% of its workforce, tied to its investment shift, resulting in approximately $20 million restructuring charge for severance and related costs, excluded from GAAP earnings.

Preliminary 2026 Outlook Reflects Increased Confidence

Ciena expects about 17% revenue growth for fiscal 2026, matching fiscal 2025 projections and reaching the high end of its three-year CAGR target a year early.

It projects gross margins to rise in fiscal 2026 to around 43%.

Management plans to keep investing in its roadmap, funded by portfolio choices and efficiencies, with OpEx expected to be flat at about $1.5 billion, in line with fiscal 2025. Ciena now expects to reach its 15–16% operating margin goal a year early, in fiscal 2026, driven by stronger leverage and margin gains.

CIEN’s Zacks Rank

Ciena currently has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Corning Incorporated (GLW) reported impressive second-quarter 2025 results, wherein adjusted earnings and revenues surpassed the respective Zacks Consensus Estimate. The advanced glass substrates producer witnessed revenue expansion year over year, driven by healthy sales across multiple end markets. The growing adoption of its advanced products for Gen-AI (generative artificial intelligence) applications is a tailwind. Its U.S.-made solar products are also gaining solid market traction.

Viavi Solutions Inc. (VIAV) reported solid fourth-quarter fiscal 2025 results, with both the top and bottom lines surpassing the Zacks Consensus Estimate. The company reported an increase in revenues backed by healthy growth in the Network and Service Enablement (NSE) and Optical Security and Performance Products (OSP) segments. Management’s strong emphasis on various markets such as wireless & fiber, optical transport, Ethernet, broadband access, video test and storage network testing is a key growth driver. However, a constrained spending environment owing to macroeconomic challenges is worrisome.

Descartes Systems (DSGX) reported second-quarter fiscal 2026 non-GAAP EPS of 43 cents, which lagged the Zacks Consensus Estimate by 12.2%. The bottom line, however, grew 7.5% year over year and 4.9% sequentially. Revenues in the quarter totaled $179.8 million, up 10% year over year and 7% sequentially. The growth was supported by synergies from acquisitions completed in the second half of fiscal 2025, as well as the addition of 3GTMS in the first quarter of the fiscal year.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research