Ciena Corporation (NYSE:CIEN) Q1 2023 Earnings Call Transcript

Gary Smith: Amit, the honest answer to that is I honestly don’t know what the new normal is going to look like. And I think the dynamics of this are largely driven resulting not necessarily by demand. Demand has been very consistent and is very solid. It’s by the ability of lead times to meet that demand. And so lead times in this space, even in very large infrastructure projects were 10 to 12 weeks, I’m not sure they will return to that level for that kind of product, for the access and the edge and the rest of it, absolutely. Two weeks or whatever the dynamics should be around that. But I’m not sure of what the new normal will look like for that and when that new normal absolutely kicks in. because you’ve still got volatility around the supply chain.

It’s getting better. There’s no doubt about it. That’s great. So it’s very difficult to predict exactly when we’ll get back to some kind of new normal and indeed, even, Amit, what that new normal might look like. But it will be better lead times than we’re seeing right now. There’s no doubt about it. And that will reflect in carrying a lower backlog into the business. And that’s the same for sort of everybody in this space. It’s a little bit different for us and that we had enormous amounts of backlog because of the new wins that we had in the sort of ’19 to ’21 timeframe that have now translated into orders and backlog. So that’s what gives us fantastic visibility over the next 12 months or so.

Amit Daryanani: Got it. And then if you could maybe spend a minute talking about — think about the 20%, 22% growth rate. You talked a fair bit about APAC and India doing fairly well. How do you think EMEA stacks up for the year from that growth perspective, you sort of think about it? And then I think Jan quarter is a little bit weaker there versus the rest of the geos. So maybe just touch on what are you seeing in EMEA for the year? That would be helpful.

Gary Smith: Jim, do you want to take that?

James Moylan: We believe that all of our regions are going to grow pretty meaningfully this year. EMEA is going to grow. I’m not sure that it’s quite at this company average, but it will grow very significantly in this year. India is probably going to grow above average — web-scale well above average.

Operator: Next question comes from Jim Suva from Citigroup.

Jim Suva: My question is a little bit on gross margins. You’d mentioned that, I think you said lower — I’m sorry, around low 40% range. I want to make sure that I understood it correctly. You’re not saying 40%. You’re just kind of saying lower part of 40% because I believe your range for the full year is 42% to 44%. But with the long backlog and lead times, should you have kind of more visibility in pricing power? So is it just less modem shippings that you’re going to be experiencing in the next quarter? Or why would the margins potentially come in lower? Or maybe I just misheard that?