On February 11, 2016 Infinera’s Infinera reported their Q4 results for 2015. On that call, Tom and Brad also provided a few hints on what we might expect for Q1. Keep in mind, on February 11, 2016 the current quarter Q1 was also half over. It’s much easier to project a second half when you have the first half of that data already known.
To refresh my memory on what was told, I took a peek back at the conference call transcripts. By the way, all the transcripts, summaries, balance sheets and next quarter outlooks going back to 2011 are conveniently located at the investor relations section of Infinera’s website: http://investors.infinera.com/financials/financial-summary/d… They’ve been making it super easy to find key info about the company.
Here are a few of those reveals from last quarters conference call:
George C. Notter Jefferies LLC
Got it. And then one follow-up I had. I guess I was curious about Cloud Xpress in Q4. I guess if we go back, you guys at one point said $30 million to $60million was kind of range for CloudXpress and then I think you were kind of point to the lower end of that range. I’d love to get an update on where CloudXpress shakes out for the year and what kind of momentum you’re seeing in terms of traction with revenue?
Thomas J. Fallon A Chief Executive Officer & Director
Yeah. It played out in the range that we had said. As we said, it got off to a slower start than we thought because of certifications which I still believe are architecturally important and put us in a great position. I’ll give a little comment on Q1. The momentum that was building near the end of the year has actually accelerated in Q1 for the Cloud Xpress product. It’s actually in Q1 so far exceeding our expectations. That’s what we thought would happen. Its an architectural win. It’s a proofpoint in the industry. And even though a number of competitors have announced ompeting products,we’re really not seeing them impact the market yet. We feel like we’ve got a real winner with the CX family .
Doug Clark Q Goldman Sachs & Co.
Great. Thank you. And then my follow-up was more first quarter guidance. You talked about kind of the impact of timing of budget releases and the finalization of that. A month and a half into the quarter halfway through,are those budgets actually being released? Are you seeing spending come unlocked or is it still the anticipation of that to come?
Thomas J. Fallon A Chief Executive Officer & Director
I’m going to be a little bit – add a little clarity. Budgets are being released, et cetera, but we wouldn’t have guided to $245 million if we couldn’t touch in the field of $245 million. So I don’t want you to read that there is–we take the guide very, very seriously. So we’re not depending upon budgets being released that we’re not aware of yet.
Finally, from their OFC update released last week we had another tell on their DCI ramp.
Our DCI volume continues to ramp to the ICPs and others as we attack the broad set of applications both in the US and internationally. We will continue to innovate in this area and believe our technologies will lead to ultimate success in the growing DCI market.
We look forward to speaking with you after Q1 Earnings
So we’ve got other buyer types looking at CloudXpress. Not just ICPs.
I wouldn’t mind seeing a few more tells between now and 4/27. It would be nice to see a press release with a new CloudXpress customer, just to serve as confirmation. Let’s hope we get one.
As a last point of update, here is their Q1’16 Outlook in summary form:
http://s21.q4cdn.com/892601718/files/doc_financials/quarterl…
• Revenue is expected to be in the range of $240 million to $250 million. ?
• GAAP Gross Margin is expected to be 45.7% +/- 100 bps. Non-GAAP Gross Margin is expected to be ?48.5% +/- 100 bps. ?
• GAAP Operating Expenses are expected to be $103 million +/- $2 million. Non-GAAP Operating Expenses ?are expected to be $93 million +/- $2 million. ?
• GAAP Operating Margin is expected to be 4% +/- 100 bps. Non-GAAP Operating Margin is expected to be ?11% +/- 100 bps. ?
• Based on estimated average weighted shares outstanding of 147 million, GAAP Diluted EPS is expected to ?be $0.05 +/- $0.02. Non-GAAP Diluted EPS is expected to be $0.17 +/- $0.02. ?
Best,
–Kevin