INFN Reports

Seems fantastic

GAAP revenue for the quarter was $260.0 million compared to $232.5 million in the third quarter of 2015 and $186.3 million in the fourth quarter of 2014.

GAAP gross margin for the quarter was 44.5% compared to 44.2% in the third quarter of 2015 and 45.3% in the fourth quarter of 2014. GAAP operating margin for the quarter was 5.3% compared to 6.1% in the third quarter of 2015 and 6.9% in the fourth quarter of 2014.

Non-GAAP revenue for the year was $888.0 million compared to $668.1 million in 2014.

Non-GAAP gross margin for the year was 47.8% compared to 44.0% in 2014. Non-GAAP operating margin for the year was 13.1% compared to 8.3% in 2014. Non-GAAP net income for the year was $112.0 million, or $0.78 per diluted share, compared to $49.8 million, or $0.39 per diluted share in 2014.

A further explanation of the use of non-GAAP financial information and a reconciliation of the non-GAAP financial measures to the GAAP equivalents can be found at the end of this release.

“Our fourth quarter performance capped off an exceptional year of revenue and profitability growth, expansion of our product portfolio to serve the end-to-end market and the continuation of our commitment to deliver the Infinera Experience to our customers,” said Tom Fallon, Infinera’s Chief Executive Officer.

“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.”



I thought everything looked pretty much right on expectations.

Initial after hours drop of over 9% to $12.67

Hope that doesn’t follow through tomorrow as this is one of my high conviction/high investment stocks. It’s hard to just keep averaging down again and again with good results every quarter yet the stock price keeps falling.

Tough market…

now its down 16% AH. I really don’t know what it is the market is seeing, or I am missing.

Waiting on the conference call for answers…

Maybe they wanted to see more flow through to the bottom line?

Personally, I’m ok with them spending on R&D like a drunken sailor if they can keep the top line moving up literally every quarter.

My guess is, guidance will be the thing that swings the bump/dip for tomorrow…I’ll be interested to see what happens in the call.

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Price is rising in the after market just after guidance was issued.

Revenue guidance is $245M at mid point which is a 6% sequential decline and a 34% YoY increase. Q1 industry spend is typically down 14% so they are outpacing the Q1 spend reduction.

Take care,


Some numbers:

Revenue (millions)	Q1		Q2		Q3		Q4
2012			104.7		 93.5		112.2		128.1
2013			124.6		138.4		142.0		139.1
2014			142.8		165.4		173.6		186.3
2015			186.9		207.3		233.2		260.0

EPS (non-GAAP)	        Q1		Q2		Q3		Q4
2012			(0.10)		(0.16)		(0.07)		(0.05)
2013			(0.06)		(0.01)		0.10		0.00
2014			0.03		0.11		0.11		0.13
2015			0.16		0.18		0.22		0.21

Current (2015 Q4 Earnings):

Revenue Growth (millions)
2014 Q4 TTM Revenue = 668.1
2015 Q4 TTM Revenue = 887.4
Year Over Year Revenue Growth = 32.8%, last quarter 31%

EPS Growth (Non-GAAP)
2014 Q4 TTM Earnings = 0.38
2015 Q4 TTM Earnings = 0.77
Year Over Year EPS Growth = 102%, last quarter 176%

P/E = (Check Current Price) 13.96/0.77 = 18.13

1YPEG = 18.13/102 = 0.18

Listening to the conference call…Sounds like they’re expecting sequential declines for 2016 Q1. Don’t know what expectations were from analysts, but I wonder how the market will respond to that?

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now up 4%+ AH

now up 4%+ AH

Reminds me of SKX yesterday.


Listening to the conference call…Sounds like they’re expecting sequential declines for 2016 Q1. Don’t know what expectations were from analysts, but I wonder how the market will respond to that?

I was listening on the call as well. The industry as a whole expects a sequential decline of 14% due to seasonality. Infinera guided for a 6% decline. Tom also went on to say they take their guidance seriously and their revenue target is based on real, tangible demand and this also implies it is market share they are taking.

The other thing that was interesting on the call was how Tom said that Infinera’s business is just a different animal from Ciena, and the two should not be compared. There was a joke about it on the call, and one of the analysts seemed to agree. Tom then gave an example on their backlog, where their customer’s orders are typically in 3-4 week window for deployment vs Ciena who has 6 month horizon for theirs.


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Finished the call. Great, upbeat, strong call. Here are my notes. Some stuff could be wrong – there were a lot of distractions at home. But I think the gist is there.

Q1 Guidance:
$245M +/- 5M
48.5% +/- 100 basis points non-gaap margin
$93M +/- 2M non-gaap operating expenses
11% +/- 100 basis points non-gaap operating margin
1.5M taxes
$0.17 +/- 0.02 non-gaap EPS

What’s up with increase in deferred revenue and inventories? 4Q deferred revenue due to maintenance renewals. Elevated inventory due to new product releases, and actively reducing lead times, especially for internet-provider industry where less long-range planning occurs. They now like their leads times now. They don’t want multiple quarters of backlog. They see it as an advantage that they can deliver quickly.

Seeing a lot more opportunity for transmode gear than transmode saw before. But will take time for customers to test and acquire transmode gear, so probably second half of year to see it reflected in the numbers.

Economic distress? INFN sees permanent move to cloud that isn’t slowing down, good for INFN. Not seeing slowdown in requirements customers need on bandwidth. Demand for bandwidth means INFN will do well. Just came back from conference talking to customers, and all of them see demand for bandwidth. One difference this quarter: INFN seeing subset of customers starting to buy-on-win rather than planning ahead. Quick lead times help INFN as a competitive differentiator.

Cloud Express got off to slower start due to certifications, but fell within given range for year. Began accelerating at end of year, and accelerated more in Q1 so far and exceeding expectations. Competitors have announced competing products, but INFN not seeing any impact in the market.

Pricing power and competitive advantage in 100 gig market as it gets more crowded? A lot of people announcing products, but a lot fewer selling products that actually solve customer problems. INFN not seeing these people actually deliver products. Differentiated optics important, which is a unique distinct advantage for INFN (IP and vertically owned and manufactured). Next generation terabit tech coming out in 2016.

How manage gross margins? Margins continue to expand. INFN has a differentiated approach to the market and is selective about the business they take, have leverage through vertical manufacturing. Aiming for 50% gross margin over time.

Tax rate won’t change in 2016. In 2017, tax rate will go up, but no specifics available.

What about Cienna 6% growth guidance? INFN thinks they’ll grow market share in its various segments. Isn’t bothered at all by what Cienna is doing. Doesn’t want to be lumped together with them.

INFN investing in Q1 based on its outlook for the year, not for the quarter, and since lighter revenues in Q1 means lower operating margin.

INFN is adamant they will run R&D at 20% of revenues. Due to fast revenue growth, they’ve been lagging, but that’s where they will be. Don’t model less than 20%.

continue to see growth in 100g metro, expect acceleration in later 2016. Majority of services are still 10g.

capex 5% on annual basis for entire business. Were a little higher in 4Q, but still in line for year.

INFN believes they will be much better at any other competitor at optics due to their IP. Competitors moving into optics because customers are demanding it, but INFN has a sustainable competitive advantage with their IP, specialized expertise, and vertical integration.

All segments growing. INFN won’t break out metro expectations until perhaps second half of the year

What about cautiousness management spoke about last call? Not seeing spending from ICP’s going down. Analysts focusing too much on broad capex from ICPs, but that includes a lot of stuff. Should focus on bandwidth demand. Great and growing presence in long haul, data center interconnect, management optimistic about position and demand. Will be watching competition, but very few are delivering products. Expected a lot more competition than seen so far. CloudExpress growing faster than it’s ever grown. Not feeling cautious.

Competitive advantage in metro? Are 1 terabit pics really needed in metro? Transmode was marketshare leader because it had complete set of services, but also because it could offer lowest power, lowest size offering to meet needs. INFN continues that approach and seeing success in multiple markets and geographies. Bringing that strength to INFN customers. Will be integrating PIC with TM platform. INFN also coming out with multiple flavors of PIC that should work well for metro market. And metro will need 1tb eventually.

Very excited about mid-year software release.

When will CX get to 10% of revenue? Management not going to comment. CX obviously growing much faster than business, but all segments are growing. Management does see it getting to 10% of revenue at some point, but right now focusing in winning marketshare in growing markets. INFN management very excited about company is at, doesn’t so much care about which product is sold to customers – just wants to solve customer’s problem however it makes the most sense.

Several peers struggling. INFN management very excited about company is at, doesn’t so much care about which product is sold to customers – just wants to solve customer’s problem however it makes the most sense. That is, not trying to compete internally.



And, just in case anyone thinks the demand for higher bandwidth is going to hit a ceiling any time soon ……

20-25 MB/sec is painfully slow to me at times. Amazing considering where we came from back when over 100KB/sec was considered fast…

I used to have a phone modem working at 300 bits per second.
Later, 1200 bps was a big jump for me


My second job in IT was designing an on-line database. We had to have the phone company come out and specially condition the lines so that they would handle 110 baud! 1969!

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