Infinera Corporation announces preliminary unaudited fourth-quarter 2023 financial results
Via Infinera
Mar 8, 2024
San Jose, California – Infinera Corporation (NASDAQ: INFN) (“Infinera” or the “Company”) today released preliminary financial results for its fourth quarter ended December 30, 2023.
For the fourth quarter,
- Preliminary revenue is expected to be $435 million to $452 million, compared to the Company’s prior outlook of $421 million to $451 million.
- The resulting preliminary GAAP gross margin is expected to be 38.0% to 40.0%, compared to the Company’s prior outlook of 37.3% to 40.4%.
- The resulting preliminary GAAP operating margin is expected to be 0.0% to 3.0%, compared to the Company’s prior outlook of 0.7% to 5.0%.
- The resulting preliminary GAAP net income (loss) per diluted share is expected to be ($0.02) to $0.04, compared to the Company’s prior outlook of ($0.04) to $0.04.
- Preliminary non-GAAP gross margin is expected to be 39.0% to 41.0%, compared to the Company’s prior outlook of 38.0% to 41.0%, and the preliminary non-GAAP operating margin is expected to be 5.7% to 8.3%, compared to the Company’s prior outlook of 5.5% to 9.5%.
- Preliminary non-GAAP net income per diluted share is expected to be $0.07 to $0.13, compared to the Company’s prior outlook of $0.05 to $0.13 per diluted share.
- Preliminary cash and cash equivalents, including restricted cash, was approximately $174 million.
Infinera CEO David Heard said, “We ended 2023 on a high note with a strong fourth quarter during which the midpoints of our preliminary revenue, gross margin, and earnings per share ranges are all expected to come in above those of our prior outlook ranges. For the full year of 2023, we expect to deliver our sixth consecutive year of revenue growth, expand gross margin to a level approaching 40%, and grow earnings per share on a year-over-year basis.”
“As we look ahead, like the rest of the industry, we are expecting a slow first half of the year. Regardless, both the pace and scale of our design wins are accelerating. Already, in the first 60 days of 2024, we have achieved major hyperscale-influenced strategic wins, one of which is among the most significant in the Company’s history, based on our Systems and Subsystems solutions. These strategic wins, combined with our design win funnel, position us well to deliver a stronger second half and place us on a path to achieve our seventh consecutive year of revenue growth with continued margin and earnings per share expansion,” continued Mr. Heard.
Financial Outlook
Infinera’s outlook for the quarter ending March 30, 2024, is as follows:
- Revenue is expected to be $320 million to $350 million.
- GAAP gross margin is expected to be 35.3% to 37.4%. Non-GAAP gross margin is expected to be 36.0% to 38.0%.
- GAAP operating expenses are expected to be $157 million to $161 million. Non-GAAP operating expenses are expected to be $143 million to $147 million.
- GAAP operating margin is expected to be (13.5%) to (8.2%). Non-GAAP operating margin is expected to be (8.5%) to (3.5%).
- GAAP net loss per diluted share is expected to be ($0.25) to ($0.17). Non-GAAP net loss per diluted share is expected to be ($0.18) to ($0.10).
A further explanation of the use of non-GAAP financial information and a reconciliation of each of the non-GAAP financial measures to the most directly comparable GAAP financial measure can be found at the end of this press release.
On February 29, 2024, the Company filed a Notification of Late Filing on Form 12b-25 pursuant to which it disclosed it would not be able to file its Annual Report on Form 10-K for its fiscal year ended December 30, 2023 (the “Form 10-K”) by February 28, 2024, the original due date for such filing, without unreasonable effort or expense due to the circumstances described below.
Subsequent to the filing of the Company’s Form 10-K and Quarterly Reports on Form 10-Q for the periods ended December 31, 2022, April 1, 2023 and July 1, 2023, respectively, Ernst & Young LLP (“EY”), the Company’s independent registered public accounting firm, informed the Company that the Public Company Accounting Oversight Board had commenced an inspection of EY’s audit of the Company’s consolidated financial statements for the fiscal year ended December 31, 2022. Subsequently, EY raised questions regarding the Company’s stand-alone sales price (“SSP”) methodology as it relates to revenue allocation between product revenue, which is recognized upon delivery, and certain components of services revenue, which is amortized over a period of time. In addition, EY raised questions regarding the sufficiency of documentation retained by the Company related to the revenue portion of its quote to cash cycle (revenue cycle) and its inventory cycle. As a result of these queries, the Company reexamined its SSP methodology and engaged in an evaluation of its review procedures related to its revenue cycle and its inventory cycle.
Subsequently, the Company’s management concluded that, as of December 31, 2022, there were material weaknesses in its internal control over financial reporting related to its revenue cycle, inventory cycle, and with respect to these, its internal resources, expertise and policies required to maintain an effective control environment. As a result, the Company’s internal control over financial reporting was not effective, as of December 31, 2022, and continues to be ineffective, and these material weaknesses are unremediated to date. Furthermore, the Company’s Chief Executive Officer and Chief Financial Officer have determined that because of these material weaknesses, the Company’s disclosure controls and procedures were not effective at a reasonable assurance level as of December 31, 2022, April 1, 2023, July 1, 2023 and September 30, 2023.
On February 29, 2024, the Company filed a Form 10-K/A for the period ended December 31, 2022, a Form 10-Q/A for the period ended April 1, 2023, a Form 10-Q/A for the period ended July 1, 2023 and a Form 10-Q for the period ended September 30, 2023.
The Company intends to delay the filing of its Form 10-K until the Company completes its year-end closing procedures in light of the delays caused by the circumstances described above.
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