Optical networking company Infinera reported higher (GAAP) revenue of $338.2 million in the second quarter (Q2) of 2021 compared to $330.9 million in the first quarter of 2021 and $331.6 million in Q2 2020.

The moderate year-on-year growth nevertheless continues to reflect the global shortage of semiconductors.

According to David Heard, CEO of Infinera, revenue in Q2 grew 2% year-on-year, "With our growth rate entirely constrained by supply. These supply issues limited our cumulative revenue by a total of $35 million to $40 million."

Figure 1: Shine on: Despite the global semiconductor shortage, Infinera still managed to post modest growth.

At the same time, Heard said revenue "was within our outlook range, despite significant industry-wide supply chain challenges, while gross margin and operating margin exceeded the high end of our outlook ranges."

Trimming down

The (GAAP) net loss for the quarter was somewhat improved at $35.6 million, compared to $48.3 million in Q1 2021, and $61.6 million in Q2 2020. The gross margin also improved to 35.6% compared to 35.4% in Q1 2021 and 29.4% in Q2 2020.

In non-GAAP terms, revenue was $339.2 million compared to $332.6 million in Q2 2020, while the net loss was $6 million compared to a net loss of $15.6 million in Q2 2020.

Heard said demand remained strong in the quarter, "with double-digit year-over-year growth in product bookings, a book-to-bill ratio above one and record backlog at quarter end."

"For the first half of FY 2021, we delivered double-digit year-over-year bookings growth and expanded each of gross margin and operating margin by over 600 basis points," he added.

Silver linings

Heard said Infinera believes that the supply chain challenges are temporary and not unique to the company. He also pointed to an upside.

"Interestingly, the supply chain constraints have opened the doors to greater collaboration with our customers, providing us increased visibility into their core demand profile," he said.

The CEO certainly provided a bullish view despite the challenges, saying this is "one of the healthiest optical environments we've seen in years."

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He said Q2 was a pivotal quarter for several reasons: the trend towards the open optical networks, "including an acceleration in the pace of Huawei replacement opportunities"; the strong growth in booking; and progress in its business model to drive market share and enter new product areas.

"Despite the temporal headwinds from the industry-wide supply chain disruptions, our Q2 and first half operating results give us confidence that we are on track to achieve the target business model we presented at our Investor Day in May," Heard said.

Infinera's target business model is 8% to 12% revenue growth starting in 2022, gross margins in the mid-40s and double-digit operating margins by 2023. For Q3, it is forecasting revenue to be in the range of $340 million to $370 million.

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— Anne Morris, contributing editor, special to Light Reading