Infinera hit by Russia exit, supply chain glitchesInfinera hit by Russia exit, supply chain glitches

US-based Infinera, a coherent optical transport supplier, posted what might be described as an "if only" set of financial results for fiscal Q1 (ended March 26).

Booking volumes were buoyant but the cost of exiting Russia ($5 million) and supply-chain problems causing project delays among some customers – which Infinera indicated were also related to Russia's invasion of Ukraine – inflicted more top-line damage ($20 million).

Figure 1: The tougher trading environment inevitably took its toll on Q1 revenue, which clocked in at $338.9 million compared to $400.3 million during Q1 2021.
(Source: Pixabay)

GAAP gross margin for Q1 was 32.9% (the bottom end of guidance), down from 35.6% the previous quarter. It was 35.4% during Q1 2021. Infinera attributed the margin squeeze primarily to higher component costs and lower volumes caused by "supply chain impact."

"We continue to benefit from strong demand and deal momentum in the quarter, both of which were above our expectations, especially following a very strong Q4 2021," said Infinera CEO David Heard on the company's earnings conference call with analysts (as transcribed by Seeking Alpha).

"However, our Q1 financial results did not represent our full potential, and we're at the low end of our outlook range due to uncontrollable and previously unforeseen supply chain developments late in the quarter."

Speaking with Light Reading at OFC, Rob Shore, Infinera's SVP of marketing, discussed three announcements covering Infinera's moves in optical transport.

The tougher trading environment inevitably took its toll on Q1 revenue, which clocked in at $338.9 million (below Infinera's forecast) compared to $400.3 million during Q1 2021.

Net loss for the quarter was $41.9 million compared to $33.1 million the previous quarter.

Bookings up

Infinera's overall Q1 bookings grew, impressively, in the double-digit percentage range on a year-over-year basis.

"We ended the quarter with a product book-to-bill meaningfully above one," asserted Heard. "This was our sixth consecutive quarter with a book-to-bill ratio above one."

Looking ahead to Q2 Heard said he anticipated continued healthy demand "given our bookings momentum and the expectation of a strong capex cycle continuing."

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The CEO warned, however, that "acute macroeconomic and supply chain pressures from Q1 will continue into Q2."

Despite the challenges, Infinera expects revenue to grow sequentially from Q1 to Q2 (around $350 million, plus or minus $20 million) and that there will be improved revenue growth and margins in the second half of the year.

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— Ken Wieland, contributing editor, special to Light Reading