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ADVA Reports Q3 Improvements

MUNICH -- ADVA Optical Networking (ISIN: DE0005103006, WKN 510300), a leading provider of open networking solutions for the delivery of cloud and mobile services, reported financial results for Q3 2018 ended on September 30, 2018. The results have been prepared in accordance with International Financial Reporting Standards (IFRS).

Q3 2018 IFRS financial results
Revenues for Q3 2018 increased by 2.0% to EUR 126.2 million from EUR 123.8 million in Q2 2018 and increased by 13.5% from EUR 111.2 million in the same year-ago period. Revenues for Q3 2018 were within the guidance forecast the company provided on July 19, 2018 of between EUR 123 million and EUR 133 million.

Pro forma operating income for Q3 2018 was EUR 6.8 million (5.4% of revenues), compared to EUR 6.1 million (5.0% of revenues) in Q2 2018 and a pro forma operating loss of EUR 0.8 million in the same year-ago period. Pro forma operating income for Q3 2018 was at the upper end of the company's guidance range of between 2% and 6% of revenues. Operating income for Q3 2018 increased to EUR 5.0 million, compared to operating income of EUR 4.1 million reported for Q2 2018, and improved from the operating loss of EUR 11.5 million in the same year-ago period.

Net income for Q3 2018 was EUR 3.9 million, down from EUR 4.6 million in Q2 2018 and significantly improved in comparison to the same year-ago period net loss of EUR 14.0 million.

At quarter-end, the company's cash and cash equivalents totaled EUR 53.9 million, representing a decrease of 9.6% compared to EUR 59.7 million in Q2 2018.

The company's net debt increased by EUR 2.1 million to EUR 38.7 million from EUR 36.6 million at the end of the prior quarter.

Net working capital at quarter-end was EUR 131.0 million compared to EUR 121.8 million at the end of Q2 2018.

Management commentary
"Q3 2018 was the company's fourth quarter in a row with sequential growth," said Uli Dopfer, CFO, ADVA. "In addition to our top line momentum, our solid profitability confirms that we are on the right track to further scale our business. Our forecast for the current fourth quarter points to further sequential growth as well as a year-over-year increase compared to Q4 2017. The positive order intake and the overall healthy demand from numerous important customers provide a solid backdrop for us for the remaining fiscal year and beyond."

"Our industry is pivotal to the long-term success of the digital revolution," commented Brian Protiva, CEO, ADVA. "As a company, we have aligned ourselves strongly and invested exclusively in strategically important future technologies - technologies that enable new, digital business models. Optical transmission technology delivers the required bandwidth, physical and virtual edge technologies bring the cloud closer to the customer and our synchronization technology guarantees the level of timing needed in the network. All of these things make the difference between success and failure in the digital world. With our vision and innovation, we are well positioned for the future."

Q4 2018 financial outlook
For Q4 2018, ADVA expects revenues to be in the range of EUR 126 million and EUR 136 million and a pro forma operating income of between 3% and 7% of revenues.

ADVA performs quarterly reviews of expected business development with respect to all intangible assets, including capitalized development expenses. In case of adverse business prospects, these reviews may result in non-cash impairment charges in Q4 2018 and beyond, which are excluded from the above guidance.

ADVA Optical Networking

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