Cyan Ups Q4 Outlook, Promises SDN Wins

Following a bountiful holiday season that included a contract win from an existing customer and new debt funding, Cyan this week raised its outlook for fourth-quarter revenue.

The vendor now expects revenue for the fourth quarter in the $30 million to $31 million range -- a bump up from the range of $24 million to $26 million it had quoted earlier. In a statement, Cyan Inc. CEO Mark Floyd said the company has seen greater than expected demand for its Z-Series optical platform for metro and regional 100G and packet applications.

The brightened revenue outlook comes two weeks after Cyan announced it had won a deal from existing customer Windstream Communications Inc. (Nasdaq: WIN) for the Z-Series to be deployed in the carrier's metro and regional networks to help it offer faster broadband to residential and business customers, as well as improve the carrier's ability to compete for data center and cloud connectivity opportunities. (See Windstream Taps Cyan for 100G Upgrade.)

Want to know how other companies are faring in the SDN market? Check out our dedicated SDN content channel here on Light Reading.

Though Windstream has often been Cyan's biggest revenue contributor on a quarter-to-quarter basis, the December announcement represented an expansion of the vendor's role at Windstream from its previous, smaller role supporting mobile backhaul applications, according to Joe Cumello, vice president of marketing at Cyan.

Cumello tells us that Cyan will further elaborate on the reasons for its change in outlook when the company reports fourth-quarter earnings on Feb. 18. For now, he's dancing around the question of how much the higher revenue projection has to do with the Windstream deal, saying that Cyan saw increased interest "across all markets" for its optical and SDN/NFV products.

Industry analysts are keenly watching Cyan for some progress in converting its numerous SDN/NFV trials into paying contracts. This week's statement from the company also reiterated CEO Floyd's earlier projection that Cyan will do just that during the first half of this year, but how soon such contract wins will translate into revenue remains to be seen.

"We remain concerned that Tier 1 carriers are notoriously slow-moving, and it might be a few quarters before Blue Planet [Cyan's SDN software platform] could hit the top-line for these Tier 1 opportunities," says George Notter, analyst with Jefferies, in a research note.

Lagging SDN purchasing cycles were part of what drove Cyan to size up new funding options late last year. In December, it announced a sale of Convertible Senior Secured Notes to obtain more than $46 million to be used to support ongoing business operations. (See Cyan to Net $46.6M in Notes Sale and Cyan Seeks Funding in SDN Squeeze.)

— Dan O'Shea, Managing Editor, Light Reading

[email protected] 1/12/2015 | 4:54:35 AM
SDN details It's the SDN details that everyone's waiting for... Cyan was early off the blocks in terms of SDN software and many other vendors are looking to see which operators are using it and what sort of impact it has on Cyan's top and bottom lines.

The economics of telco software is going to be a big talking point from hereon in.
DOShea 1/12/2015 | 5:01:32 PM
Re: SDN details True, as something of a bellwether for the carrier SDN vendor community, Cyan provided a lot of hope early on with a lot of trials and news of overall interest, but the first half of this year is now looking like a critical time for both the company and the sector to take the next step.
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