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Infinera Corporation Reports First Quarter 2020 Financial Results

May 12, 2020

SUNNYVALE, Calif., May 12, 2020 (GLOBE NEWSWIRE) -- Infinera Corporation (NASDAQ: INFN) today released financial results for its first quarter ended March 28, 2020.

GAAP revenue for the quarter was $330.3 million compared to $384.6 million in the fourth quarter of 2019 and $292.7 million in the first quarter of 2019.

GAAP gross margin for the quarter was 23.3% compared to 29.0% in the fourth quarter of 2019 and 22.7% in the first quarter of 2019. GAAP operating margin for the quarter was (23.3)% compared to (15.8)% in the fourth quarter of 2019 and (38.2)% in the first quarter of 2019.

GAAP net loss for the quarter was $(99.3) million, or $(0.55) per share, compared to $(66.6) million, or $(0.37) per share, in the fourth quarter of 2019, and $(121.6) million, or $(0.69) per share, in the first quarter of 2019.

Non-GAAP revenue for the quarter was $331.4 million compared to $386.5 million in the fourth quarter of 2019 and $295.6 million in the first quarter of 2019.

Non-GAAP gross margin for the quarter was 28.3% compared to 35.2% in the fourth quarter of 2019 and 35.3% in the first quarter of 2019. Non-GAAP operating margin for the quarter was (9.4)% compared to 2.3% in the fourth quarter of 2019 and (11.9)% in the first quarter of 2019.

Non-GAAP net loss for the quarter was $(49.4) million, or $(0.27) per share, compared to a net income of $6.4 million, or $0.03 per share, in the fourth quarter of 2019, and net loss of $(41.2) million, or $(0.23) per share, in the first quarter of 2019.

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 release.

“While facing impacts associated with the COVID-19 pandemic, we continued to service our customers and deliver year-over-year growth in revenue and orders during the quarter,” said Tom Fallon, Infinera CEO. “While the macro-economic environment creates visibility challenges for the second half of the year, we are on track for ICE6 delivery this year and remain very optimistic about the opportunity we see for Infinera in the medium and long term, driven by our truly differentiated performance in the fast-growing high-capacity optical market.”

Financial Outlook

Infinera's outlook for the quarter ending June 27, 2020 is as follows:

  • GAAP revenue is expected to be $319 million +/- $10 million. Non-GAAP revenue is expected to be $320 million +/- $10 million.
  • GAAP gross margin is expected to be 29% +/- 200 bps. Non-GAAP gross margin is expected to be 33% +/- 200 bps.
  • GAAP operating expenses are expected to be $142 million +/- $2 million. Non-GAAP operating expenses are expected to be $122 million +/- $2 million.
  • GAAP operating margin is expected to be approximately (15.5)% +/- 300 bps. Non-GAAP operating margin is expected to be approximately (4)% +/- 300 bps.

First Quarter 2020 Investor Slides Available Online

Investor slides reviewing Infinera's first quarter of 2020 financial results will be furnished to the SEC on a Current Report on Form 8-K and published on Infinera's Investor Relations website at investors.infinera.com prior to first quarter of 2020 earnings conference call. Analysts and investors are encouraged to review these slides prior to participating in the conference call webcast.

Conference Call Information

Infinera will host a conference call for analysts and investors to discuss its results for the first quarter of 2020 and its outlook for the second quarter of 2020 today at 5:00 p.m. Eastern Time (2:00 p.m. Pacific Time). Interested parties may join the conference call by dialing 1-866-373-6878 (toll free) or 1-412-317-5101 (international). A live webcast of the conference call will also be accessible from the Events section of Infinera’s website at investors.infinera.com. Replay of the audio webcast will be available at investors.infinera.com approximately two hours after the end of the live call.

Contacts:

Media:
Anna Vue
Tel. +1 (916) 595-8157
avue@infinera.com

Investors:
Michael Bowen, ICR, Inc.
Tel. +1 (203) 682-8299
Michael.Bowen@icrinc.com

Marc P. Griffin, ICR, Inc.
Tel. +1 (646) 277-1290
Marc.Griffin@icrinc.com

About Infinera

Infinera is a global supplier of innovative networking solutions that enable carriers, cloud operators, governments, and enterprises to scale network bandwidth, accelerate service innovation, and automate network operations. The Infinera end-to-end packet-optical portfolio delivers industry-leading economics and performance in long-haul, submarine, data center interconnect, and metro transport applications. To learn more about Infinera, visit www.infinera.com, follow us on Twitter @Infinera, and read Infinera's latest blog posts at www.infinera.com/blog.

Forward-Looking Statements

This press release contains certain forward-looking statements based on current expectations, forecasts and assumptions that involve risks and uncertainties. Such forward-looking statements include, without limitation, Infinera’s visibility into the performance of its business in the second half of 2020 based on the unpredictability of the macro-economic environment; Infinera's expectations related to the delivery of ICE6 in 2020; Infinera’s medium- and long-term opportunities; and its financial outlook for the second quarter of 2020, including the projected revenue impact of the coronavirus for the second quarter of 2020.

Forward-looking statements can also be identified by forward-looking words such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “should,” “will,” and "would” or similar words. These statements are based on information available to Infinera as of the date hereof and actual results could differ materially from those stated or implied due to risks and uncertainties. The risks and uncertainties that could cause Infinera’s results to differ materially from those expressed or implied by such forward-looking statements include, the effect of the COVID-19 pandemic on Infinera’s business, results of operations, financial condition, and stock price; the effect of global and regional economic conditions on Infinera’s business, including effects on purchasing decisions by customers; Infinera’s future capital needs and its ability to generate the cash flow or otherwise secure the capital necessary to make anticipated capital expenditures; Infinera's ability to service its debt obligations and pursue its strategic plan; delays in the development and introduction of new products or updates to existing products; market acceptance of Infinera’s end-to-end portfolio; Infinera's reliance on single and limited source suppliers; fluctuations in demand, sales cycles and prices for products and services, including discounts given in response to competitive pricing pressures, as well as the timing of purchases by Infinera's key customers; the effect that changes in product pricing or mix, and/or increases in component costs could have on Infinera’s gross margin; Infinera’s ability to respond to rapid technological changes; aggressive business tactics by Infinera’s competitors; the effects of customer consolidation; the impacts of foreign currency fluctuations; Infinera’s ability to protect Infinera’s intellectual property; claims by others that Infinera infringes their intellectual property; war, terrorism, public health issues, natural disasters and other circumstances that could disrupt the supply, delivery or demand of Infinera's products; and other risks and uncertainties detailed in Infinera’s SEC filings from time to time. More information on potential factors that may impact Infinera’s business are set forth in its Annual Report on Form 10-K for the year ended on December 28, 2019 as filed with the SEC on March 4, 2020, as well as subsequent reports filed with or furnished to the SEC from time to time. These reports are available on Infinera’s website at www.infinera.com and the SEC’s website at www.sec.gov. Infinera assumes no obligation to, and does not currently intend to, update any such forward-looking statements.

Use of Non-GAAP Financial Information

In addition to disclosing financial measures prepared in accordance with U.S. Generally Accepted Accounting Principles (GAAP), this press release and the accompanying tables contain certain non-GAAP financial measures that exclude acquisition-related deferred revenue and inventory adjustments, stock-based compensation expenses, amortization of acquired intangible assets, acquisition and integration costs, restructuring and related costs, amortization of debt discount on Infinera’s convertible senior notes, and COVID-19 related costs, along with related income tax effects. For a description of these non-GAAP financial measures and a reconciliation to the most directly comparable GAAP financial measures, please see the section titled, “GAAP to Non-GAAP Reconciliations.”

Infinera has included forward-looking non-GAAP information in this press release, including an estimate of certain non-GAAP financial measures for the second quarter of 2020 that exclude acquisition-related deferred revenue adjustments, stock-based compensation expenses, amortization of acquired intangible assets, acquisition and integration costs related to Infinera's acquisition of Coriant, and restructuring and related expenses. Please see the section titled, “GAAP to Non-GAAP Reconciliation of Financial Outlook” below on specific adjustments.

Infinera believes these adjustments are appropriate to enhance an overall understanding of its underlying financial performance and also its prospects for the future and are considered by management for the purpose of making operational decisions. In addition, these results are the primary indicators management uses as a basis for its planning and forecasting of future periods. The presentation of this additional information is not meant to be considered in isolation or as a substitute for revenue, gross margin, operating expenses and operating margin, prepared in accordance with GAAP. Non-GAAP financial measures are not based on a comprehensive set of accounting rules or principles and are subject to limitations.

A copy of this press release can be found on the Investor Relations page of Infinera’s website at www.infinera.com.

Infinera and the Infinera logo are trademarks or registered trademarks of Infinera Corporation. All other trademarks used or mentioned herein belong to their respective owners.

Infinera Corporation
Condensed Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited) 

    Three Months Ended
    March 28,
 2020
  March 30,
 2019
Revenue:        
Product   $ 255,192     $ 223,007  
Services   75,081     69,700  
Total revenue   330,273     292,707  
Cost of revenue:        
Cost of product   201,792     157,817  
Cost of services   40,695     36,676  
Amortization of intangible assets   8,628     8,252  
Acquisition and integration costs   1,035     2,064  
Restructuring and related   1,157     21,466  
Total cost of revenue   253,307     226,275  
Gross profit   76,966     66,432  
Operating expenses:        
Research and development   68,180     73,660  
Sales and marketing   36,689     40,037  
General and administrative   29,620     33,044  
Amortization of intangible assets   4,555     7,057  
Acquisition and integration costs   9,222     7,134  
Restructuring and related   5,580     17,188  
Total operating expenses   153,846     178,120  
Loss from operations   (76,880 )   (111,688 )
Other income (expense), net:        
Interest income   24     766  
Interest expense   (8,794 )   (7,563 )
Other gain (loss), net:   (12,682 )   (2,923 )
Total other income (expense), net   (21,452 )   (9,720 )
Loss before income taxes   (98,332 )   (121,408 )
Provision for income taxes   936     193  
Net loss   (99,268 )   (121,601 )
         
Net loss per common share - basic and diluted:   $ (0.55 )   $ (0.69 )
         
Weighted average shares used in computing net loss per common share - basic and diluted:        
Basic   182,024     176,406  
Diluted   182,024     176,406  
             
             


Infinera Corporation
GAAP to Non-GAAP Reconciliations
(In thousands, except percentages and per share data)
(Unaudited) 

    Three Months Ended
    March 28, 2020       December 28, 2019       March 30, 2019    
Reconciliation of Revenue:                        
U.S. GAAP as reported   $ 330,273         $ 384,567         $ 292,707      
Acquisition-related deferred revenue adjustment(1)   1,110         1,891         2,905      
Non-GAAP as adjusted   $ 331,383         $ 386,458         $ 295,612      
                         
Reconciliation of Gross Profit:                        
U.S. GAAP as reported   $ 76,966     23.3 %   $ 111,406     29.0 %   $ 66,432     22.7 %
Acquisition-related deferred revenue adjustment(1)   1,110         1,891         2,905      
Stock-based compensation(2)   2,102         1,752         1,328      
Amortization of acquired intangible assets(3)   8,628         8,437         8,252      
Acquisition and integration costs(4)   1,035         7,238         2,064      
Acquisition-related inventory adjustments(5)                   1,778      
Restructuring and related(6)   1,157         5,407         21,466      
COVID-19 related costs(8)   2,880                      
Non-GAAP as adjusted   $ 93,878     28.3 %   $ 136,131     35.2 %   $ 104,225     35.3 %
                         
Reconciliation of Operating Expenses:                        
U.S. GAAP as reported   $ 153,846         $ 172,277         $ 178,120      
Stock-based compensation(2)   9,601         9,321         7,385      
Amortization of acquired intangible assets(3)   4,555         6,617         7,057      
Acquisition and integration costs(4)   9,222         11,011         7,134      
Restructuring and related costs(6)   5,580         18,024         17,188      
Non-GAAP as adjusted   $ 124,888         $ 127,304         $ 139,356      
                         
Reconciliation of Net Income/(Loss) from Operations:                        
U.S. GAAP as reported   $ (76,880 )   (23.3 )%   $ (60,871 )   (15.8 )%   $ (111,688 )   (38.2 )%
Acquisition-related deferred revenue adjustment(1)   1,110         1,891         2,905      
Stock-based compensation(2)   11,703         11,073         8,713      
Amortization of acquired intangible assets(3)   13,183         15,054         15,309      
Acquisition and integration costs(4)   10,257         18,249         9,198      
Acquisition-related inventory adjustments(5)                   1,778      
Restructuring and related costs(6)   6,737         23,431         38,654      
COVID-19 related costs(8)   2,880                      
Non-GAAP as adjusted   $ (31,010 )   (9.4 )%   $ 8,827     2.3 %   $ (35,131 )   (11.9 )%
                         
                         
Reconciliation of Net Income/(Loss):                        
U.S. GAAP as reported   $ (99,268 )       $ (66,594 )       $ (121,601 )    
Acquisition-related deferred revenue adjustment(1)   1,110         1,891         2,905      
Stock-based compensation(2)   11,703         11,073         8,713      
Amortization of acquired intangible assets(3)   13,183         15,054         15,309      
Acquisition and integration costs(4)   10,257         18,249         9,198      
Acquisition-related inventory adjustments(5)                   1,778      
Restructuring and related costs(6)   6,737         23,431         38,654      
Amortization of debt discount(7)   5,121         4,567         4,241      
COVID-19 related costs(8)   2,880                      
Income tax effects(9)   (1,170 )       (1,268 )       (426 )    
Non-GAAP as adjusted   $ (49,447 )       $ 6,403         $ (41,229 )    
                         
Net Loss per Common Share - Basic and Diluted:                        
U.S. GAAP as reported   $ (0.55 )       $ (0.37 )       $ (0.69 )    
Non-GAAP as adjusted(10)   $ (0.27 )       $ 0.03         $ (0.23 )    
                         
Weighted Average Shares Used in Computing Net Loss per Common Share - Basic and Diluted:                        
Basic   182,024         180,864         176,406      
Diluted(11)   182,024         186,349         176,406      
                               


   

(1) Business combination accounting principles require Infinera to write down to fair value its maintenance support contracts assumed in the Coriant acquisition. The revenue for these support contracts is deferred and typically recognized over a period of time after the Coriant acquisition, so Infinera's GAAP revenue for a period of time after the acquisition will not reflect the full amount of revenue that would have been reported if the acquired deferred revenue was not written down to fair value. The non-GAAP adjustment eliminates the effect of the deferred revenue write-down. Management believes these adjustments to revenue from support contracts assumed in the Coriant acquisition are useful to investors as an additional means to reflect revenue trends of Infinera's business.
(2) Stock-based compensation expense is calculated in accordance with the fair value recognition provisions of Financial Accounting Standards Board Accounting Standards Codification Topic 718, Compensation – Stock Compensation effective January 1, 2006. The following table summarizes the effects of stock-based compensation related to employees and non-employees (in thousands):

  

    Three Months Ended
    March 28,
2020
  December 28,
2019
  March 30,
2019
Cost of revenue   $ 624     $ (120 )   $ 538  
Research and development   3,774     3,574     3,603  
Sales and marketing   2,644     2,578     1,547  
General and administration   3,183     3,169     2,235  
    10,225     9,201     7,923  
Cost of revenue - amortization from balance sheet*   1,478     1,872     790  
Total stock-based compensation expense   $ 11,703     $ 11,073     $ 8,713  
                         


* Stock-based compensation expense deferred to inventory and deferred inventory costs in prior periods recognized in the current period.
(3) Amortization of acquired intangible assets consists of developed technology, trade names, customer relationships and backlog acquired in connection with the Coriant acquisition, which closed during the fourth quarter of 2018. Amortization of acquired intangible assets also consists of amortization of developed technology, trade names and customer relationships acquired in connection with the Transmode AB acquisition. U.S. GAAP accounting requires that acquired intangible assets are recorded at fair value and amortized over their useful lives. As this amortization is non-cash, Infinera has excluded it from its non-GAAP gross profit, operating expenses and net income measures. Management believes the amortization of acquired intangible assets is not indicative of ongoing operating performance and its exclusion provides a better indication of Infinera's underlying business performance.
(4) Acquisition and integration costs consist of legal, financial, IT, manufacturing-related costs, employee-related costs and professional fees incurred in connection with Infinera's acquisition of Coriant. These amounts have been adjusted in arriving at Infinera's non-GAAP results because management believes that these expenses are non-recurring, not indicative of ongoing operating performance and their exclusion provides a better indication of Infinera's underlying business performance.
(5) Business combination accounting principles require Infinera to measure acquired inventory at fair value. The fair value of inventory reflects the acquired company’s cost of manufacturing plus a portion of the expected profit margin. The non-GAAP adjustment to Infinera's cost of sales excludes the amortization of the acquisition-related step-up in carrying value for units sold in the quarter. Additionally, in connection with the Coriant acquisition, cost of sales excludes a one-time adjustment in inventory as a result of renegotiated supplier agreements that contained unusually higher than market pricing. Management believes these adjustments are useful to investors as an additional means to reflect ongoing cost of sales and gross margin trends of Infinera's business.
(6) Restructuring and related costs are primarily associated the closure of Infinera's Berlin, Germany site, the reduction of headcount at Infinera's Munich, Germany site and Coriant's historical restructuring plan associated with its early retirement plan. In addition, management included accelerated amortization on operating lease right-of-use assets due to the cease use of certain facilities. Management has excluded the impact of these charges in arriving at Infinera's non-GAAP results as they are non-recurring in nature and its exclusion provides a better indication of Infinera's underlying business performance.
(7) Under GAAP, certain convertible debt instruments that may be settled in cash on conversion are required to be separately accounted for as liability (debt) and equity (conversion option) components of the instrument in a manner that reflects the issuer's non-convertible debt borrowing rate. Accordingly, for GAAP purposes, Infinera is required to amortize as debt discount an amount equal to the fair value of the conversion option that was recorded in equity as interest expense on the $402.5 million in aggregate principal amount of its 2.125% convertible debt issuance in September 2018 due September 2024 and $200 million in aggregate principal amount of 2.50% convertible debt issued in March 9, 2020 due March 2027. Interest expense has been excluded from Infinera's non-GAAP results because management believes that this non-cash expense is not indicative of ongoing operating performance and provides a better indication of Infinera's underlying business performance.
(8) COVID-19 related costs consist of higher replacement costs associated with certain warranty parts customers were unable to return for repair due to logistics issues and mobility issues related to COVID-19 public health mandates and restrictions. In addition, we needed to source certain key components from an alternate suppler at substantially higher cost in order for Infinera to fulfill delivery commitments in the normal course of business. As of result of these atypical challenges caused by the circumstances surrounding the COVID-19 pandemic, management has excluded these expenses from non-GAAP financial measures, as their exclusion provides a better indication of Infinera's underlying business performance.
(9) The difference between the GAAP and non-GAAP tax provision is due to the net tax effects of the purchase accounting adjustments, acquisition-related costs and amortization of acquired intangible assets.
(10) Non-GAAP EPS as adjusted did not exclude the impact of foreign currency. Had the impact of foreign currency been excluded for the three months ended March 28, 2020, December 28, 2019 and March 30, 2019, non-GAAP EPS as adjusted would have been $(0.20), $0.02 and $(0.22), respectively.
(11) The non-GAAP diluted shares include the potentially dilutive securities from Infinera's stock-based benefit plans excluded from the computation of dilutive net loss per share attributable to common stockholders on a GAAP basis because the effect would have been anti-dilutive. These potentially dilutive securities are added for the computation of diluted net income per share on a non-GAAP basis in periods when Infinera has net income on a non-GAAP basis.
   

Infinera Corporation
Condensed Consolidated Balance Sheets
(In thousands, except par values)
(Unaudited)

  March 28,
 2020
  December 28,
 2019
ASSETS      
Current assets:      
Cash $ 261,534     $ 109,201  
Short-term restricted cash 4,126     4,339  
Accounts receivable, net of allowance for doubtful accounts of and $4,014 in 2020 and $4,005 in 2019 272,278     349,645  
Inventory 319,696     340,429  
Prepaid expenses and other current assets 159,845     139,217  
Total current assets 1,017,479     942,831  
Property, plant and equipment, net 148,815     150,793  
Operating lease right-of-use assets 61,914     68,081  
Intangible assets 155,356     170,346  
Goodwill 239,412     249,848  
Long-term restricted cash 17,808     19,257  
Other non-current assets 26,347     27,182  
Total assets $ 1,667,131     $ 1,628,338  
LIABILITIES AND STOCKHOLDERS’ EQUITY      
Current liabilities:      
Accounts payable $ 203,277     $ 273,397  
Accrued expenses and other current liabilities 186,668     193,168  
Accrued compensation and related benefits 69,135     92,221  
Short-term debt, net 31,680     31,673  
Accrued warranty 18,988     21,107  
Deferred revenue 95,693     103,753  
Total current liabilities 605,441     715,319  
Long-term debt, net 509,564     323,678  
Long-term financing lease obligation 2,113     2,394  
Accrued warranty, non-current 20,474     22,241  
Deferred revenue, non-current 34,149     36,067  
Deferred tax liability 7,505     8,700  
Operating lease liabilities 60,420     64,210  
Other long-term liabilities 65,746     69,194  
Commitments and contingencies (Note 13)      
Stockholders’ equity:      
Preferred stock, $0.001 par value
  Authorized shares – 25,000 and no shares issued and outstanding
     
Common stock, $0.001 par value
 Authorized shares – 500,000 as of March 28, 2020 and December 28, 2019
 Issued and outstanding shares – 183,198 as of March 28, 2020 and 181,134 as of December 28, 2019
183     181  
Additional paid-in capital 1,827,484     1,740,884  
Accumulated other comprehensive loss (46,139 )   (34,639 )
Accumulated deficit (1,419,809 )   (1,319,891 )
Total stockholders' equity 361,719     386,535  
Total liabilities and stockholders’ equity $ 1,667,131     $ 1,628,338  
               
               

Infinera Corporation
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)

  Three Months Ended
  March 28,
 2020
  March 30,
 2019
Cash Flows from Operating Activities:      
Net loss $ (99,268 )   $ (121,601 )
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:      
Depreciation and amortization 25,445     30,939  
Non-cash restructuring and other related costs 1,760     16,851  
Amortization of debt discount and issuance costs 5,731     4,614  
Operating lease expense, net of accretion 5,204     14,966  
Stock-based compensation expense 11,703     8,713  
Other, net 1,153     1,775  
Changes in assets and liabilities:      
Accounts receivable 70,238     49,754  
Inventory 17,737     (24,937 )
Prepaid expenses and other assets (18,744 )   (5,236 )
Accounts payable (72,355 )   (23,439 )
Accrued liabilities and other expenses (32,083 )   (15,486 )
Deferred revenue (8,038 )   6,933  
Net cash used in operating activities (91,517 )   (56,154 )
Cash Flows from Investing Activities:      
Proceeds from maturities of investments     10,542  
Acquisition of business, net of cash acquired     (10,000 )
Purchase of property and equipment, net (8,464 )   (6,590 )
Net cash provided by (used in) investing activities (8,464 )   (6,048 )
Cash Flows from Financing Activities:      
Proceeds from issuance of 2027 Notes 194,500      
Proceeds from revolving line of credit 55,000      
Proceeds from issuance of debt, net     8,584  
Repayment of mortgage payable (99 )    
Payment of debt issuance cost (1,775 )    
Proceeds from issuance of common stock 7,395     7,740  
Net cash provided by financing activities 255,021     16,324  
Effect of exchange rate changes on cash and restricted cash (4,369 )   (1,213 )
Net change in cash, cash equivalents and restricted cash 150,671     (47,091 )
Cash, cash equivalents and restricted cash at beginning of period 132,797     242,337  
Cash, cash equivalents and restricted cash at end of period(1) $ 283,468     $ 195,246  
Supplemental disclosures of cash flow information:      
Cash paid for income taxes, net of refunds $ 1,072     $ 1,353  
Cash paid for interest $ 5,131     $ 4,315  
Supplemental schedule of non-cash investing activities:      
Transfer of inventory to fixed assets $ 118     $ 1,805  
Unpaid debt issuance cost $ 1,793     $  


 

(1) Reconciliation of cash, cash equivalents and restricted cash to the condensed consolidated balance sheets:

  

  March 28,
 2020
  March 30,
 2019
  (In thousands)
Cash and cash equivalents $ 261,534     $ 167,259  
Short-term restricted cash 4,126     4,671  
Long-term restricted cash 17,808     23,316  
Total cash, cash equivalents and restricted cash $ 283,468     $ 195,246  
               
               

Infinera Corporation
Supplemental Financial Information
(Unaudited)

    Q2'18   Q3'18   Q4'18   Q1'19   Q2'19   Q3'19   Q4'19   Q1'20
GAAP Revenue ($ Mil)   $ 208.2     $ 200.4     $ 332.1     $ 292.7     $ 296.3     $ 325.3     $ 384.6     $ 330.3  
GAAP Gross Margin %     40.5 %     35.0 %     25.4 %     22.7 %     20.7 %     26.7 %     29.0 %     23.3 %
Non-GAAP Gross Margin %(1)     43.9 %     38.4 %     31.8 %     35.3 %     30.7 %     33.1 %     35.2 %     28.3 %
Revenue Composition:                                                                
Domestic %     58 %     49 %     39 %     45 %     45 %     51 %     52 %     52 %
International %     42 %     51 %     61 %     55 %     55 %     49 %     48 %     48 %
Customers >10% of Revenue     2       2       2       1       1       1       1       1  
Cash Related Information:                                                                
Cash from Operations ($ Mil)   $ 7.0     ($ 20.4 )   ($ 71.6 )   ($ 56.2 )   ($ 63.8 )   ($ 37.2 )   ($ 10.2 )   ($ 91.5 )
Capital Expenditures ($ Mil)   $ 13.5     $ 5.5     $ 10.7     $ 6.6     $ 9.2     $ 12.5     $ 2.7     ($ 8.5 )
Depreciation & Amortization ($ Mil)   $ 16.3     $ 17.1     $ 50.2     $ 31.0     $ 31.2     $ 29.0     $ 28.6     $ 25.4  
DSOs     65       70       87       83       80       80       83       75  
Inventory Metrics:                                                                
Raw Materials ($ Mil)   $ 30.5     $ 33.6     $ 74.5     $ 82.5     $ 70.4     $ 47.2     $ 47.4     $ 50.0  
Work in Process ($ Mil)   $ 61.6     $ 56.4     $ 57.2     $ 63.0     $ 59.5     $ 52.2     $ 48.8     $ 52.0  
Finished Goods ($ Mil)   $ 127.2     $ 121.9     $ 180.2     $ 187.0     $ 208.9     $ 225.4     $ 244.1     $ 217.7  
Total Inventory ($ Mil)   $ 219.3     $ 211.9     $ 311.9     $ 332.5     $ 338.8     $ 324.8     $ 340.3     $ 319.7  
Inventory Turns(2)     2.1       2.3       2.9       2.3       2.5       2.7       2.9       3.0  
Worldwide Headcount     2,070       2,079       3,876       3,708       3,632       3,557       3,261       3,302  
Weighted Average Shares Outstanding (in thousands):                                                                
Basic     152,259       153,492       174,908       176,406       178,677       179,988       180,864       182,024  
Diluted     154,777       154,228       175,629       176,602       179,343       182,073       186,349       189,246  
                                                                 


(1) Non-GAAP adjustments include acquisition-related deferred revenue and inventory adjustments, stock-based compensation expenses, amortization of acquired intangible assets, acquisition and integration costs, restructuring and related costs, amortization of debt discount on Infinera’s convertible senior notes, and COVID-19 related costs, along with related income tax effects. For a description of this non-GAAP financial measure, please see the section titled, “GAAP to Non-GAAP Reconciliations” of this press release for a reconciliation to the most directly comparable GAAP financial measures.
(2) Infinera calculates non-GAAP inventory turns as annualized non-GAAP cost of revenue before adjustments for restructuring and related costs, non-cash stock-based compensation expense, and certain purchase accounting adjustments, divided by the average inventory for the quarter.
   

Infinera Corporation
GAAP to Non-GAAP Reconciliation of Financial Outlook
(In millions, except percentages and per share data)
(Unaudited)

The following amounts represent the midpoint of the expected range:

    Q2'20
    Outlook
Reconciliation of Revenue:    
U.S. GAAP   $ 319  
Acquisition-related deferred revenue adjustment     1  
Non-GAAP   $ 320  
         
Reconciliation of Gross Margin:        
U.S. GAAP     29.0 %
Acquisition-related deferred revenue adjustment     0.5 %
Stock-based compensation     0.5 %
Amortization of acquired intangible assets     3.0 %
Non-GAAP     33.0 %
         
Reconciliation of Operating Expenses:        
U.S. GAAP   $ 142  
Stock-based compensation     (11 )
Amortization of acquired intangible assets     (4 )
Restructuring and related costs     (1 )
Acquisition and integration costs     (4 )
Non-GAAP   $ 122  
         
Reconciliation of Operating Margin:        
U.S. GAAP     (15.5 )%
Acquisition-related deferred revenue adjustment     0.5 %
Stock-based compensation     4.5 %
Amortization of acquired intangible assets     4.5 %
Acquisition and integration costs     1.5 %
Restructuring and related costs     0.5 %
Non-GAAP     (4.0 )%
     


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Source: Infinera Corporation