Infinera's Q2 revenue rises to $165M as DTN-X customer adoption grows
Infinera continues to benefit from sales of its next-gen DTN-X platform as second-quarter 2014 earnings jumped sequentially and year-over-year to $165.4 million from $142.8 million in the first quarter of 2014 and $138.4 million in the second quarter of 2013.
Company GAAP gross margin for the quarter was 42.5 percent compared with 40.9 percent in the first quarter of 2014 and 37.3 percent in the second quarter of 2013.
Likewise, quarterly GAAP net income was $4.8 million, or $0.04 per diluted share, compared with a net loss of $(4.4) million, or 4 cents per share, in the first quarter of 2014, and a net loss of $(10.0) million, or 9 cents per share, in the second quarter of 2013.
Customer acceptance of the DTN-X continued to ramp in the second quarter with more of its existing customer base migrating to the new platform.
The vendor signed four new customers, including: a Mexican-based Tier 1 carrier, a large competitive U.S. provider, a Russian cable operator, and XO Communications, a long-time customer that migrated to the DTN-X platform. Three of these DTN-X customers were existing customers that were converting from the previous DTN platform.
"We added four new invoiced DTN-X customers in the second quarter, one of which was a new customer to Infinera," said Tom Fallon, CEO of Infinera, during the earnings call, according to a Seeking Alpha transcript. "This positions us with 46 DTN-X customers to continue to capitalize on the 100-gig technology cycle."
Although the domestic U.S. market makes up 82 percent of its total revenues, Infinera is seeing strong momentum on the international front. International revenue was $29 million, or 18 percent of its total revenue. EMEA made up $19 million or 12 percent, with APAC and Latin America each representing 3 percent.
"Coming off a relatively soft first half of the year, we anticipate growth within multiple international accounts in the second half of 2014," Fallon said.
Fallon added that about "one-third of our DTN customers have now converted to the DTN-X platform."
Besides the new DTN-X customers, Infinera did add another new DTN customer, ending the quarter with a total of 133 invoiced DTN platform customers. The vendor also made inroads on the international front, announcing SEACOM as its second customer in Africa. It also secured a multi-terabit upgrade contract upgrade with the Australia Japan Cable (AJC) consortium.
Looking toward the third quarter, Infinera has forecast revenue to be in the range of $165 million to $175 million, but remains cautious about the rest of the year.
"As mentioned on our Q1 earnings call, we expected to see elevated revenue levels in both Q2 and Q3," said Brad Feller, CFO of Infinera, during the earnings call. "This is playing out in our results and our outlook as we continue to see strong demand across a customer base at new customers as well as growth with the existing customers. Although we remain very optimistic about our core business and as Tom mentioned, our intermediate visibility has returned to more normal levels, causing us to be cautious about our ability to maintain revenue at these levels as we exit the year."
Shares of Infinera were listed at $9.40, up 11 cents, or 1.18 percent, in Thursday pre-market trading on the Nasdaq stock exchange.
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