Ciena forecasts software revenues to grow 14%-16% over 3 years

software
Software was only one area of growth for Ciena during the fiscal fourth quarter of 2017. The vendor also saw continued growth across its networking platforms business, while global services revenues declined slightly. 

Now that it has Blue Planet software capabilities firmly under its belt, Ciena said it can address a series of near-term network management and analytics needs for its service provider customers, which it can grow in the coming two to three years.  

During the fiscal fourth quarter, Ciena reported total software and software-related services were $41.8 million, up year-over-year from $37.6 million.

Within the software segment, the vendor reported revenue gains in software platforms and software-related services. Software platforms revenues were $17.3 million while software-related services were $24.5 million.

Gary Smith, president and CEO of Ciena, told investors during its fiscal fourth-quarter earnings call that software and related services saw notable growth in 2017.

Ciena Smith
Gary Smith

“The segment with the Blue Planet software and services was actually up, albeit from a fairly small base, by close to 30% for the year,” Smith said. “I still think we’re early days of this and one of the key elements that will drive Blue Planet over the next couple of years is domain management.”

As more of its service provider customers move to virtualize more functions in their networks, Ciena has forecast that the software side of its business via Blue Planet could grow 13-14% during the next three years.

Specifically, Smith said its Blue Planet domain manager will resonate with its customers.

“One of the key elements that will drive Blue Planet growth is we have launched our domain manager in the first quarter,” Smith said. “That will be well adopted and is well anticipated by our existing customer base.”

Smith added that the near-term opportunity for Blue Planet will be centered around network management.

“The domain manager gives us a great platform to expand into the Blue Planet analytics, which we’re also just bringing into the market,” Smith said. “Rather than the nascent market of orchestration, which is not mature enough from an ecosystem point of view, we can get a good footprint and are confident in our growth of Blue Planet on domain manager and analytics.”

Software was only one area of growth for Ciena during the fiscal fourth quarter of 2017. The vendor also saw continued growth across its networking platforms business, while global services revenues declined slightly. 

Here’s a breakdown of Ciena’s key metrics:

  • Networking platforms: Like earlier quarters, the dominant contributors to networking platforms growth was twofold—converged packet optical and packet networking. Converged packet optical revenues were $504.7 million, up from $488 in the same quarter a year ago. Packet Networking also had a good showing, with $92.5 million, up year over year from $72.4 million. Finally, Optical Transport declined to $1.7 million.
  • Global services: Global services results for the quarter were more of a mixed bag as the vendor reported varying results for each of its three segments—installation, deployment and consulting and network design—resulting in $103.7 million in total segment revenues. Ciena reported maintenance support and training and installation, while deployment revenues declined to $56.2 million and $33.5 million, respectively. Meanwhile, consulting and network design revenues remained flat at $14 million.
  • Financials: For the fiscal fourth quarter 2017, Ciena reported $744.4 million in revenue, up year over year from $716.2 million for the fiscal fourth quarter 2016. For fiscal year 2017, Ciena reported revenue of $2.80 billion, as compared to $2.60 billion for fiscal year 2016.