Infinera notes several ICE6 wins in Q1 despite supply chain hurdles

Infinera faced an underwhelming financial performance in Q1 2022, reporting a net loss of $41.9 million. Despite high product demand, Infinera CEO David Heard attributed the loss to “uncontrollable and previously unforeseen supply chain developments” at the tail-end of the quarter.

Revenue went up 2% year-over-year to $339 million, from $331 million in Q1 2021, but fell short of an expected $363 million.  Product revenue increased over 5% primarily due to demand for Infinera’s ICE6 optical engine, with Infinera releasing a "turbo" version of ICE6 in February. Services revenue, however, was down 8% year-over-year.

Infinera's suspension of operations in Russia impacted revenue by $5 million, Heard noted on the company’s earnings call Tuesday. Another $15 million was lost from project delays based on customer dependencies – meaning Infinera shipped its hardware, but customers faced challenges in readying their sites for installation. Heard said this timing impact was “split roughly across product and services revenue.”

Heard also added Infinera faced a “relatively smaller” supply chain impact from Covid-related shutdowns in China in the last two weeks of the quarter, occurring in the midst of an “already difficult semiconductor environment.”

Despite supply-chain hurdles, Heard said Infinera bookings “grew in the double-digit percentage range” year-over-year. Infinera already announced a few major customer wins this quarter. Infinera and fiber provider Zayo broke an 800G distance record in March, while Windstream and Infinera are working together on next-gen technology for optical network slicing.

Infinera also this quarter secured an ICE6 win with Hetzner Online, a Germany-based data center operator, and signed a metro deal with NexGen Networks to deploy Infinera’s GX Series product.

“We're significantly increasing production capacity of ICE6 internally, given the robust demand we are seeing,” said Heard.

Infinera CFO Nancy Erba added ICE6 production positively impacted the company’s gross margin of 36.2%, with ICE6 ramping to the “high teens” as a percentage of product revenue in Q1.

Heading into Q2 2022, Infinera maintains a positive financial outlook, aiming for a revenue of $350 million. It expects to continue ramping up ICE6 production in the second half of the year, but Erba noted customer delays and product push outs “will continue to pressure [Infinera’s] services revenue, especially professional services tied to new project installations.”

Separately, Infinera this week announced it successfully delivered 800G optical transmission across GlobalConnect Carrier’s long-haul network, which services over 100,000 kilometers (km) of fiber throughout Northern Europe.