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Infinera Corporation Fourth Quarter and Fiscal 2023 Summary of Key Financial Results
ソース: Nasdaq GlobeNewswire / 13 5 2024 16:05:20 America/New_York
SAN JOSE, Calif., May 13, 2024 (GLOBE NEWSWIRE) -- Infinera Corporation (NASDAQ: INFN) has issued a press release with a summary of key financial results for the fourth quarter and fiscal year ended December 30, 2023. The press release is also published on Infinera’s Investor Relations website.
GAAP revenue for the quarter was $453.5 million compared to $392.4 million in the third quarter of 2023 and $485.9 million in the fourth quarter of 2022.
GAAP gross margin for the quarter was 38.6% compared to 40.3% in the third quarter of 2023 and 37.1% in the fourth quarter of 2022. GAAP operating margin for the quarter was 2.5% compared to 2.0% in the third quarter of 2023 and 5.2% in the fourth quarter of 2022.
GAAP net income for the quarter was $12.9 million, or $0.06 per diluted share, compared to net loss of $(9.4) million, or $(0.04) per diluted share, in the third quarter of 2023, and net income of $33.5 million, or $0.14 per diluted share, in the fourth quarter of 2022.
Non-GAAP gross margin for the quarter was 39.6% compared to 41.9% in the third quarter of 2023 and 38.7% in the fourth quarter of 2022. Non-GAAP operating margin for the quarter was 7.2% compared to 7.7% in the third quarter of 2023 and 10.5% in the fourth quarter of 2022.
Non-GAAP net income for the quarter was $28.6 million, or $0.12 per diluted share, compared to $19.9 million, or $0.08 per diluted share, in the third quarter of 2023, and $40.3 million, or $0.16 per diluted share, in the fourth quarter of 2022.
GAAP revenue for the year was $1,614.1 million compared to $1,573.2 million in 2022. GAAP gross margin for the year was 38.6% compared to 34.1% in 2022. GAAP operating margin for the year was (0.3)% compared to (3.8)% in 2022. GAAP net loss for the year was $(25.2) million, or $(0.11) per diluted share, compared to $(76.0) million, or $(0.35) per diluted share, in 2022.
Non-GAAP gross margin for the year was 39.9% compared to 37.3% in 2022. Non-GAAP operating margin for the year was 5.4% compared to 4.4% in 2022. Non-GAAP net income for the year was $53.4 million, or $0.23 per diluted share, compared to $26.1 million, or $0.12 per diluted share, in 2022.
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 press release.
On May 6, 2024, the Company announced that it expected to file its fiscal year 2023 Annual Report on Form 10-K (“Form 10-K”) on or before May 13, 2024. Due to process delays in the finalization of the audit of its fiscal year 2023 financial statements, the Company currently expects to file its Form 10-K on or before May 17, 2024.
As a result, the Company currently expects to file its Quarterly Report on Form 10-Q for its fiscal quarter ended March 30, 2024 on or before May 21, 2024.
Fourth Quarter 2023 Investor Slides to be Made Available Online After the Filing of Form 10-K
Investor slides reviewing Infinera's fourth quarter of 2023 financial results will be furnished to the U.S. Securities and Exchange Commission (SEC) on a Current Report on Form 8-K and published on Infinera's Investor Relations website after filing its Form 10-K.
Contacts:
Media:
Anna Vue
Tel. +1 (916) 595-8157
avue@infinera.comInvestors:
Amitabh Passi, Head of Investor Relations
Tel. +1 (669) 295-1489
apassi@infinera.comAbout Infinera
Infinera is a global supplier of innovative open optical networking solutions and advanced optical semiconductors that enable carriers, cloud operators, governments, and enterprises to scale network bandwidth, accelerate service innovation, and automate network operations. Infinera solutions deliver 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 X and LinkedIn, and subscribe for updates.
Infinera and the Infinera logo are registered trademarks of Infinera Corporation.
Forward-Looking Statements
This press release contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements generally relate to future events or Infinera's future financial or operating performance. In some cases, you can identify forward-looking statements because they contain words such as "anticipate," "believe," "could," "estimate," "expect," "intend," "may," "should," "will," and "would" or the negative of these words or similar terms or expressions that concern Infinera's expectations, strategy, priorities, plans or intentions. Forward-looking statements in this press release include, but are not limited to, statements regarding the Company’s expectations related to the timing of filing of its Form 10-K for the fiscal year ended December 30, 2023, its expectations related to the filing of its Form 10-Q for the fiscal quarter ended March 30, 2024 and its expectations related to the furnishing of the investor slides reviewing the Company’s fourth quarter of 2023 financial results. Infinera’s auditors have not completed their audit of its financial results for the fiscal 2023 period, their review of its financial results for the fourth quarter of fiscal 2023 or their review of its financial results for the first quarter of fiscal 2024.
Infinera’s financial results for the fourth quarter of and full fiscal year 2023 are subject to all aspects of the final quarterly and annual review process and may change as a result of new information that arises, or new determinations that are made, in this process.
These forward-looking statements are based on estimates and information available to Infinera as of the date hereof and are not guarantees of future performance; 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 but are not limited to, Infinera’s expectations regarding revenue, gross margin, operating expenses, cash flows and other financial items and the drivers related to these; demand growth for additional network capacity and the level and timing of customer capital spending and excess inventory held by customers beyond normalized levels; delays in the development, introduction or acceptance of new products or in releasing enhancements to existing products; aggressive business tactics by Infinera’s competitors and new entrants and Infinera's ability to compete in a highly competitive market; supply chain and logistics issues, including delays, shortages, components that have been discontinued and increased costs, and Infinera's dependency on sole source, limited source or high-cost suppliers; dependence on a small number of key customers; product performance problems; the complexity of Infinera's manufacturing process; Infinera's ability to identify, attract, upskill and retain qualified personnel; challenges with our contract manufacturers and other third-party partners; the effects of customer and supplier consolidation; dependence on third-party service partners; Infinera’s ability to respond to rapid technological changes; failure to accurately forecast Infinera's manufacturing requirements or customer demand; the effects of public health emergencies; Infinera’s future capital needs and its ability to generate the cash flow or otherwise secure the capital necessary to meet such capital needs; the effect of global and regional economic conditions on Infinera’s business, including effects on purchasing decisions by customers; the adverse impact inflation and higher interest rates may have on Infinera by increasing costs beyond what it can recover through price increases; restrictions to our operations resulting from loan or other credit agreements; the impacts of any restructuring plans or other strategic efforts on our business; Infinera’s international sales and operations; the impacts of foreign currency fluctuations; the effective tax rate of Infinera, which may increase or fluctuate; potential dilution from the issuance of additional shares of common stock in connection with the conversion of Infinera's convertible senior notes; Infinera’s ability to protect its intellectual property; claims by others that Infinera infringes on their intellectual property rights; security incidents, such as data breaches or cyber-attacks; Infinera's ability to comply with various rules and regulations, including with respect to export control and trade compliance, environmental, social, governance, privacy and data protection matters; events that are outside of Infinera's control, such as natural disasters, acts of war or terrorism, or other catastrophic events that could harm Infinera's operations; Infinera’s ability to remediate its recently disclosed material weaknesses in internal control over financial reporting in a timely and effective manner, and other risks and uncertainties detailed in Infinera’s SEC filings from time to time; and statements of assumptions underlying any of the foregoing. More information on potential factors that may impact Infinera’s business are set forth in Infinera’s period reports filed with the SEC, including its Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC on February 27, 2023, and amended February 29, 2024, and its Quarterly Report on Form 10-Q for the quarter ended September 30, 2023, filed with the SEC on February 29, 2024, as well as subsequent reports filed with or furnished to the SEC from time to time. These SEC filings 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 summary of key financial results and the accompanying tables contain certain non-GAAP financial measures that exclude in certain cases stock-based compensation expenses, amortization of acquired intangible assets, restructuring and other related costs, inventory related charges, global distribution center transition costs, warehouse fire loss (recovery), litigation charges, gain on extinguishment of debt, foreign exchange (gains) losses, net, and income tax effects. 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, the non-GAAP financial measures presented in this summary of key financial 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 gross margin, operating expenses, operating margin, net income (loss) and net income (loss) per common share 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.
For a description of these non-GAAP financial measures and a reconciliation to the most directly comparable GAAP financial measures, please see the table titled “GAAP to Non-GAAP Reconciliations” and related footnotes.
Infinera Corporation
Condensed Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)Three months ended Twelve months ended December 30, 2023 December 31,
2022December 30, 2023 December 31,
2022Revenue: Product $ 373,172 $ 398,880 $ 1,304,229 $ 1,268,624 Services 80,284 87,056 309,899 304,618 Total revenue 453,456 485,936 1,614,128 1,573,242 Cost of revenue: Cost of product 233,693 255,449 810,845 852,476 Cost of services 42,643 45,485 167,532 161,630 Amortization of intangible assets — 4,451 10,621 23,138 Restructuring and other related costs 2,218 37 2,218 222 Total cost of revenue 278,554 305,422 991,216 1,037,466 Gross profit 174,902 180,514 622,912 535,776 Operating expenses: Research and development 79,645 77,986 316,879 306,188 Sales and marketing 42,532 41,373 166,938 146,445 General and administrative 35,112 31,639 124,874 118,602 Amortization of intangible assets 2,256 3,581 12,344 14,576 Restructuring and other related costs 4,096 577 6,717 10,122 Total operating expenses 163,641 155,156 627,752 595,933 Income (loss) from operations 11,261 25,358 (4,840 ) (60,157 ) Other income (expense), net: Interest income 982 467 2,716 893 Interest expense (8,814 ) (7,255 ) (30,609 ) (26,015 ) Gain on extinguishment of debt — — — 15,521 Other gain (loss), net 4,739 18,852 15,325 14,247 Total other income (expense), net (3,093 ) 12,064 (12,568 ) 4,646 Income (loss) before income taxes 8,168 37,422 (17,408 ) (55,511 ) (Benefit from) provision for income taxes (4,705 ) 3,964 7,805 20,532 Net income (loss) $ 12,873 $ 33,458 $ (25,213 ) $ (76,043 ) Net income (loss) per common share: Basic $ 0.06 $ 0.15 $ (0.11 ) $ (0.35 ) Diluted $ 0.06 $ 0.14 $ (0.11 ) $ (0.35 ) Weighted average shares used in computing net income (loss) per common share: Basic 230,509 219,921 226,726 216,376 Diluted 233,090 258,030 226,726 216,376 Infinera Corporation
GAAP to Non-GAAP Reconciliations
(In thousands, except percentages)
(Unaudited)Three months ended Twelve months ended December 30, 2023 September 30, 2023 December 31, 2022 December 30, 2023 December 31, 2022 Reconciliation of Gross Profit and Gross Margin: GAAP as reported $ 174,902 38.6 % $ 158,320 40.3 % $ 180,514 37.1 % $ 622,912 38.6 % $ 535,776 34.1 % Stock-based compensation expense(1) 2,328 2,515 2,763 10,000 9,485 Amortization of acquired intangible assets(2) — 3,528 4,451 10,621 23,138 Restructuring and other related costs(3) 2,218 — 37 2,218 222 Inventory related charges(4) — — (269 ) — 14,381 Global distribution center transition costs(5) — — 509 — 2,109 Warehouse fire loss (recovery)(6) — — — (1,985 ) 2,232 Non-GAAP as adjusted $ 179,448 39.6 % $ 164,363 41.9 % $ 188,005 38.7 % $ 643,766 39.9 % $ 587,343 37.3 % Reconciliation of Operating Expenses: GAAP as reported $ 163,641 $ 150,665 $ 155,156 $ 627,752 $ 595,933 Stock-based compensation expense(1) 10,429 13,230 13,834 52,150 51,530 Amortization of acquired intangible assets(2) 2,256 2,976 3,581 12,344 14,576 Restructuring and other related costs(3) 4,096 400 577 6,717 10,122 Litigation charges (7) — — — — 1,350 Non-GAAP as adjusted $ 146,860 $ 134,059 $ 137,164 $ 556,541 $ 518,355 Reconciliation of Income (Loss) from Operations and Operating Margin: GAAP as reported $ 11,261 2.5 % $ 7,655 2.0 % $ 25,358 5.2 % $ (4,840 ) (0.3 )% $ (60,157 ) (3.8 )% Stock-based compensation expense(1) 12,757 15,745 16,597 62,150 61,015 Amortization of acquired intangible assets(2) 2,256 6,504 8,032 22,965 37,714 Restructuring and other related costs(3) 6,314 400 614 8,935 10,344 Inventory related charges(4) — — (269 ) — 14,381 Global distribution center transition costs(5) — — 509 — 2,109 Warehouse fire loss (recovery)(6) — — — (1,985 ) 2,232 Litigation charges(7) — — — — 1,350 Non-GAAP as adjusted $ 32,588 7.2 % $ 30,304 7.7 % $ 50,841 10.5 % $ 87,225 5.4 % $ 68,988 4.4 % Three months ended Twelve months ended December 30, 2023 September 30, 2023 December 31, 2022 December 30, 2023 December 31, 2022 Reconciliation of Net Income (Loss): GAAP as reported $ 12,873 $ (9,413 ) $ 33,458 $ (25,213 ) $ (76,043 ) Stock-based compensation expense(1) 12,757 15,745 16,597 62,150 61,015 Amortization of acquired intangible assets(2) 2,256 6,504 8,032 22,965 37,714 Restructuring and other related costs(3) 6,314 400 614 8,935 10,344 Inventory related charges(4) — — (269 ) — 14,381 Global distribution center transition costs(5) — — 509 — 2,109 Warehouse fire loss (recovery)(6) — — — (1,985 ) 2,232 Litigation charges(7) — — — — 1,350 Gain on extinguishment of debt(8) — — — — (15,521 ) Foreign exchange (gains) losses, net(9) (4,852 ) 7,527 (18,328 ) (14,755 ) (12,767 ) Income tax effects(10) (780 ) (894 ) (308 ) 1,292 1,319 Non-GAAP as adjusted $ 28,568 $ 19,869 $ 40,305 $ 53,389 $ 26,133 Reconciliation of Adjusted EBITDA (11): Non-GAAP net income $ 28,568 $ 19,869 $ 40,305 $ 53,389 $ 26,133 Add: Interest expense, net 7,832 7,062 6,788 27,893 25,122 Less: Other gain (loss), net (113 ) (13 ) 524 570 1,480 Add: Income tax effects (3,925 ) 3,360 4,272 6,513 19,213 Add: Depreciation 17,125 13,498 11,787 55,819 46,116 Non-GAAP as adjusted $ 49,713 $ 43,802 $ 62,628 $ 143,044 $ 115,104 Net Income (Loss) per Common Share: GAAP Basic $ 0.06 $ (0.04 ) $ 0.15 $ (0.11 ) $ (0.35 ) Diluted(12) $ 0.06 $ (0.04 ) $ 0.14 $ (0.11 ) $ (0.35 ) Weighted Average Shares Used in Computing GAAP Net Income (Loss) per Common Share: Basic 230,509 228,077 219,921 226,726 216,376 Diluted(12) 233,090 228,077 258,030 226,726 216,376 Three months ended Twelve months ended December 30, 2023 September 30, 2023 December 31, 2022 December 30, 2023 December 31, 2022 Net Income per Common Share: Non-GAAP Basic $ 0.12 $ 0.09 $ 0.18 $ 0.24 $ 0.12 Diluted(13) $ 0.12 $ 0.08 $ 0.16 $ 0.23 $ 0.12 Weighted Average Shares Used in Computing Non-GAAP Net Income per Common Share: Basic 230,509 228,077 219,921 226,726 216,376 Diluted(13) 259,210 257,219 258,030 255,468 219,398 (1) 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 Twelve months ended December 30, 2023 September 30, 2023 December 31, 2022 December 30, 2023 December 31, 2022 Cost of revenue $ 2,328 $ 2,515 $ 2,763 $ 10,000 $ 9,485 Total cost of revenue 2,328 2,515 2,763 10,000 9,485 Research and development 4,917 5,734 6,292 22,474 23,553 Sales and marketing 2,328 3,706 3,296 13,699 13,311 General and administration 3,184 3,790 4,246 15,977 14,666 Total operating expenses 10,429 13,230 13,834 52,150 51,530 Total stock-based compensation expense $ 12,757 $ 15,745 $ 16,597 $ 62,150 $ 61,015 (2) Amortization of acquired intangible assets consists of developed technology and customer relationships acquired in connection with the acquisitions of Coriant and Transmode AB. 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.
(3) Restructuring and other related costs are primarily associated with the reduction of headcount, the reduction of operating costs and Infinera's restructuring of certain international research and development operations. In addition, this includes accelerated amortization on operating lease right-of-use assets due to the cessation of 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.
(4) Inventory related charges were incurred as a result of the exit from certain product lines in connection with restructuring initiatives. Management has excluded the impact of these charges in arriving at Infinera's non-GAAP results as they are non-recurring in nature and their exclusion provides a better indication of Infinera's underlying business performance.
(5) Global distribution center transition costs were primarily freight and handling costs incurred to transfer and consolidate our inventory from existing warehouses to our global distribution center in southeastern Asia. Management has excluded the impact of these costs in arriving at Infinera's non-GAAP results as they are non-recurring in nature and their exclusion provides a better indication of Infinera's underlying business performance.
(6) Warehouse fire losses were incurred due to inventory destroyed in a warehouse fire in the third quarter of fiscal year 2022. Recoveries are recorded when they are probable of receipt. Management has excluded the impact of this loss and subsequent recoveries in arriving at Infinera's non-GAAP results as it is non-recurring in nature and its exclusion provides a better indication of Infinera's underlying business performance.
(7) Litigation charges are associated with the settlement of litigation matters. Management has excluded the impact of this charge in arriving at Infinera's non-GAAP results because it is non-recurring, and management believes that this expense is not indicative of ongoing operating performance.
(8) Gain on extinguishment of debt was recognized from the accounting for the partial repurchase of the 2024 convertible senior notes. Management has excluded the impact of this gain in arriving at Infinera's non-GAAP results as it is not indicative of ongoing operating performance and its exclusion provides a better indication of Infinera's underlying business performance.
(9) Foreign exchange (gains) losses, net, have been excluded from Infinera's non-GAAP results because management believes that this expense is not indicative of ongoing operating performance and its exclusion provides a better indication of Infinera's underlying business performance.
(10) The difference between the GAAP and non-GAAP tax provision is due to the net tax effects of above non-GAAP adjustments. Management believes the exclusion of these tax effects provides a better indication of Infinera's underlying business performance.
(11) Adjusted EBITDA is a non-GAAP supplemental measure of operating performance that does not represent and should not be considered an alternative to operating loss or cash flow from operations, as determined by GAAP. Infinera's adjusted EBITDA is calculated by excluding the above non-GAAP adjustments, interest expense, net, other gain (loss), net, income tax effects and depreciation expenses. Management believes that adjusted EBITDA is an important financial measure for use in evaluating Infinera's financial performance, as it measures the ability of our business operations to generate cash.
(12) The GAAP diluted shares include potentially dilutive securities from Infinera's stock-based benefit plans and convertible senior notes. These potentially dilutive securities are added for the computation of diluted net income per share on a GAAP basis in periods when Infinera has net income on a GAAP basis, as its inclusion provides a better indication of Infinera's underlying business performance.
For purposes of calculating GAAP diluted earnings per share, we used the following net income (loss) and weighted average common shares outstanding (in thousands, except per share data):Three months ended Twelve months ended December 30, 2023 September 30, 2023 December 31, 2022 December 30, 2023 December 31, 2022 GAAP net income (loss) for basic earnings per share $ 12,873 $ (9,413 ) $ 33,458 $ (25,213 ) $ (76,043 ) Interest expense related to the convertible senior notes, net of tax 104 — 1,637 — — GAAP net income (loss) for diluted earnings per share $ 12,977 $ (9,413 ) $ 35,095 $ (25,213 ) $ (76,043 ) Weighted average basic common shares outstanding 230,509 228,077 219,921 226,726 216,376 Dilutive effect of restricted and performance share units 682 — 1,574 — — Dilutive effect of employee stock purchase plan — — 18 — — Dilutive effect of 2024 convertible senior notes(a) 1,899 — 10,397 — — Dilutive effect of 2027 convertible senior notes(b) — — 26,120 — — Dilutive effect of 2028 convertible senior notes(c) — — — — — Weighted average dilutive common shares outstanding 233,090 228,077 258,030 226,726 216,376 GAAP net income (loss) per common share: Basic $ 0.06 $ (0.04 ) $ 0.15 $ (0.11 ) $ (0.35 ) Diluted $ 0.06 $ (0.04 ) $ 0.14 $ (0.11 ) $ (0.35 ) (a) For the three- months ended September 30, 2023, there were 1.9 million shares excluded from the calculation of diluted net income (loss) per share due to their anti-dilutive effect. For the twelve- months ended December 30, 2023, and December 31, 2022, there were 5.8 million and 28.9 million shares, respectively, excluded from the calculation of diluted net loss per share, due to their anti-dilutive effect.
(b) For each of the three-months ended December 30, 2023, and September 30, 2023, there were 26.1 million shares excluded from the calculation of diluted net income (loss) per share, due to their anti-dilutive effect. For the twelve- months ended December 30, 2023, and December 31, 2022, there were 26.1 million and 26.9 million shares, respectively, excluded from the calculation of diluted net loss per share, due to their anti-dilutive effect.
(c) For the three-months ended December 30, 2023, September 30, 2023, and December 31, 2022, there were no shares excluded from the calculation of diluted net income (loss) per share. For the twelve- months ended December 30, 2023, and December 31, 2022, there were 0.9 million and zero shares, respectively, excluded from the calculation of diluted net loss per share, due to their anti-dilutive effect.
(13) The non-GAAP diluted shares include the potentially dilutive securities from Infinera's stock-based benefit plans and convertible senior notes. 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 as its inclusion provides a better indication of Infinera's underlying business performance. Refer to the diluted earnings per share reconciliation presented below.
For purposes of calculating non-GAAP diluted earnings per share, we used the following net income and weighted average common shares outstanding (in thousands, except per share data):
Three months ended Twelve months ended December 30, 2023 September 30, 2023 December 31, 2022 December 30, 2023 December 31, 2022 Non-GAAP net income for basic earnings per share $ 28,568 $ 19,869 $ 40,305 $ 53,389 $ 26,133 Interest expense related to the convertible senior notes, net of tax 1,652 1,359 1,637 5,370 — Non-GAAP net income for diluted earnings per share $ 30,220 $ 21,228 $ 41,942 $ 58,759 $ 26,133 Weighted average basic common shares outstanding 230,509 228,077 219,921 226,726 216,376 Dilutive effect of restricted and performance share units 682 1,123 1,574 1,674 2,935 Dilutive effect of employee stock purchase plan — — 18 53 87 Dilutive effect of 2024 convertible senior notes(a) 1,899 1,899 10,397 — — Dilutive effect of 2027 convertible senior notes(b) 26,120 26,120 26,120 26,120 — Dilutive effect of 2028 convertible senior notes(c) — — — 895 — Weighted average dilutive common shares outstanding 259,210 257,219 258,030 255,468 219,398 Non-GAAP net income per common share: Basic $ 0.12 $ 0.09 $ 0.18 $ 0.24 $ 0.12 Diluted $ 0.12 $ 0.08 $ 0.16 $ 0.23 $ 0.12 (a) For the twelve- months ended December 30, 2023, and December 31, 2022, there were 5.8 million and 28.9 million shares, respectively, excluded from the calculation of diluted net income per share, due to their anti-dilutive effect.
(b) For the twelve-months ended December 31, 2022, there were 26.9 million shares excluded from the calculation of diluted net income per share, due to their anti-dilutive effect.
(c) For the three-months ended December 30, 2023, September 30, 2023, and December 31, 2022, there were no shares excluded from the calculation of diluted net income per share. For the twelve- months ended December 31, 2022, there were no shares excluded from the calculation of diluted net income per share.
Infinera Corporation
GAAP to Non-GAAP Reconciliations
(In thousands)
(Unaudited)Free Cash Flow
We define free cash flow as net cash provided by (used in) operating activities in the period minus the purchase of property and equipment made in the period.
Free cash flow is considered a non-GAAP financial measure under the SEC’s rules. Management believes that free cash flow is an important financial measure for use in evaluating Infinera's financial performance, as it measures our ability to generate additional cash from our business operations. Free cash flow should be considered in addition to, rather than as a substitute for, net loss as a measure of our performance or net cash provided by (used in) operating activities as a measure of our liquidity. Additionally, our definition of free cash flow is limited and does not represent residual cash flows available for discretionary expenditures due to the fact that the measure does not deduct the payments required for debt service and other obligations. Therefore, we believe it is important to view free cash flow as supplemental to our entire statement of cash flows.
Three months ended Twelve months ended December 30, 2023 September 30, 2023 December 31, 2022 December 30, 2023 December 31, 2022 Net cash provided by (used in) operating activities $ 79,652 $ (29,793 ) $ (564 ) $ 49,510 $ (37,560 ) Purchase of property and equipment (21,414 ) (13,318 ) (8,303 ) (62,314 ) (46,053 ) Free cash flow $ 58,238 $ (43,111 ) $ (8,867 ) $ (12,804 ) $ (83,613 ) Infinera Corporation
Condensed Consolidated Balance Sheets
(In thousands, except par values)
(Unaudited)December 30,
2023December 31,
2022ASSETS Current assets: Cash and cash equivalents $ 172,505 $ 178,657 Short-term restricted cash 517 7,274 Accounts receivable, net 381,981 419,735 Inventory 431,163 374,855 Prepaid expenses and other current assets 129,218 152,451 Total current assets 1,115,384 1,132,972 Property, plant and equipment, net 206,997 172,929 Operating lease right-of-use assets 39,973 34,543 Intangible assets 24,819 47,787 Goodwill 240,566 232,663 Long-term restricted cash 837 3,272 Other long-term assets 50,662 44,972 Total assets $ 1,679,238 $ 1,669,138 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $ 299,005 $ 304,880 Accrued expenses and other current liabilities 110,758 141,450 Accrued compensation and related benefits 85,203 78,849 Short-term debt, net 25,512 510 Accrued warranty 17,266 19,747 Deferred revenue 136,248 158,501 Total current liabilities 673,992 703,937 Long-term debt, net 658,756 667,719 Long-term accrued warranty 15,934 16,874 Long-term deferred revenue 21,332 23,178 Long-term deferred tax liability 1,805 2,348 Long-term operating lease liabilities 47,464 45,862 Other long-term liabilities 43,364 29,573 Commitments and contingencies 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 in 2023 and 500,000 in 2022
Issued and outstanding shares - 230,994 in 2023 and 220,408 in 2022231 220 Additional paid-in capital 1,976,014 1,901,491 Accumulated other comprehensive loss (34,848 ) (22,471 ) Accumulated deficit (1,724,806 ) (1,699,593 ) Total stockholders' equity 216,591 179,647 Total liabilities and stockholders’ equity $ 1,679,238 $ 1,669,138 Infinera Corporation
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)Twelve months ended December 30, 2023 December 31, 2022 Cash Flows from Operating Activities: Net loss $ (25,213 ) $ (76,043 ) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Depreciation and amortization 78,784 83,830 Non-cash restructuring charges and other related costs 1,200 6,066 Amortization of debt issuance costs and discount 3,862 6,109 Operating lease expense 7,464 9,421 Stock-based compensation expense 62,150 61,015 Gain on extinguishment of debt — (15,521 ) Other, net (823 ) 1,218 Changes in assets and liabilities: Accounts receivable 38,511 (69,024 ) Inventory (57,864 ) (89,527 ) Prepaid expenses and other current assets 9,683 (34,046 ) Accounts payable (2,921 ) 88,256 Accrued expenses and other current liabilities (40,063 ) (24,443 ) Deferred revenue (25,260 ) 15,129 Net cash provided by (used in) operating activities 49,510 (37,560 ) Cash Flows from Investing Activities: Purchase of property and equipment (62,314 ) (46,053 ) Net cash used in investing activities (62,314 ) (46,053 ) Cash Flows from Financing Activities: Proceeds from issuance of 2028 Notes 98,751 373,750 Repayment of 2024 Notes (83,446 ) (280,842 ) Payment of debt issuance cost (2,108 ) (12,451 ) Proceeds from asset-based revolving credit facility 50,000 80,000 Repayment of asset-based revolving credit facility (50,000 ) (80,000 ) Repayment of mortgage payable (510 ) (533 ) Principal payments on finance lease obligations (1,023 ) (1,314 ) Payment of term license obligation (10,417 ) (7,739 ) Proceeds from issuance of common stock 14,931 15,189 Tax withholding paid on behalf of employees for net share settlement (2,465 ) (3,714 ) Net cash provided by financing activities 13,713 82,346 Effect of exchange rate changes on cash, cash equivalents and restricted cash (16,253 ) (12,051 ) Net change in cash, cash equivalents and restricted cash (15,344 ) (13,318 ) Cash, cash equivalents and restricted cash at beginning of period 189,203 202,521 Cash, cash equivalents and restricted cash at end of period(1) $ 173,859 $ 189,203 Infinera Corporation
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)Twelve months ended December 30, 2023 December 31, 2022 Supplemental disclosures of cash flow information: Cash paid for income taxes, net $ 14,109 $ 15,126 Cash paid for interest $ 22,394 $ 14,787 Supplemental schedule of non-cash investing and financing activities: Property and equipment included in accounts payable and accrued liabilities $ 10,104 $ 7,435 Transfer of inventory to fixed assets $ 1,847 $ 9,332 Unpaid term licenses (included in accounts payable, accrued liabilities and other long-term liabilities) $ 23,326 $ 9,178 (1) Reconciliation of cash, cash equivalents and restricted cash to the condensed consolidated balance sheets (in thousands):
December 30, 2023 December 31, 2022 Cash and cash equivalents $ 172,505 $ 178,657 Short-term restricted cash 517 7,274 Long-term restricted cash 837 3,272 Total cash, cash equivalents and restricted cash $ 173,859 $ 189,203 Infinera Corporation
Supplemental Financial Information
(Unaudited)Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 Q3'23 Q4'23 GAAP Revenue $(Mil) $ 338.9 $ 358.0 $ 390.4 $ 485.9 $ 392.1 $ 376.2 $ 392.4 $ 453.5 GAAP Gross Margin % 32.9 % 30.5 % 34.4 % 37.1 % 37.5 % 38.0 % 40.3 % 38.6 % Non-GAAP Gross Margin %(1) 36.2 % 36.1 % 37.8 % 38.7 % 38.8 % 39.3 % 41.9 % 39.6 % GAAP Revenue Composition: Domestic % 50 % 51 % 57 % 61 % 60 % 58 % 59 % 67 % International % 50 % 49 % 43 % 39 % 40 % 42 % 41 % 33 % Customers >10% of Revenue — 1 1 1 — 1 1 1 Cash Related Information: Cash from Operations $(Mil) $ 15.8 $ (72.4 ) $ 19.6 $ (0.6 ) $ (1.8 ) $ 1.4 $ (29.7 ) $ 79.6 Capital Expenditures $(Mil) $ 16.1 $ 10.6 $ 11.0 $ 8.3 $ 16.8 $ 10.8 $ 13.3 $ 21.4 Depreciation & Amortization $(Mil) $ 21.6 $ 21.1 $ 21.3 $ 19.8 $ 19.6 $ 19.8 $ 20.0 $ 19.4 DSOs(2) 74 77 66 79 78 79 76 77 Inventory Metrics: Raw Materials $(Mil) $ 41.2 $ 50.4 $ 43.5 $ 48.7 $ 67.6 $ 85.4 $ 110.4 $ 133.6 Work in Process $(Mil) $ 55.4 $ 58.9 $ 62.6 $ 66.6 $ 71.8 $ 71.9 $ 69.9 $ 68.4 Finished Goods $(Mil) $ 195.1 $ 200.3 $ 224.9 $ 259.6 $ 273.6 $ 270.1 $ 276.6 $ 229.2 Total Inventory $(Mil) $ 291.7 $ 309.6 $ 331.0 $ 374.9 $ 413.0 $ 427.4 $ 456.9 $ 431.2 Inventory Turns(3) 3.0 3.0 3.0 3.4 2.4 2.2 2.1 2.5 Worldwide Headcount 3,206 3,186 3,199 3,267 3,351 3,365 3,369 3,389 Weighted Average Shares Outstanding (in thousands): Basic 212,182 215,509 217,620 219,921 222,393 225,922 228,077 230,509 Diluted 287,588 285,968 268,927 258,030 229,404 262,712 257,219 259,210 (1) Non-GAAP adjustments include stock-based compensation expenses, amortization of acquired intangible assets, restructuring and other related costs, inventory related charges, global distribution center transition costs and warehouse fire loss (recovery). 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. For reconciliations of prior periods that are not otherwise provided herein, see the prior period earnings releases available on our Investor Relations webpage.
(2) Infinera calculates DSO based on 91 days. Fiscal year 2022 was 53 weeks and the fourth quarter of fiscal year 2022 was 98 days. When calculation is based on 98 days, DSO was 85 days for the fourth quarter of fiscal year 2022.
(3) Infinera calculates non-GAAP inventory turns as annualized non-GAAP cost of revenue, which is calculated as GAAP cost of revenue less stock-based compensation expense, amortization of acquired intangible assets, restructuring and other related costs, inventory related charges, global distribution center transition costs and warehouse fire loss (recovery), as illustrated in the reconciliation of gross profit above, divided by the average inventory for the quarter.
