Ciena Revenue Jumps 37%, Backlog Reaches $8.5 Billion on Network Spending
Key Facts
Ciena reported a 37% year-on-year increase in fiscal 2026 third-quarter revenue to $1.67 billion, driven by AI-related network investment. The company released the results on September 3, 2026, for the fiscal period ended August 1, 2026. Chief Executive Gary Smith said in the earnings statement that "AI continues to drive successive waves of network investment." Backlog rose by $800 million during the quarter, according to management comments on the earnings call. That brought the company's backlog to $8.5 billion at the end of the period.
Revenue exceeded the midpoint of management's third-quarter guidance of $1.625 billion, plus or minus $50 million. The result remained within that guidance range, which the company announced alongside its second-quarter results. Revenue in the previous quarter was $1.57 billion, representing reported year-on-year growth of 40%. In the second quarter, backlog increased by more than $600 million from the preceding quarter. It reached $7.7 billion at that point, before the additional increase recorded in the third quarter.
Cloud service providers accounted for 53% of total third-quarter revenue, according to the earnings presentation Ciena filed with the U.S. Securities and Exchange Commission. Revenue from those customers grew 82% from the same period a year earlier. Geographically, Asia-Pacific revenue rose 58% year on year. The company attributed the regional performance to strong demand across the region. Major customers whose individual contributions exceeded the disclosure threshold together accounted for 41.7% of total revenue, according to the earnings statement.
On profitability, Ciena posted diluted earnings per share of $1.83 under U.S. generally accepted accounting principles, according to its financial statement. Adjusted earnings per share were $2.11 in the fiscal third quarter. Adjusted gross margin reached 46.4%, while adjusted operating margin was 22.5%. The chief financial officer attributed gross margin resilience to "disciplined cost execution, a favorable sales mix and pricing discipline," according to the earnings call transcript published by Investing.com. He said those factors supported margin resilience even excluding the impact of tariff refunds.
On September 16, 2026, the company announced multiyear financial targets, including a compound annual revenue growth rate of about 30% from fiscal 2026 through 2029. Ciena aims to achieve an adjusted gross margin of about 50% in fiscal 2029. It also set an adjusted operating margin target range of 32% to 35%. The targets also include a free cash flow margin of about 20% in the same fiscal year. In September, the company launched its investment arm, "Ciena Ventures," with an initial commitment of $200 million to fund startups and technology funds aligned with its strategy.
In trading on the day the results were announced, Ciena shares stood at $317.33, down 10.40% at 2:39 p.m. Eastern Time, according to Investing.com. The company raised its fiscal 2026 revenue guidance to $6.42 billion, plus or minus $50 million. For the fiscal fourth quarter, it forecast revenue of $1.75 billion, with the same range of plus or minus $50 million. Management also expected backlog to exceed $10 billion by the end of fiscal 2026. Starting in fiscal 2027, Ciena will adopt a new reporting segment structure, which will be reflected in its first-quarter results for that year.