If you needed more proof that the AI boom is about more than just chips and data centers, Ciena just gave it to you. The optical networking specialist reported a blockbuster fiscal third quarter on Thursday, with revenue and earnings soaring past expectations as telecom and cloud giants keep spending big on high-speed connectivity.
Revenue for the quarter came in at $1.671 billion, up 37% from $1.219 billion a year ago and ahead of the analyst consensus of $1.633 billion. But the real headline was the bottom line: GAAP diluted EPS jumped about 423% to $1.83 from 35 cents, while adjusted diluted EPS rose about 215% to $2.11 from 67 cents, blowing past the $1.73 analysts were looking for.
Optical Networking Drives Growth
The growth was broad-based, but the star was clearly optical networking. Networking Platforms revenue increased about 44% to $1.356 billion from $941.4 million. Within that, Optical Networking revenue climbed about 46% to $1.191 billion from $815.5 million, while Routing and Switching revenue rose about 31% to $164.4 million from $125.9 million.
Platform Software and Services revenue increased about 10% to $98.6 million from $90 million, though Blue Planet Automation Software and Services revenue declined about 17% to $23.2 million from $27.8 million. Global Services revenue rose about 21% to $193.6 million from $160.2 million.
Ciena Margins Expand
What really got investors excited, though, was the margin story. Adjusted gross margin expanded to 46.4% from 41.9%, and adjusted operating margin more than doubled to 22.5% from 10.7%. That operating leverage shows up directly in the bottom line: GAAP net income surged about 430% to $266.4 million from $50.3 million.
Adjusted EBITDA increased 160.2% to $411.1 million from $158 million, while EBITDA rose to $349.9 million from $109.2 million.
Cash Flow Improves
Ciena's balance sheet is also looking healthier. Operating cash flow increased about 57% to $683.6 million during the first nine months of fiscal 2026, compared with $435 million a year earlier. The company ended the quarter with $2.446 billion in cash and cash equivalents, up from $1.092 billion at the end of fiscal 2025.
Ciena Raises Full-Year Outlook
Looking ahead, Ciena is feeling good about the future. For the fiscal fourth quarter, the company expects revenue of $1.7 billion to $1.8 billion, compared with the analyst estimate of $1.702 billion. It also expects an adjusted gross margin of 45%, plus or minus 50 basis points, and an adjusted operating margin of 20%, plus or minus 50 basis points.
For the full fiscal 2026, Ciena raised its revenue outlook to $6.37 billion-$6.47 billion from $6.2 billion-$6.4 billion. The new range compares with the analyst consensus estimate of $6.336 billion.
CEO Gary Smith said AI-driven network investment continues to support demand for Ciena's high-speed connectivity products. CFO Marc Graff added that expanding supply capacity, stronger business fundamentals and increased operating leverage position Ciena to accelerate earnings growth and pursue long-term opportunities.
Price Action
Investors clearly liked what they saw. Ciena shares were trading 3.06% higher at $365.00 in Thursday's premarket session.
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