Ciena Corporation reported fiscal third-quarter 2026 adjusted earnings per share of $2.11, exceeding the $1.72 estimate by 22.7%, and revenue of $1.67 billion, up 37% year-over-year and surpassing the $1.63 billion consensus by $40 million. Adjusted gross margin expanded to 46.4%, the highest in company history, while adjusted operating margin more than doubled to 22.5%. Free cash flow totaled $116 million, and backlog rose to $8.5 billion.
Despite the beat, Ciena shares fell 9.05% in premarket trading to $322.10, down $32.06 from the prior close of $354.16. The stock remains 49.5% below its 52-week high of $637.51. The company repurchased 356,000 shares for $172 million during the quarter.
Full-year fiscal 2026 revenue guidance was raised to $6.42 billion, up $120 million from the prior midpoint, representing 35% growth. For the fourth quarter, Ciena expects revenue of $1.75 billion, plus or minus $50 million, with adjusted gross margin of 45% and operating margin near 20%.
Fiscal 2027 revenue is projected to grow at least 30% to $8.3 billion-$8.4 billion, with gross margins holding at 45%-46% and operating margins reaching 25%-27%. Management noted supply constraints are expected to persist through 2027 and possibly into 2028. The total addressable market is forecast to double from about $25 billion to $50 billion by 2029, with customer commitments secured through that year.
Key product segments showed strong growth, including direct cloud provider revenue up more than 80% year-over-year and in-and-around-data-center revenue quadrupling year-to-date. Optical networks revenue, including interconnects, grew more than 45% year-over-year, and the company shipped over twice the volume of 800 ZR plugs compared with the prior quarter. Ciena claimed roughly 70% market share for its Resilient Line Systems installed base.
CEO Gary Smith emphasized the company's position in a "multiyear, highly durable network investment era," while CFO Marc Graff highlighted the ability to further expand gross margins and a backlog expected to exceed $10 billion by fiscal year-end.
