12:36 PM EST, 03/07/2024 (MT Newswires) -- Ciena (CIEN) said Thursday that it now expects fiscal 2024 revenue to fall year over year as customers seek to recover from supply chain issues that have persisted in recent years, while the company's first-quarter results exceeded Wall Street's estimates.

Revenue is now set to come in between $4 billion and $4.3 billion for fiscal 2024, the networking systems and software company said in an investor presentation. It previously forecast revenue growth of 1% to 4% versus last year's result of $4.39 billion. The consensus on Capital IQ is for $4.17 billion.

The firm remains in a period of uncertainty, "which has come about as a result of the whiplash effects on industry supply chains," caused by key component shortages, drawn-out lead times and huge orders from customers, Chief Financial Officer James Moylan Jr. said during a conference call, according to a Capital IQ transcript. The stock slumped 14% in midday trading.

"It is taking longer than we and many in the industry anticipated for Tier 1 service providers in North America to work through these high levels of inventory, and this is impacting their placement of new orders," according to Moylan. "Additionally, we are seeing increased caution from certain European service providers related to macro concerns."

For the three-month period ended Jan. 27, adjusted earnings rose to $0.66 per share from $0.64 the year before, surpassing the Street's view for $0.48. Revenue decreased 1.8% to $1.04 billion, but was above analysts' $1.02 billion estimate.

Sales for the networking platform segment amounted to $807.2 million, down from $855.1 million in the prior-year quarter. Within the division, optical networking fell to $695.8 million from $735.6 million, while routing and switching slipped to $111.4 million from $119.5 million. The global services business saw revenue grow to $126.8 million from $112.6 million last year.

In the Americas segment, which represents about 69% of total revenue during the quarter, sales dropped to $718.2 million from $765.1 million. Asia Pacific revenue slid to $112.1 million from $138.6 million, while Europe, the Middle East and Africa moved up to $207.4 million from $152.8 million.

"We generated $250 million in free cash flow within the quarter," Chief Executive Gary Smith said on the call. "The drivers of bandwidth demand remain strong, and we believe very durable, and network traffic is increasing as a result."

Ciena anticipates revenue to be in a range of $850 million to $930 million for the ongoing quarter, while the Street is looking for nearly $1.07 billion. The company expects adjusted gross margin to be in the low 40% range, "given expected product mix and lower volumes in the quarter," Moylan told analysts.

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