Ciena reports Q2 2026 revenue of $1.57B, up 40% YoY

The vendor is seeing accelerating demand from hyperscalers as AI workloads drive network buildouts, said Smith, who highlighted the early success of its next-generation RLS HyperRail system. This included an initial multi-rail order from a leading, un-named hyperscaler, with additional engagements underway.

The RLS HyperRail deployments are strategic, multi-year opportunities, often worth hundreds of millions of dollars, that enable high-density, long-distance connectivity for AI training and inference workloads, he noted.

Ciena's Chief Strategy Officer David Rothenstein told Fierce on a separate one-to-one call that, "HyperRail will become generally available toward the end of this year, and it will scale throughout next year into 2027 to become a not just a meaningful revenue contributor, but because of the value that it's providing, we believe it will be a meaningful margin accretive revenue generator for us as well."

The company also emphasized expanding opportunity in interconnects and pluggables, noting strong demand for 400G and 800G solutions and expectations to more than double pluggable revenue. New wins across coherent modules and switch OEM partnerships evidence growing diversification across systems, modules and components, Smith said.

When asked where Ciena is seeing the largest demand, Rothenstein told Fierce. "All of it and I'm being glib, but not really."

Ciena has talked about the significant acceleration in the total addressable market, but he said, "Over the next three years, we expect it will about double to $50 billion and within that $50 billion ... about 70% or about $35 billion is optical...and that would include our classic optical systems business in the WAN, and our interconnects, our plugs and components inside the data center."

As for the remainder, he said, "$15 billion is DCOM, routing and switching network operations, things like that. But really, the big, the big high runners and drivers for our business the next three years will be scale across and HyperRail."

Ciena's order backlog increased sequentially to $7.7 billion, reflecting a continued imbalance between demand and supply. Smith said that customers would take more product if supply allowed, which underscored constrained capacity across key components.

Rothenstein echoed Smith and said, "[Customers] would take as much as you could give them, they would. So not just the hyperscalers, the service providers as well."

What about the service provider market?

When it comes to the service provider market, 'The death of the service provider is greatly exaggerated," Rothenstein said. "Everyone talks about Meta and Google and Amazon and Microsoft for good reason, but the service providers ... will continue to play a significant role."

To date, service providers have "writ large under-invested in their network infrastructure either because they bought too much post Covid, or because they were maybe distracted with 5G mobile infrastructure investments, which really didn't monetize," said Rothenstein. "They have been running their networks hot for a long time, and what they recognize is all of this data that's being generated inside the data center has to move out of the data center into the WAN in order to be monetized."

Hyperscalers won't be able to monetize their AI investments unless they're connecting to the end users, and they connect to end users over service provider networks in the LAN, he noted. "If the service providers ... are not investing in their own network infrastructure, what do you think is going to happen when that massive traffic flows out of the data center? They will not be able to get it right."

Those operators that are "getting it right" include Lumen, Zayo and Colt, he said. "Those guys are doing a bang-up business selling as much capacity as they can."

Subsea cables

Rothenstein said one big "rate limiter" is subsea. "If you and I make a decision and get through permitting today, it will take between three to five years to get a new submarine cable online," he said. "There is a backlog of between 45 and 60 active cables that have been approved that are not online, because there's just simply the only three companies in the world with ships to do it. So, what you're seeing is more and more of the existing capacity on existing cables being used, but you know they're running up against the barrier in that regard."

What's projected for Q3?

Ciena expects fiscal third-quarter revenue of approximately $1.625 billion and has raised full-year 2026 guidance to about $6.3 billion at the midpoint, implying roughly 32% growth.

The company anticipates sustained demand through at least the next several years, driven by AI-driven network investment across both hyperscalers and service providers.

Overall, Smith emphasized durable growth supported by customer collaboration, expanding addressable markets and a strong technology roadmap, positioning the company for continued share gains and earnings growth into 2027 and beyond.

This story was updated on June 4, 2026, at 1:20 p.m. to include quotes from our interview with Ciena's Chief Strategy Officer David Rothenstein.

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