- Ciena reported Q3 2026 earnings with revenue up 37% year-over-year
- It also raised its 2026 guidance and said 2027 should be another record year
- Analysts were most concerned with how it’s going to get enough supply to meet all the demand
Ciena this morning reported excellent revenue numbers and guidance, but analysts are concerned about its ability to meet all the demand, driven by AI. (There could be worse problems to have).
Ciena reported fiscal third quarter 2026 revenue of $1.67 billion, up 37% year-over-year, and earnings per share of $2.11, an increase of 215% compared to the year-ago quarter.
The company also raised its revenue guidance for fiscal year 2026 to $6.42 billion plus or minus $50 million, a 35% increase year-over-year at the midpoint. And it even gave guidance for fiscal 2027, saying it expects to deliver another record year with revenue growing a minimum of 30% year-on-year, yielding at least $8.3 billion.
While the numbers all looked good, the company’s stock has dropped about 10% as of the writing of this article. Fierce spoke with Ciena’s Chief Strategy Officer David Rothenstein after today’s call, and in terms of the stock drop he said, “I don't have a great answer for you because clearly the market reaction in the first few hours today is not commensurate with the performance.”
He noted that other companies in the telecom space during this reporting cycle have seen a similar disconnect between their “beat-and-raise” reports and the reaction from Wall Street. “One hypothesis is that the sector and the industry got bid up to valuations very quickly over the course of the first half of this year, and perhaps it is the market overcorrecting and overreacting, trying to find some degree of normalization,” said Rothenstein.
On the earnings call, Gary Smith, Ciena’s president and CEO, said the company continues to see strong momentum in customer demand and order flow. “As a result, we are currently projecting to exit fiscal 2026 with over $10 billion in backlog,” said Smith.
Of course, all of this is driven by the boom in data center infrastructure. “High-speed, low-latency optical connectivity has become a critical enabler,” said Smith. “Optics have become the indispensable element for next-generation AI architectures.”
Smith also said Ciena recently secured a significant increase in customer commitments that extend through 2029. The company says it has two 10% customers, both of whom are hyperscalers.
Too much of a good thing?
The biggest problem for Ciena is getting enough supply to meet all the demand.
Mark Graff, Ciena’s CFO, said “Our focus is on delivering strong financial performance while ensuring security of supply and manufacturing capacity necessary to support the significant multi-year demand in front of us.”
To ensure enough supply, Graff said Ciena has, in recent weeks, finalized long-term agreements that secure supply of certain key components through 2029. And it’s investing upstream to drive security of supply to “eventually bring into balance the demand backlog.”
Graff also said Ciena is having “price discussions.”
These discussions are with Ciena’s suppliers in terms of the cost of optical components, but the discussions are also with Ciena’s own customers because in some cases Ciena must raise prices.
Graff said that based on conversations with Ciena’s customers “we've gotten to a space where we would expect, depending on the customer and the product line, anywhere between you know call it high single-digits types of price increases to something in the range of high-teens, low-20s type of price increases.”
“Just like we're looking for supply security, our customers are looking for supply security from us as well,” said Graff.
Rothenstein said, “The goal really isn't to simply just pass along dollar-for-dollar the input costs to our customers. We're not doing that.” Instead, the company is working on the overall value equation with its customers, sometimes reducing costs via design and sometimes agreeing to longer contracts.
Ciena is seeing huge demand and is guiding for that demand to continue into 2027 and beyond. But it will be a “multi-year journey before we see supply and demand get back into balance,” said Graff.
READ MORE ABOUT CIENA:
Ciena’s Gary Smith: Telecom is underestimating AI’s network demands
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