Infinera pulled a rabbit out of its hat, posting a relatively positive ending to what had been an operationally challenging 2017.
The company, which provides digital optical networking systems for telecom operators and data centers, posted robust revenue that showed forward-looking potential.
Fourth quarter 2017 revenues increased 8.2 percent year-over-year to $195.8 million, which was ahead of forecasts of around $190 million. However, an increase in operational expenses doubled the company’s net losses for the quarter from a loss of $36.2 million in 2016 to a loss of $74 million in 2017.
Highlighting its full-year challenges, revenues plunged nearly 15 percent in 2017 compared with 2016, coming in at $740.7 million. Net losses for the year also increased from a loss of $24 million in 2016 to a loss of $194.5 million last year.
Looking ahead, Infinera CFO Brad Feller said the company was seeing positive revenue growth in the first quarter of 2018, according to a transcript of the company’s earnings call. Feller said he expects that momentum to continue through the first half of the year, and the company expects to see more than 10 percent growth in 2018.
As part of that outlook, Feller said the company remains well positioned to maintain business from its largest customer — CenturyLink — which accounted for approximately 13 percent of its total revenues in the fourth quarter. CenturyLink recently closed on its acquisition of Level 3. Both companies were significant customers for Infinera having at one point accounted for a combined 30 percent of Infinera’s revenues.
Despite the mixed message, investors were enthusiastic on the results and outlook. Infinera’s stock surged more than 27 percent in early Thursday trading hitting a new 52-week high of $8.94 per share.
The fourth-quarter results followed on a pair of ugly quarters that hammered Infinera’s stock price. Alongside its third-quarter 2017 reporting, company management announced plans for a corporate restructuring that is expected to save around $40 million per year.
Infinera is also reducing its facilities’ footprint and writing off some of its equipment and licenses that it no longer plans to use. There are also plans for a reduction in headcount, although the company did not disclose an exact number of job cuts. A recent State of California Employment Development Department report showed Infinera had cut 73 jobs from its Sunnyvale, California, headquarters last November. Infinera currently counts around 2,000 employees worldwide.
The restructuring is expected to cost Infinera between $21 million and $27 million, with a majority of the plan completed by the end of last year. The company did report $16.1 million in restructuring costs for the final quarter of 2017.