Infinera Corp (INFN) 2023 Q2 法說會逐字稿

Good afternoon. My name is David, and I'll be your conference operator today. At this time, I'd like to welcome everyone to the Infinera Corp. Q2 23 Earnings Call. Today's conference is being recorded. All lines have been placed on mute to prevent and background noise. After the speaker's remarks, there will be a question-and-answer session. (Operator Instructions) Thank you. Amitabh Passi, Head of Investor Relations, you may begin your conference.

下午好。我叫大衛，今天我將擔任你們的會議操作員。此時此刻，我謹歡迎大家參加英飛朗公司 23 年第二季度財報電話會議。今天的會議正在錄製中。所有線路均已靜音，以防止背景噪音。演講者發言後，將進行問答環節。 （操作員說明）謝謝。 Amitabh Passi，投資者關係主管，您可以開始會議了。

Thank you, David, and good afternoon. Welcome to Infinera's Second Quarter Fiscal 2020 Conference Call. A copy of today's earnings and investor slides are available on the Investor Relations section of the website. Additionally, this call is being recorded and will be available for replay from our website. Today's call will include projections and estimates that constitute forward-looking statements, including, but not limited to, statements related to our future business plans, product development and growth opportunities, including progress against strategic priorities and milestones, trends, competition and customers, capacity growth, excess inventory held by customers beyond normalized levels, expectations regarding industry-wide supply chain dynamics and the macroeconomic environment, market adoption of coherent optical engines, expectations regarding our subsystems business and its impact on our financial results, expectations regarding obtaining government funding, projected year-over-year drivers of demand, revenue, gross margin, operating expenses and operating margin; expectations regarding our future performance, revenue growth and margin expansion and our financial outlook for the third quarter of 2023.

謝謝你，大衛，下午好。歡迎參加英飛朗 2020 財年第二季度電話會議。今天的收益和投資者幻燈片的副本可在網站的投資者關係部分獲取。此外，本次通話正在錄音中，可在我們的網站上重播。今天的電話會議將包括構成前瞻性陳述的預測和估計，包括但不限於與我們未來業務計劃、產品開發和增長機會相關的陳述，包括戰略優先事項和里程碑的進展、趨勢、競爭和客戶、產能增長、客戶持有的庫存超出正常水平、對全行業供應鏈動態和宏觀經濟環境的預期、相干光學引擎的市場採用率、對我們的子系統業務及其對財務業績的影響的預期、對獲得政府資金的預期、需求、收入、毛利率、運營費用和運營利潤率的預計同比驅動因素；對我們未來業績、收入增長和利潤率擴張的預期以及 2023 年第三季度的財務前景。

These statements are subject to risks and uncertainties that could cause Infinera's results to differ materially from management's current expectations. Actual results may differ materially as a result of various risk factors, including those set forth in our annual report on Form 10-K for the year ended on December 31, 2022, as filed with the SEC on February 27, 2023, and in our quarterly report on Form 10-Q for the quarter ended April 1, 2023, as filed with the SEC on May 4, 2023, as well as subsequent reports filed with or furnished to the SEC from time to time. Please be reminded that all statements are made as of today, and Infinera undertakes no obligation to update or revise any forward-looking statements to reflect events or circumstances that may arise after the date of this call.

這些陳述受到風險和不確定性的影響，可能導致英飛朗的業績與管理層當前的預期存在重大差異。由於各種風險因素，實際結果可能會存在重大差異，包括我們於 2023 年 2 月 27 日向 SEC 提交的截至 2022 年 12 月 31 日的 10-K 表格年度報告以及我們的於2023 年5 月4 日向SEC 提交的截至2023 年4 月1 日季度的10-Q 表格季度報告，以及不時向SEC 提交或提供的後續報告。請注意，所有聲明均截至今天，英飛朗沒有義務更新或修改任何前瞻性聲明以反映本次電話會議之後可能出現的事件或情況。

Today's conference call includes references to non-GAAP financial measures, except for revenue, balance sheet items and cash flow from operations, which are each discussed on a GAAP basis. Pursuant to Reg G, we've provided a reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measures in earnings release and investor slides for this quarter, each of which is available on the Investor Relations section of our website. And finally, as a reminder, we'll allow for plenty of time for Q&A today that we ask that you limit yourselves to one question and one follow-up, please. I'll now turn the call over to our Chief Executive Officer, David Heard.

今天的電話會議提到了非公認會計原則財務指標，但收入、資產負債表項目和運營現金流除外，這些指標都是根據公認會計原則進行討論的。根據Reg G 的規定，我們在本季度的收益發布和投資者幻燈片中提供了這些非GAAP 財務指標與最直接可比的GAAP 財務指標的調節表，每一項都可以在我們網站的投資者關係部分找到。最後，提醒一下，今天我們將留出足夠的時間進行問答，請您將自己限制在一個問題和一個後續行動上。我現在將把電話轉給我們的首席執行官戴維·赫德 (David Heard)。

Yes. Thanks, Amitabh. Good afternoon, and thanks for joining us today. I'll begin with the highlights from our Q2 results and then turn the call over to Nancy to cover the financial details of our second quarter, and the outlook for Q3. Overall, the second quarter was another solid quarter for us. We beat the midpoint of our outlook range across all key financial metrics: revenue, gross margin, operating margin and EPS. On a year-over-year basis, we grew revenue by 5%, expanded gross margins by 320 basis points and increased operating margins by 240 basis points, while continuing to invest in our strategic programs.

是的。謝謝，阿米塔布。下午好，感謝您今天加入我們。我將首先介紹第二季度業績的重點，然後將電話轉給南希，介紹第二季度的財務細節以及第三季度的前景。總體而言，第二季度對我們來說又是一個穩健的季度。我們在所有關鍵財務指標（收入、毛利率、營業利潤率和每股收益）上都超出了預期範圍的中點。與去年同期相比，我們的收入增長了 5%，毛利率提高了 320 個基點，營業利潤率提高了 240 個基點，同時繼續投資於我們的戰略計劃。

In the first half of the year, we increased our top line by 10%, improved gross margins by approximately 300 basis points to 39% and grew EBITDA by 137% compared to the first half of 2022. Bookings in Q2 improved sequentially with book-to-bill just below 1, which was in line with our expectations. In our subsystems business, we continue to win new strategic deals in the areas we've been prioritizing. For example, first, consistent with our efforts to expand our metro footprint, we won a new deployment with a major U.S. service provider. This is a turnkey award, which will include our GX Metro platform, next-generation line system software suite and professional services. The footprint we established with this customer, will allow for future margin expansion as we integrate our own 400-gig ZR, ZR+ pluggables in 2024, which we just made commercially available.

與 2022 年上半年相比，今年上半年，我們的營收增長了 10%，毛利率提高了約 300 個基點，達到 39%，EBITDA 增長了 137%。賬單金額略低於1，這符合我們的預期。在我們的子系統業務中，我們繼續在我們優先考慮的領域贏得新的戰略交易。例如，首先，為了與我們擴大地鐵覆蓋範圍的努力相一致，我們贏得了美國一家主要服務提供商的新部署。這是一個交鑰匙合同，其中包括我們的 GX Metro 平台、下一代線路系統軟件套件和專業服務。我們與該客戶建立的足跡將允許未來的利潤擴張，因為我們將在 2024 年集成我們自己的 400g ZR、ZR+ 可插拔設備，我們剛剛將其投入商業化。

Second, our investments in go-to-market and geographic expansion resulted in new deals in India, a market where we believe we have significant growth opportunity. These wins span both subsea and terrestrial deployments in India for domestic service providers and U.S. hyperscalers who are increasing their presence in the region. Finally, we continued our momentum in the hyperscale segment where we landed a new subsea deal with a major hyperscaler, a customer with whom we historically have less share, positioning us well for future expansion in this account.

其次，我們在市場進入和地域擴張方面的投資導致了在印度的新交易，我們相信我們在這個市場擁有巨大的增長機會。這些勝利涵蓋了印度國內服務提供商和正在擴大在該地區影響力的美國超大型企業的海底和陸地部署。最後，我們繼續在超大規模領域保持勢頭，與一家大型超大規模客戶達成了一項新的海底交易，我們歷史上與該客戶的份額較少，這為我們未來在該領域的擴張奠定了良好的基礎。

In the subsystems business, we're seeing the first signs of commercial progress. Our 400-gig ZR, ZR+ pluggable is now commercially available, and we're excited about the margin expansion potential as we vertically integrate into the metro portfolio. We're on schedule to make the first set of software-enabled 100-gig pluggables commercially available in the second half of '24. We will open a significant market opportunity at the edge of the network with broadband access, 5G and cable networks. And we're on track to deliver the highest performing lowest power 800 gig pluggable that will leverage 3-nanometer technology and enable our customers to reach greater distances at unmatched economics.

在子系統業務中，我們看到了商業進展的初步跡象。我們的 400g ZR、ZR+ 可插拔現已投入商用，當我們垂直整合到城域產品組合中時，我們對利潤擴張潛力感到興奮。我們計劃於 2024 年下半年推出第一套軟件支持的 100 Gb 可插拔產品。我們將通過寬帶接入、5G 和有線網絡在網絡邊緣開闢重要的市場機會。我們有望提供性能最高、功耗最低的 800 GB 可插拔電源，該產品將利用 3 納米技術，使我們的客戶能夠以無與倫比的經濟性實現更遠的距離。

In addition to all of our intelligent pluggables have software that enables seamless integration and router switches, which allows simplified management, increased agility and dramatically lower operating costs for our customers. These achievements have resulted in a solid pipeline and purchase orders from 15 network equipment manufacturers and service providers to date. The purchase orders are broad-based and include our entire suite of pluggables and components from 100 gig to 800 gig. While these initial wins are relatively small in magnitude, they are encouraging and signs of the return we expect to get from our investment going forward.

除了我們所有的智能可插拔設備外，還配備了可實現無縫集成和路由器交換機的軟件，從而可以簡化管理、提高敏捷性並大幅降低客戶的運營成本。迄今為止，這些成就已為 15 家網絡設備製造商和服務提供商帶來了穩固的渠道和採購訂單。採購訂單範圍廣泛，包括我們從 100 GB 到 800 GB 的整套可插拔設備和組件。雖然這些最初的勝利規模相對較小，但它們令人鼓舞，並且是我們期望從未來的投資中獲得回報的跡象。

Finally, as a company, we've been a proponent of open architectures and open networks. We're excited to see the addition to 3 new members to the Open XR Forum in the quarter, including Arista Networks. Total membership in the OpenXR Forum is now up to 34 members and represents a significant portion of the overall network spend. Our results in the first half of 2023 continue to build on our momentum over the last 5 years that validate our strategy is working. From 2018 to 2022, we've grown company revenue at an average of 14% annually. Expanded operating margins by over 1,000 basis points, ramped i6 as one of the fastest technologies in our history to ramp, refreshed our entire hardware and software portfolio and added a significant number of new customers gained share, especially in the metro segment with our refreshed GX portfolio.

最後，作為一家公司，我們一直是開放架構和開放網絡的支持者。我們很高興看到本季度 Open XR 論壇新增 3 位新成員，其中包括 Arista Networks。 OpenXR 論壇的會員總數現已達到 34 名，佔整個網絡支出的很大一部分。我們 2023 年上半年的業績繼續以過去 5 年的勢頭為基礎，驗證了我們的戰略正在發揮作用。從 2018 年到 2022 年，我們公司收入平均每年增長 14%。營業利潤率擴大了1,000 個基點以上，將i6 提升為我們歷史上提升速度最快的技術之一，更新了我們的整個硬件和軟件產品組合，並增加了大量新客戶，從而獲得了份額，特別是在地鐵領域，我們更新了GX文件夾。

We're now in a position to expand our market opportunity further with the newly launched subsystems business, a business which we're investing close to $100 million this year. As this business ramps, we expect to benefit from the higher margins in 2024, as we vertically integrate into our metro portfolio. And from the operating leverage once we ramp up the sale of external pluggables. Furthermore, we've continued to position ourselves to benefit from the Chips & Sciences Act to augment our existing business plan. As a U.S.-based optical semiconductor manufacturer, Infinera is well situated at a time when significant government funding is on the table to reshore and secure critical supply chain an issue of increasing importance to our customers.

我們現在能夠通過新推出的子系統業務進一步擴大我們的市場機會，我們今年對該業務的投資接近 1 億美元。隨著這項業務的發展，我們預計將在 2024 年受益於更高的利潤率，因為我們垂直整合到我們的地鐵投資組合中。一旦我們增加外部可插拔設備的銷售，就會產生運營槓桿。此外，我們繼續使自己受益於《芯片與科學法案》，以擴大我們現有的業務計劃。作為一家總部位於美國的光學半導體製造商，英飛朗 (Infinera) 處於有利地位，目前政府正在拿出大量資金來支持和保護關鍵供應鏈，而這一問題對我們的客戶來說日益重要。

While long-term demand will continue to be healthy with data rates growing from network payloads, they're getting asked from artificial intelligence and machine learning. We believe the second half of the year is going to be lighter than our original expectations as our customers are going through a 3- to 4-quarter period of inventory digestion that's industry-wide and are being cautious about spending in a recessionary environment. We believe we're roughly halfway through this projected 4-quarter digestion period, and are taking this into account in our outlook for the back half of the year. However, for the full year, we expect we'll grow revenue in the low single-digit percentage range and delivered our sixth consecutive year of top line growth. We'll expand operating profit and EBITDA by double-digit percentages on a year-over-year basis

雖然隨著網絡有效負載數據速率的增長，長期需求將繼續保持健康，但人工智能和機器學習也對它們提出了要求。我們認為，今年下半年的情況將比我們最初的預期要淡，因為我們的客戶正在經歷全行業的三到四個季度的庫存消化期，並且在經濟衰退的環境下對支出持謹慎態度。我們相信，我們預計的第四季度消化期已經過半，並且在我們對今年下半年的展望中考慮到了這一點。然而，就全年而言，我們預計收入將以較低的個位數百分比增長，並實現連續第六年的營收增長。我們的營業利潤和 EBITDA 將同比增長兩位數百分比

(technical difficulty)

（技術難度）

despite the near-term and temporary industry-wide digestion mentioned earlier, the longer-term secular drivers of our business and target business model remain intact. We're executing to the 6 strategic milestones we outlined during our March Investor Day, and we're focused on gaining additional market share expanding margins, ramping the pluggables business and delivering at least $1 in earnings per share in the 2025, 2026 time frame.

儘管前面提到了短期和暫時的全行業消化，但我們業務和目標業務模式的長期長期驅動因素仍然完好無損。我們正在執行我們在3 月份投資者日概述的6 個戰略里程碑，我們的重點是獲得額外的市場份額、擴大利潤、擴大可插拔業務並在2025 年和2026 年的時間範圍內實現至少1 美元的每股收益。

Overall, our investment thesis remains unchanged. We continue to expand EPS. As I close today, I'd like to reiterate the fact that I'm confident in our strategy and our ability to execute through this adjustment period. Over the past few years, we've delivered consistent commercial and financial progress while navigating a pandemic supply chain disruptions of war rising interest rates. As evidenced by our progress over the last few years, our systems portfolio is in the best shape it's ever been, and I'm equally excited about the outlook of the new subsystems business.

總體而言，我們的投資理念保持不變。我們繼續擴大每股收益。在今天結束時，我想重申一個事實，即我對我們的戰略以及我們在這一調整期的執行能力充滿信心。在過去的幾年裡，我們在應對戰爭、利率上升造成的大流行供應鏈中斷的同時，取得了持續的商業和金融進展。正如我們過去幾年的進步所證明的那樣，我們的系統產品組合處於有史以來的最佳狀態，我對新子系統業務的前景同樣感到興奮。

I would like to take this opportunity to thank the Infinera team for their unweaving commitment to our customers and one another and delivering on innovation that matters. In addition, I'd like to thank our partners, customers and shareholders for their ongoing support. I'm now going to hand the call over to Nancy to cover the financial details of the quarter and outlook. Nancy?

我想藉此機會感謝英飛朗團隊對我們的客戶和彼此的堅定承諾，並提供重要的創新。此外，我還要感謝我們的合作夥伴、客戶和股東的持續支持。我現在將把電話轉交給南希，介紹本季度的財務細節和前景。南希？

Thanks, David. Good afternoon, everyone. I will begin by covering our second quarter results and then provide the outlook for the third quarter. For your reference on our Investor Relations website, we have posted slides with financial details, including our GAAP to non-GAAP reconciliation to assist with my commentary. As you heard from David, the second quarter was another strong quarter for us. Revenue was $376 million, up 5% on a year-over-year basis and just above the midpoint of our outlook range. This performance was primarily driven by strength in the Americas, Asia Pacific and with ICP customers. Geographically, we derived 58% of our Q2 revenue from domestic customers, a level generally consistent with Q1. There was one customer who accounted for over 10% of our revenue in the quarter, which was an ICP customer.

謝謝，大衛。大家下午好。我將首先介紹我們第二季度的業績，然後提供第三季度的前景。為了供您在我們的投資者關係網站上參考，我們發布了包含財務詳細信息的幻燈片，包括我們的 GAAP 與非 GAAP 調節表，以協助我的評論。正如您從大衛那裡聽到的那樣，第二季度對我們來說是又一個強勁的季度。收入為 3.76 億美元，同比增長 5%，略高於我們預期範圍的中點。這一業績主要得益於美洲、亞太地區和 ICP 客戶的實力。從地域上看，我們第二季度收入的 58% 來自國內客戶，這一水平與第一季度基本一致。有一個客戶占我們本季度收入的10%以上，就是ICP客戶。

Q2 gross margin of 39.3% was above the midpoint of our outlook range and increased 320 basis points year-over-year. Compared to the prior quarter, gross margin in the quarter benefited from higher vertical integration, including ICE6 and some relief in supply costs, partially offset by lower services margin as we continue to work through our lower-margin professional services backlog. Overall, I'm encouraged by the gross margin trend in the first half of the year as it supports my confidence in our ability to show continued gross margin improvement in 2024 and beyond, as we vertically integrate our metro portfolio and ramp up our external pluggables revenue.

第二季度毛利率為 39.3%，高於我們展望範圍的中點，同比增長 320 個基點。與上一季度相比，本季度的毛利率受益於更高的垂直整合，包括ICE6 和供應成本的一些緩解，但由於我們繼續處理利潤率較低的專業服務積壓工作，服務利潤率下降部分抵消了這一影響。總體而言，我對今年上半年的毛利率趨勢感到鼓舞，因為它支持了我對我們在2024 年及以後顯示毛利率持續改善的能力的信心，因為我們垂直整合了城域網產品組合併增加了外部可插拔產品收入。

Operating profit in the quarter was $10.7 million, with an operating margin of 2.8%, which was at the higher end of our outlook range. On a year-over-year basis, we expanded our operating margin by 240 basis points. Operating expenses of $137 million in Q2 were below our outlook range of $140 million to $144 million, as we tightly managed quarterly spending while continuing to make substantial investments in our subsystems business. The resulting diluted EPS was at the high end of our outlook range at breakeven, and compared to a loss of $0.05 in the year ago quarter.

本季度營業利潤為 1,070 萬美元，營業利潤率為 2.8%，處於我們預期範圍的上限。與去年同期相比，我們的營業利潤率增加了 240 個基點。第二季度運營費用為 1.37 億美元，低於我們 1.4 億至 1.44 億美元的預期範圍，因為我們嚴格管理季度支出，同時繼續對子系統業務進行大量投資。由此產生的攤薄每股收益處於我們盈虧平衡預期範圍的高端，而去年同期虧損 0.05 美元。

Moving on to the balance sheet and cash flow items. We ended the quarter with $167 million in cash and cash equivalents with no amount drawn on the ABL. From a cash flow perspective, we generated $1.4 million in cash flow from operations, while free cash flow was an outflow of $9.4 million. Let me now turn to the outlook for the third quarter of 2023 and our expectations for the rest of the year. As you heard from David, the near-term operating environment has become more challenging than our original expectations as customers in our industry have slowed the pace of bookings, while continuing to work down their inventory. However, even against this backdrop, we achieved our plan in the first half of the year, growing revenue by 10%, expanding operating margin by 350 basis points, and increasing EBITDA by 137% compared to the first half of 2022.

接下來是資產負債表和現金流量項目。本季度結束時，我們擁有 1.67 億美元的現金和現金等價物，沒有從 ABL 中提取任何金額。從現金流的角度來看，我們從運營中產生了 140 萬美元的現金流，而自由現金流為 940 萬美元的流出。現在讓我談談 2023 年第三季度的展望以及我們對今年剩餘時間的預期。正如您從大衛那裡聽到的那樣，近期的運營環境比我們最初的預期更具挑戰性，因為我們行業的客戶放慢了預訂速度，同時繼續減少庫存。然而，即使在這種背景下，我們上半年也實現了計劃，與 2022 年上半年相比，收入增長了 10%，營業利潤率提高了 350 個基點，EBITDA 增長了 137%。

We believe we are about halfway through this temporary industry-wide 4-quarter customer adjustment period. As a result, we now expect our outlook for the third quarter to be revenue of $376 million, plus or minus $15 million; gross margin of 39%, plus or minus 150 basis points; operating expenses of $141 million, plus or minus $2 million; and operating margin of 1.5% plus or minus 250 basis points. Below the operating income line, we assume $7 million for net interest expense and $4 million for taxes. Finally, we are anticipating a loss of $0.02, plus or minus $0.04 per share, assuming a basic share count of approximately 228 million shares, and a fully diluted share count, if profitable, of approximately 260 million shares. We expect to utilize cash from operations in Q3, primarily for working capital, and returned to generating cash from operations in Q4. We are continuing to target generating cash from operations for the full year.

我們相信，整個行業的第四季度客戶臨時調整期已經過半。因此，我們現在預計第三季度營收為 3.76 億美元，上下浮動 1500 萬美元；毛利率39%，上下浮動150個基點；運營費用 1.41 億美元，上下浮動 200 萬美元；營業利潤率為 1.5% 正負 250 個基點。在營業收入線以下，我們假設淨利息支出為 700 萬美元，稅金為 400 萬美元。最後，我們預計每股虧損 0.02 美元，正負 0.04 美元，假設基本股數約為 2.28 億股，完全稀釋後的股數（如果盈利）約為 2.6 億股。我們預計第三季度的運營現金主要用於營運資金，並在第四季度恢復運營現金。我們繼續以全年運營產生現金為目標。

Despite the near-term considerations, our investment thesis is sound, and we are still planning on delivering year-over-year improvement in our financials in 2023. This will include growing revenue in the low single-digit percentage range driving gross margins to 40%, expanding operating profit in the double-digit percentage range and delivering at least 25% growth in earnings per share compared to 2022, remaining on the path to delivering $1 of EPS in '25, '26. We expect bookings to continue to improve sequentially in Q3 and then again in Q4 and to exit the year with our remaining performance obligations or RPOs of approximately $800 million, which should set us up well for 2024 when we believe demand should start to normalize.

儘管有短期的考慮，我們的投資理論是合理的，我們仍然計劃在 2023 年實現財務狀況的同比改善。這將包括以低個位數百分比範圍實現收入增長，將毛利率推至 40 %，營業利潤擴大兩位數百分比範圍，每股收益與2022 年相比至少增長25%，繼續致力於在25 年和26 年實現1 美元的每股收益。我們預計第三季度的預訂量將繼續持續改善，然後在第四季度再次改善，並以約8 億美元的剩餘履約義務或RPO 結束今年，這將為我們在2024 年做好準備，屆時我們相信需求應該開始正常化。

As I close today, I would like to reiterate that I'm pleased with our second quarter and first half performance, especially considering the industry-wide slowdown that we are experiencing. In the near term, we are tempering our expectations for the back half of the year, but believe our strategic initiatives are on track, and we are on pace toward our sixth consecutive year of revenue growth and fifth consecutive year of operating profit expansion. We expect to improve our earnings per share by at least 25% in 2023, while investing close to $100 million in our subsystems business this year, and we remain on the path to delivering at least $1 in earnings per share in the '25, '26 time frame.

在今天結束時，我想重申，我對我們第二季度和上半年的業績感到滿意，特別是考慮到我們正在經歷的全行業放緩。短期內，我們正在調整對下半年的預期，但相信我們的戰略舉措正在步入正軌，我們正在朝著連續第六年收入增長和連續第五年營業利潤擴張的方向邁進。我們預計到2023 年，我們的每股收益將提高至少25%，同時今年將在我們的子系統業務上投資近1 億美元，並且我們仍然致力於在“25”年實現至少1 美元的每股收益。 26 時間範圍。

I would like to thank the Infinera team, as well as their continued commitment to innovation and execution excellence and our partners, customers and shareholders for your continued cooperation and support. David, we can now open the line for questions.

我要感謝英飛朗團隊以及他們對創新和卓越執行的持續承諾，感謝我們的合作夥伴、客戶和股東的持續合作和支持。大衛，我們現在可以開始提問了。

Thank you. (Operator Instructions). We'll take our first question from Simon Leopold with Raymond James. Your line's open.

謝謝。 （操作員說明）。我們將回答西蒙·利奧波德和雷蒙德·詹姆斯提出的第一個問題。您的線路已開通。

Great. Thanks for taking the questions. I wanted to see if you could maybe unpack what's going on in terms of your verticals, whether they're all behaving similarly in terms of this inventory absorption and slowing, or whether there's an aspect that stands out either because of customer concentration or other reasons? And then I've got a quick follow-up.

偉大的。感謝您提出問題。我想看看您是否可以分析一下您的垂直行業的情況，它們在庫存吸收和放緩方面是否表現相似，或者是否有一個方面由於客戶集中或其他原因而突出？然後我會進行快速跟進。

It's a good question, Simon, good to hear from you. Yes. So look, I think on the -- from an ICP front, they are lumpy orders, and each one of those is behaving differently. I'd say that maybe 50% of the ICPs are burning through a significant portion of inventory and still have nice CapEx forecast for 2024, and I expect as we exit the year. Again, we're -- as I mentioned, we used to be with one ICP at a time we're now doing some form of business with the top 7. So that bodes well for the future. A couple of them are going in still quite strong because of their immediate exposure to machine learning and AI.

這是一個很好的問題，西蒙，很高興收到你的來信。是的。所以，我認為，從 ICP 的角度來看，它們是塊狀訂單，而且每一個的行為都不同。我想說，也許 50% 的 ICP 正在消耗很大一部分庫存，但 2024 年的資本支出預測仍然不錯，我預計在今年結束時。再說一遍，正如我所提到的，我們過去一次只與一個 ICP 合作，現在我們正在與前 7 名 ICP 開展某種形式的業務。因此，這對未來來說是個好兆頭。其中一些人由於直接接觸機器學習和人工智能，因此仍然表現強勁。

In the CST domain, the largest CSPs in the world, I think that's where you see a large portion of that inventory. What we used to call the interexchange carriers have been less affected by that. I think the larger conglomerates that offer multi-service access wireless, others have been burning through inventory, let's say, that's been a bigger challenge for them. So it's spotty in the ICPs, but identified on the applications they're using. And in the CSPs, it's based on, again, their overall supply chain buying that they did last year, meaning they packed on inventory to cover themselves in supply chain, and they're going to burn that down.

在 CST 領域（世界上最大的 CSP）中，我認為您可以看到很大一部分庫存。我們過去所說的交換運營商受此影響較小。我認為提供多服務無線接入的大型企業集團，其他企業一直在消耗庫存，可以說，這對他們來說是一個更大的挑戰。因此，它在 ICP 中參差不齊，但在他們使用的應用程序中得到了識別。在 CSP 中，它再次基於他們去年進行的整體供應鏈購買，這意味著他們增加了庫存以覆蓋供應鏈，並且他們將燒掉這些庫存。

It feels like when we look at the inventory levels that we perceive are out there -- in the industry, this isn't our inventory, it's total inventory in the industry. They're about, I think, halfway through the inventory burn down.

感覺就像當我們看到我們認為的行業庫存水平時，這不是我們的庫存，而是行業的總庫存。我認為，庫存消耗已經進行到一半了。

So that sets up my follow-up nicely in that, it sounds like you're expecting a couple of quarters of this remains, but if I combine the midpoint of your 3Q guidance with the prediction for low single-digit growth in 2023, that would imply at least mid-teens sequential growth in your fourth quarter. So somewhat of a nice rebound in the fourth quarter...

因此，這很好地設定了我的後續行動，聽起來您預計這一情況將持續幾個季度，但如果我將您的第三季度指導的中點與2023 年低個位數增長的預測結合起來，那麼這意味著第四季度的環比增長至少達到十幾歲左右。第四季度的反彈有點不錯......

Yes.

是的。

I want to make sure I'm interpreting that correctly and what you see fueling that implied fourth quarter strength? Thanks.

我想確保我的解釋正確，以及您認為是什麼推動了第四季度的強勁勢頭？謝謝。

Yes. So backlog, right? So both our backlog and the order intake that we have in our order forecast that we have with our client base. So I think, again, despite a bit of a softer back half as we see service providers again digesting the inventory. We're still continuing to have system design wins out there with carriers. They're just slower to pull the trigger on ultimately getting the orders in. And even once they've got the orders in on getting them scheduled. We think that begins to rebound as we exit the year and we get a more normalized '24.

是的。所以積壓了，對吧？因此，我們的積壓訂單和訂單量都預測了我們與客戶群的關係。因此，我再次認為，儘管後半段有點疲軟，但我們看到服務提供商再次消化庫存。我們仍然繼續在系統設計方面贏得運營商的青睞。他們只是在最終收到訂單時扣動扳機的速度較慢。即使他們收到訂單後也無法安排訂單。我們認為，隨著今年的結束，這種情況開始反彈，我們將迎來一個更加正常化的“24”。

Now despite that, Simon -- look, we pull our levers in times like this, you drive efficiency. And then both Nancy and my comments, for the fifth year in a row, we'll expand EPS. And this year, you can do the math. If you contemplate that we'll grow by at least 25%, that says it's kind of $0.15 to $0.20 of EPS, which when you go back to our Analyst Day, that's kind of the view. The upper end of that view was where we said we needed to be. And when we look at the consensus view for next year, that doesn't scare us at all. Nancy also said that we're spending $100 million on a subsystem business that's over $0.30 if you add it up. And that is -- that hasn't yet begun to pay back. The payback will start next year when we start putting the vertical integration in the metro platforms and then we'll further drive operating leverage as we exit '24 when you start to see true impact from the external pluggable sales in any kind of large-scale fashion.

儘管如此，西蒙，你看，我們在這樣的時刻拉動槓桿，你可以提高效率。然後南希和我的評論都是，我們將連續第五年擴大每股收益。今年，你可以算一算。如果你認為我們將增長至少 25%，這意味著 EPS 為 0.15 至 0.20 美元，當你回到我們的分析師日時，這就是這種觀點。該視圖的上端就是我們所說的我們需要達到的位置。當我們看到明年的共識時，我們一點也不害怕。 Nancy 還表示，我們在子系統業務上花費了 1 億美元，如果加起來就超過 0.30 美元。那就是——還沒有開始得到回報。當我們開始在地鐵平台中進行垂直整合時，回報將於明年開始，然後當我們退出“24”時，當您開始看到任何大規模外部可插拔銷售的真正影響時，我們將進一步提高運營槓桿時尚。

Sorry, long answer, Simon, but did that help you?

抱歉，回答很長，西蒙，但這對您有幫助嗎？

Very much so. Appreciate the details.

非常如此。欣賞細節。

Thanks.

謝謝。

Next, we'll go to Meta Marshall with Morgan Stanley. Your line is open.

接下來，我們將與摩根士丹利一起前往 Meta Marshall。您的線路已開通。

Thanks. I just wanted to reconcile some of your commentary that the book-to-bill was largely as expected with some of the lower order commentary along the way. And I know you had alluded to the fact that you were going to need to see orders improve throughout the year to make expectations. So I guess I'm just trying to see, is this just you didn't see that improvement or the environment further deteriorated?

謝謝。我只是想將你們的一些評論（即從訂單到賬單基本上符合預期）與一路上的一些較低階評論進行協調。我知道您曾經提到過這樣一個事實，即您需要看到全年的訂單量有所改善才能達到預期。所以我想我只是想看看，這只是你沒有看到改善還是環境進一步惡化？

Yes, good question, Meta. So we certainly did see improvement from Q1 to Q2. We expect to see improvement in Q3 and certainly the whole back half of the year, including Q4 to improve. I think overall, the industry had a much softer Q1 than anybody anticipated. And if you look at our competitors and where their book-to-bills have been where they reported, we think we're doing a good job of maximizing our bookings in a pretty sparse first half environment, and we think that will pick up in the back half. But I don't think you'll talk to anybody in the industry that doesn't think the first half was lighter. We all expected lower bookings, but the first half was lighter than anybody had anticipated.

是的，好問題，梅塔。所以我們確實看到了從第一季度到第二季度的改善。我們預計第三季度將會有所改善，當然還有整個下半年，包括第四季度的改善。我認為總體而言，該行業第一季度的表現比任何人預期的都要疲軟得多。如果你看看我們的競爭對手以及他們報告的訂單到賬單的情況，我們認為我們在上半年相當稀疏的環境中最大化我們的預訂量方面做得很好，而且我們認為這將在後半部分。但我認為你不會與業內任何人交談，認為上半年比較輕鬆。我們都預計預訂量會減少，但上半年的預訂量比任何人預期的都要少。

Got it. And then maybe just as a follow-up. On the new -- on the major U.S. risk provider in Metro win that you noted this quarter, is that a new customer on the 400 ZR piece of that? Is it going to be multivendor, -- just any commentary on that win?

知道了。然後也許只是作為後續行動。關於您本季度提到的 Metro win 中的新美國主要風險提供商，這是 400 ZR 部分的新客戶嗎？它會是多供應商嗎——對這場胜利有什麼評論嗎？

Yes, new customer for us using the whole GX platform starting out using call it, merchant pluggables. And we will be -- we are already integrating our pluggables into our platform so that in 2024, we can leverage our own clubs. And that was part of that deal. So we'll see the margin. That's a great example of how the margin will expand with our most important customer of our pluggables, our first most important customer is Ron Johnson, who runs our systems business. We're our most important first customer.

是的，我們的新客戶使用整個 GX 平台，開始使用所謂的商業插件。我們已經將我們的可插拔設備集成到我們的平台中，以便在 2024 年，我們可以利用我們自己的俱樂部。這是該交易的一部分。所以我們會看到邊際。這是一個很好的例子，說明我們的可插拔產品最重要的客戶的利潤將如何擴大，我們的第一個最重要的客戶是羅恩·約翰遜，他負責我們的系統業務。我們是我們最重要的第一個客戶。

Great, thank you.

太好了謝謝。

Next, we'll go to Alex Henderson with Needham. Your line is now open.

接下來，我們將與尼達姆一起去找亞歷克斯·亨德森。您的線路現已開通。

Great thanks, I was hoping you could give us some clarity on the linearity of orders over the course of the quarter, whether there was any pushouts in the period. And as you have given guidance of improving orders in both 3Q and 4Q, do you anticipate exiting the year with a book-to-bill for the year that is somewhat above 1?

非常感謝，我希望您能讓我們清楚地了解本季度訂單的線性情況，以及在此期間是否有任何推出。由於您在第三季度和第四季度都給出了改善訂單的指導，您預計今年的訂單出貨比會略高於 1 嗎？

Hi Alex, yes, the linearity has been challenging for us and I think for the industry as a whole in terms of first half versus second half. And you can see that in terms of some of the working capital usage that we're planning for Q3, as things start to work through there. But for the second half and certainly as we're exiting the year, we believe book-to-bill should be about and potentially a little over 1, just as we had said at the beginning of the year. So definitely a second half growth in bookings, and we'll see how things shake out in Q4, but expecting some good growth there.

你好，亞歷克斯，是的，線性對我們來說一直是一個挑戰，我認為對於整個行業來說，上半年與下半年相比。您可以看到，就我們計劃在第三季度使用的一些營運資金而言，隨著事情開始發揮作用。但對於下半年，尤其是今年即將結束時，我們認為訂單出貨比應該約為 1，並且可能略高於 1，正如我們在年初所說的那樣。因此，下半年預訂量肯定會增長，我們將看到第四季度的情況如何發展，但預計會有良好的增長。

Yes. Just to clarify, Alex. So for the second half, absolutely, we expect the book-to-bill to be above 1 for the year to be seen, and I think we'll be close to 1 for the year, if you were to ask our current prediction.

是的。只是為了澄清一下，亞歷克斯。因此，對於下半年，我們預計今年的訂單出貨比將高於 1，如果您詢問我們當前的預測，我認為今年我們將接近 1。

The question on linearity was for the second quarter specifically, was there any change in the linearity during the quarter, in terms of perceptions of when you're going to close deals. The follow-up question I had for you was really on the pluggable side. It was an industry piece out recently talking about 39 vendors of 400 gig ZR. Obviously, not all of them have chips to integrate from themselves. But that's a lot of players, and it does strike me as risky on pricing, considering this is supposed to be an open standard product. So how do you view the market for these pluggables relative to pricing and ability to generate decent profits on them as a stand-alone business?

關於線性度的問題具體針對第二季度，即在您對何時完成交易的看法方面，該季度的線性度是否有任何變化。我向您提出的後續問題實際上是關於可插拔方面的。最近發布的一篇行業文章談論了 39 家 400 gig ZR 供應商。顯然，並不是所有的公司都有自己集成的芯片。但有很多玩家，而且考慮到這應該是一個開放標準產品，這確實讓我覺得定價有風險。那麼，您如何看待這些可插拔設備的市場相對於定價以及作為獨立業務產生可觀利潤的能力？

Yes, we'll have to talk offline, Alex. We haven't seen -- what we see are the competitors we're bidding against today and active bids and then the awards that we're getting. I think -- again, you're right, probably not all of them. They might be rebranding or something, but I certainly don't see 39s, I see 3 or 4 in any particular bid. And not all of them have their own DSP and their own optics. In fact, we tend to be the only company that has all of the vertical integration, and also has the software enablement. And I think as you start to scale these out in networks, especially on the CSP side of things, that's going to prove to be more important. And that same software platform will carry on into our 800-gig product and certainly our 100 gig product.

是的，我們必須離線交談，亞歷克斯。我們還沒有看到——我們看到的是我們今天競標的競爭對手和積極的競標，然後是我們獲得的獎項。我想——再說一次，你是對的，但可能不是全部。他們可能正在重新命名或其他什麼，但我當然沒有看到 39，我在任何特定出價中看到 3 或 4。並不是所有的設備都有自己的 DSP 和光學器件。事實上，我們往往是唯一一家擁有所有垂直整合，並且還擁有軟件支持的公司。我認為，當你開始在網絡中擴展這些功能時，尤其是在 CSP 方面，這將變得更加重要。同樣的軟件平台將延續到我們的 800g 產品中，當然還有我們的 100g 產品中。

So I'll have to talk to you offline. I have no way shape or form as we've seen 39 when we look at the competitive field that's more like the...

所以我必須和你離線交談。當我們看到競爭激烈的領域時，我無法像我們所看到的 39 那樣形狀或形式，這更像是......

That's why I asked for a report that came out specifically saying that there is 39 companies competing in this space.

這就是為什麼我要求提供一份報告，其中明確指出有 39 家公司在這個領域競爭。

Yes. I'm just telling you what I see competing for a deal. So...

是的。我只是告訴你我所看到的交易競爭情況。所以...

Right, so..

對了，所以..

Yes.

是的。

What do you think pricing is going to look like? Do you think pricing is going to hold in? Do you think it's going to roll? Any sense of pricing?

您認為定價會是什麼樣子？您認為定價會保持不變嗎？你覺得它會滾嗎？有定價意識嗎？

Yes. So I think so far, there's pricing depending on the form factor, if it's going into an ICP. It tends to be differently in a DD form factor versus a CFP2 going into a metro network, which tends to be a bit stronger because of the value that's bringing in the overall network. There'll certainly be typical price pressure on an annualized basis, but I think we're well positioned again with the vertical integration to hit that down. And they're starting to spend even more time on the whole power and reach, because some of the ZR technologies in terms of them trying to get the reach and punch through ROADMs, they're looking for a bit more of that performance, and that's what we're going after today.

是的。所以我認為到目前為止，如果要進入 ICP，定價取決於外形尺寸。 DD 外形尺寸與進入城域網絡的 CFP2 往往有所不同，後者由於為整個網絡帶來的價值而往往更強一些。按年計算肯定會出現典型的價格壓力，但我認為我們已經做好了充分準備，通過垂直整合來降低這一壓力。他們開始在整體能力和覆蓋範圍上花費更多的時間，因為他們的一些 ZR 技術試圖獲得覆蓋範圍並突破 ROADM，他們正在尋求更多的性能，並且這就是我們今天要追求的目標。

Understand, thanks.

明白了，謝謝。

Thanks, Alex. 39

謝謝，亞歷克斯。 39

And next we'll -- okay and next we'll go to Mike Genovese with Rosenblatt Securities. Your line is open.

接下來我們將 - 好吧，接下來我們將與羅森布拉特證券公司的邁克吉諾維斯聯繫。您的線路已開通。

Oh, great. Thanks a lot. David, could you talk about just '24, which products in particular you're excited about, and for those out there who would say maybe not having a 1.6-terabit product in '24 could potentially be a disadvantage, although that seems early to me to make that -- anyway -- but what would you say to those people? So basically, yes, the products that you're excited about and why '25 is a good point to intersect the 1.6 market?

哦，太好了。多謝。 David，您能否談談 24 年，您對哪些產品特別感興趣？對於那些可能會說 24 年沒有 1.6 太比特產品可能會成為劣勢的人來說，儘管這似乎還為時尚早。無論如何，我會做到這一點，但是你會對那些人說什麼？所以基本上，是的，您感興趣的產品以及為什麼 '25 是切入 1.6 市場的好時機？

Yes. So it's a good question. Look, overall, we refreshed our entire product line since the Coriant acquisition, right? So we have a whole new line of hardware, the GX platform, a whole new line of software whole new OS, state-of-the-art that takes multigenerational sleds. So it'll take ICE6, it'll take ICE7, it'll take ICE8 and our pluggable line. So I'm pretty excited about, a, having a product in the metro where I don't have to go buy plugs from somebody else and take margins that are disruptive.

是的。所以這是一個好問題。看起來，總的來說，自收購 Coriant 以來我們更新了整個產品線，對嗎？因此，我們擁有全新的硬件系列、GX 平台、全新的軟件系列、全新的操作系統、採用多代雪橇的最先進技術。因此，它將採用 ICE6、ICE7、ICE8 和我們的可插拔線路。因此，我非常興奮，a，在地鐵中擁有一款產品，我不必從其他人那裡購買插頭並獲得破壞性的利潤。

Now we've been growing the EPS of this company for the last 5 years, while we've been investing in the systems line. And I feel good that we've got a very competitive systems line that's winning with less competitors and Huawei exiting the market. So I just -- I know everybody is going to come out and say, well, I got a 1.6 in this time frame. It's all going to be about closing wave sizes at 400 gig in the metro and then closing them in the long haul at how many 800-gig lengths and how far can you carry them, and continuing to push the economics.

現在，我們在過去 5 年裡一直在增長這家公司的每股收益，同時我們一直在投資系統產品線。我感覺很好，我們擁有非常有競爭力的系統產品線，在競爭對手較少且華為退出市場的情況下贏得勝利。所以我只是——我知道每個人都會出來說，好吧，我在這個時間範圍內得到了 1.6 分。這一切都將涉及到在地鐵中將波浪尺寸限制在 400 gig，然後在長途運輸中將波浪大小限制在多少 800 gig 長度以及您可以攜帶它們多遠，並繼續推動經濟發展。

So as we model it, we feel pretty good about that and where we sit in the -- against the competition. We're just probably a little surprised right now, especially given where we're trading, that we just continue to drive EPS expansion no matter what the market throws at us. And we're investing -- the systems portfolio has never been in as good a shape, and we're putting $100 million to work to make sure the second act and the subsystems piece drives long-term shareholder growth. So more than you asked for, Mike, but hopefully, that was helpful.

因此，當我們對其進行建模時，我們對此以及我們在競爭中所處的位置感覺非常好。我們現在可能有點驚訝，特別是考慮到我們的交易情況，無論市場給我們帶來什麼，我們都會繼續推動每股收益擴張。我們正在投資——系統投資組合從未如此良好，我們將投入 1 億美元來確保第二幕和子系統部分能夠推動股東的長期增長。邁克，這超出了您的要求，但希望這對您有所幫助。

Very helpful. My second final question, just on AI, how it might impact you in the future. Any early thoughts on either higher growth rates for the DCI market or probably maybe more likely your technology and coherent technology moving into the data center. Basically, do you think that a year or 2 down the line, you'll have an AI story like some of these optical component stocks? Thank you.

很有幫助。我的第二個最後問題是關於人工智能，它未來會對你產生什麼影響。關於 DCI 市場更高增長率的任何早期想法，或者更有可能是將您的技術和相干技術轉移到數據中心。基本上，您認為一兩年後，您會擁有像某些光學元件股票那樣的人工智能故事嗎？謝謝。

Well, I promise I'm not going to rebrand this as an AI story on this call given the recent trading environment. That isn't a trick we're going to play. But what I will tell you is, look, our order book as we went through this year and as we look into next year, it's being impacted by AI and ML, you hit it on the head. There's some ICPs that are going to have to run 8 to 10x the payload, and that just means more DCI boxes to be able to do that and the software to be able to manage it. And as they move closer and closer to the metro, other solutions get more payload.

好吧，我保證考慮到最近的交易環境，我不會在這次電話會議上將其重新命名為人工智能故事。這不是我們要玩的把戲。但我要告訴你的是，看，我們今年的訂單簿和明年的訂單簿都受到人工智能和機器學習的影響，你擊中了它的要害。有些 ICP 必須運行 8 到 10 倍的有效負載，這意味著需要更多的 DCI 設備來執行此操作，並且需要更多的軟件來管理它。隨著它們距離地鐵越來越近，其他解決方案的有效負載也越來越大。

So I think that's absolutely going to happen. And yes, look, longer term, yes. We have obviously had discussions with folks about how you can use our indium phosphide capability in our fab to have optical do what copper is doing inside the data center against a chipset that's driving AI. But that's a long, long term number wants to hear about that. Now they want to hear that we're going to continue to keep our heads on the ground put a mouth piece in and continue to drive EPS expansion.

所以我認為這絕對會發生。是的，從長遠來看，是的。顯然，我們已經與人們討論瞭如何在我們的晶圓廠中使用我們的磷化銦功能，讓光學器件完成數據中心內銅器件針對驅動人工智能的芯片組所做的工作。但這是一個長期、長期的數字想要聽到的。現在，他們希望聽到我們將繼續腳踏實地，插上嘴，繼續推動每股收益的擴張。

Okay. Fantastic, thank you.

好的。太棒了，謝謝。

Okay next, we'll go to Christian Schwab with Craig Hallum. Your line's open.

好的，接下來我們將和克雷格·哈勒姆一起去克里斯蒂安·施瓦布。您的線路已開通。

Great, thanks for taking my questions. I just -- David, you've talked even at your Analyst Day, and I know you hired some people who helped form the legislation on the CHIPS Act and we keep mentioning that. But recently, Bluebird just said that there's over 460 people asking for money, right? Germany gave big chunks to Intel, like $1 billion TSM, $5.5 million. It isn't going to take too much time to run out of the grant money and the CHIPS Act. So I guess I'm just wondering what makes you so confident that you think that there'll be something left for Infinera?

太好了，感謝您回答我的問題。我只是 - 大衛，你甚至在分析師日也談到過，我知道你聘請了一些幫助制定《CHIPS 法案》立法的人，我們不斷提到這一點。但是最近藍鳥剛剛說有超過460人要錢吧？德國向英特爾提供了大量資金，例如 10 億美元的 TSM、550 萬美元。撥款和 CHIPS 法案不會花太多時間就用完。所以我想我只是想知道是什麼讓您如此自信，認為英飛朗還會有所作為？

So first of all, none of our expectations and even when we were talking at Analyst Day assume anything from the CHIPS Act. All we're saying and have said and we still believe is that with our U.S.-based semiconductor manufacturing optical semiconductor in California and Advanced Packaging in Pennsylvania, we check a lot of the boxes that we've been told they're looking for, and we're going to pursue as we can. But none of that is incorporated into our outlook or into the dollar of EPS or into the cash generation that we've put forward in terms of our long-term business model.

因此，首先，我們的期望，甚至當我們在分析師日談論時，都沒有假設《CHIPS 法案》中的任何內容。我們所說的和已經說過的以及我們仍然相信的是，通過我們位於美國加利福尼亞州的半導體製造光學半導體和賓夕法尼亞州的先進封裝，我們檢查了很多我們被告知他們正在尋找的方框，我們將盡我們所能去追求。但這些都沒有納入我們的前景、每股收益或我們在長期商業模式中提出的現金生成。

Great. And then my second question, just as we exit this inventory digestion halfway through on the back side of that, is that when you guys would expect to return to the type of growth rates on the top line that you outlined at the Analyst Day? Is that what we should be thinking?

偉大的。然後我的第二個問題，就在我們中途退出庫存消化的時候，你們預計什麼時候會回到分析師日概述的增長率類型？這是我們應該思考的嗎？

Yes. Look, a couple of years ago at our Analyst Day, we said 8% to 12%, everybody questioned us. We've been growing, if you take, again, a 6-year view or a 5-year view, we've been clicking along at above that rate. Look, it's too early to talk about '24. But our long-term view and our long-term business plans have that -- 8% to 12% growth rate in them, and had a little bit of buffer room for EPS expansion. And meaning to continue EPS expansion, even if we have little blurps and [blurbles], which we had. And guess what, we've continued to expand EPS. And in this trading environment, I can't even explain it, hopefully, somebody can to me. But I would tell you that the one thing I do know is if you continue to grow EPS, ultimately, it will be valued. And take care.

是的。看，幾年前在我們的分析師日，我們說 8% 到 12%，每個人都質疑我們。我們一直在成長，如果你再看一下 6 年或 5 年的觀點，我們一直在以高於這個速度前進。聽著，現在談論“24”還太早。但我們的長期願景和長期業務計劃是——8%到12%的增長率，並且對每股收益擴張有一點緩衝空間。這意味著每股收益將繼續擴張，即使我們有一些小問題和[模糊]，我們有。你猜怎麼著，我們繼續擴大每股收益。在這種交易環境下，我什至無法解釋它，希望有人可以向我解釋。但我想告訴你，我確實知道的一件事是，如果你的每股收益繼續增長，最終它會被估值。還有，注意安全。

Yes. Perfect. Great. No other questions. Thank you.

是的。完美的。偉大的。沒有其他問題。謝謝。

Okay, thanks.

好的謝謝。

Okay next we'll go to Samik Chatterjee with JP Morgan. Your line is now open.

好的，接下來我們將與摩根大通一起去薩米克·查特吉 (Samik Chatterjee)。您的線路現已開通。

Hi, thanks for taking my questions. I had a couple, and maybe if I can start with the updated revenue guide for the year. I mean, simplistically, if I look at your full year guide, you're taking your revenue expectations down by about $100 million or so. I'm just wondering, can you quantify that a bit more in terms of how much of that is going to be service provider versus ICP related to your prior expectations? Or even by geography, like how should we think about that being split between Americas, India and APAC and as to where you're seeing that reduction coming from? Just to get a bit more color on the (inaudible)...

您好，感謝您回答我的問題。我有幾個，也許我可以從今年更新的收入指南開始。我的意思是，簡單地說，如果我看一下你們的全年指南，就會發現你們的收入預期降低了大約 1 億美元左右。我只是想知道，您能否進一步量化一下，與您之前的期望相關的服務提供商與 ICP 的比例有多少？或者甚至按地理位置，比如我們應該如何考慮美洲、印度和亞太地區之間的分配，以及您看到的減少來自哪裡？只是為了在（聽不清）上獲得更多的顏色......

Yes, I'd say it's pretty broad-based. I mean 25% of our revenues are coming from ICP. It's probably in that nature of 25% to 30% from that sector. The rest is broad-based across service providers. And again, remember, some of these folks have scheduled projects and are just saying, "Hey, let's delay them out a quarter or 2. And honestly, a lot of those customers have been off and have new management in place. And I'm just trying to make it through the period as they digest inventory. So it's 2 things going at once.

是的，我想說它的基礎非常廣泛。我的意思是我們 25% 的收入來自 ICP。大概有 25% 到 30% 來自該行業。其餘的則廣泛應用於服務提供商。再說一次，請記住，其中一些人已經安排了項目，只是說，“嘿，讓我們將它們推遲一兩個季度。老實說，很多客戶已經離開並有了新的管理人員。而我”我只是想在他們消化庫存的過程中度過這段時期。所以這是同時進行的兩件事。

So we can make pieces of that back for margin and through operational efficiency. And that's why Nancy and myself are confident at the 25% plus EPS expansion this year. And when we look at what you all have contemplated in EPS for next year. Again, remember, we're investing over $0.30 a year in the -- in our subsystems business that is -- it's an investment at this point. It's not yet paying back and starts to pay back in '24. So that lightens in '24 enlightens in '25, you see that path to a buck. Let's not forget in 2019, we were losing over $0.60 of EPS when we started this journey.

因此，我們可以通過提高運營效率來賺取利潤。這就是為什麼南希和我對今年每股收益增長 25% 以上充滿信心。當我們看看你們對明年每股收益的預期時。再次請記住，我們每年在我們的子系統業務中投資超過 0.30 美元，這是目前的一項投資。它還沒有償還，並在 24 年開始償還。因此，24 年的光明在 25 年照亮，你會看到通往美元的道路。我們不要忘記，在 2019 年，當我們開始這一旅程時，我們損失了超過 0.60 美元的每股收益。

Got it. Great. Helpful. And then maybe just for my follow-up. I mean given the pushout of projects being the primary driver of the uncertainty that you're seeing, what drives the conference for the $400 million plus revenue number in 4Q that you're implying? And also when you talk about a fourth quarter digestion, how much of that is just overall thinking that the comps get easy enough and you start to improve from there? Or do you really expect sort of inventory to be completely normalized? How do you get visibility into that sort of specific 4-quarter digestion?

知道了。偉大的。有幫助。然後也許只是為了我的後續行動。我的意思是，考慮到項目的推出是您所看到的不確定性的主要驅動因素，是什麼推動了會議在第四季度實現了您所說的 4 億美元以上的收入數字？而且，當您談論第四季度的消化時，有多少只是整體認為比較變得足夠簡單並且您從那裡開始改進？或者您真的期望庫存完全正常化嗎？您如何了解這種特定的第四季度消化情況？

Yes. So I mean the digestion that we're seeing is based on discussion with customers, right? And the growth that we expect in Q4 is again based off backlogs that we have today and pipeline and order opportunity that we're working through now in Q3. That's what gives us that confidence in Q4. So we should start to see inventory start to work through our own inventory. One comment there, as we've already seen and not something that you guys see quarterly, but you see annually is the commitments at RCM in terms of the NCNR on hand and on order, that has already started dropping and has dropped more than the inventory increase you saw on our balance sheet this quarter.

是的。所以我的意思是我們看到的消化是基於與客戶的討論，對吧？我們預計第四季度的增長再次基於我們今天的積壓訂單以及我們正在第三季度處理的管道和訂單機會。這就是我們對第四季度充滿信心的原因。因此，我們應該開始看到庫存開始通過我們自己的庫存發揮作用。那裡的一條評論，正如我們已經看到的，不是你們每個季度看到的，而是你們每年看到的，是RCM 在現有NCNR 和訂單方面的承諾，它已經開始下降，並且下降幅度超過了NCNR。您在本季度的資產負債表上看到的庫存增加。

So we're starting to see those signs. I know they're not all quite as visible to you in terms of the day-to-day. But that's what gives us the confidence in exiting the year in Q4 strong and then what we see in terms of backlog and pipeline demand normalizing into '24.

所以我們開始看到這些跡象。我知道它們在日常生活中對你來說並不是那麼明顯。但這讓我們有信心在第四季度強勁結束這一年，然後我們看到積壓訂單和管道需求在 24 年正常化。

Thank you. Thanks for taking my question.

謝謝。感謝您提出我的問題。

Thank you.

謝謝。

Okay. Next, we'll go to George Notter with Jefferies. Your line is now open.

好的。接下來，我們將與杰弗里斯一起拜訪喬治·諾特。您的線路現已開通。

Hi guys, thanks very much. I guess I wanted to ask about the mix of vertically integrated products for Q2. Do you have a number for ICE6 and then a number for overall?

大家好，非常感謝。我想我想問一下第二季度垂直整合產品的組合。您有 ICE6 的編號和整體的編號嗎？

Yes. For overall, it's about 55%. And for ICE 6, it's in the...

是的。總體而言，約為55%。對於 ICE 6，它位於...

Close to 30%.

接近30%。

For the first half, and so on track to the 35% plus for the year.

上半年，全年有望達到 35% 以上。

Got it. Okay. And then I think you guys also had like a 55% to 60% target for the full year, for overall vertically integrated product. Is that still in the cards? Or maybe...

知道了。好的。然後我認為你們還為全年整體垂直整合產品設定了 55% 到 60% 的目標。這仍然是可能的嗎？或者可能...

Yes.

是的。

Yes.

是的。

Okay. And then how do you think about the GX family, you're incorporating pluggables into that product, which is great and certainly very helpful for margins. But certainly, there's going to be a testing period, I think, for customers before they can start deploying that commercially. Like how long do you think that test phase will take long before you...

好的。然後您如何看待 GX 系列，您正在將可插拔功能集成到該產品中，這很棒，而且肯定對利潤非常有幫助。但我認為，在開始商業部署之前，客戶肯定需要一段測試期。就像你認為測試階段需要多長時間才能......

We've been doing...

我們一直在做...

With your own...

與你自己的...

Yes.

是的。

Can be material. Yes.

可以是物質的。是的。

Yes, we started doing that, if you recall, in the July, August time period. So early July as soon as we started the quarter. And what we had mentioned in both the Analyst Day and in prior calls is we expect that to be complete by the end of the year. And our teams are out selling today, but deployment, we said would be in 2024. And given we have qualified, I can't even tell you probably over a dozen different merchant optics in our own platforms, we're pretty aware of what needs to happen there.

是的，如果你還記得的話，我們是在七月、八月期間開始這樣做的。七月初，我們一開始這個季度就開始了。我們在分析師日和之前的電話會議中提到的是，我們預計這將在今年年底完成。我們的團隊今天已經完成銷售，但我們說將在 2024 年進行部署。鑑於我們已經獲得資格，我什至無法告訴您我們自己的平台上可能有十幾個不同的商業光學器件，我們非常清楚什麼需要在那裡發生。

So yes, that will happen this year -- through the end of the year, and we'll be deploying those solutions in '24, and Nancy will see the impact in the onlining income statement and balance sheet.

所以，是的，這將在今年發生——直到今年年底，我們將在 24 年部署這些解決方案，南希將在在線損益表和資產負債表中看到其影響。

Got it. Okay. And then I guess, same question for the XTM. I assume that now has pluggable solutions in that as well.

知道了。好的。然後我想，XTM 也有同樣的問題。我認為現在也有可插入的解決方案。

Yes. Yes. So we're in parallel going through the XTM and the GX.

是的。是的。所以我們同時討論 XTM 和 GX。

Okay, thank you very much.

好的，非常感謝。

Most of the volume going forward, you'll see in the GX platform, obviously.

顯然，您將在 GX 平台中看到未來的大部分銷量。

Okay, great. Thanks.

好的，太好了。謝謝。

I'm showing no further questions at this time. I'll now turn the call back over to CEO, David Heard, for any additional or closing remarks.

我目前沒有提出任何進一步的問題。現在，我將把電話轉回首席執行官大衛·赫德 (David Heard)，讓其發表補充或結束語。

Well, thank you, David. Well, Q2 was another solid quarter for us. Look, we beat the consensus to you across the board while making the strategic progress in the 6 milestones we talked about just a few short months ago in March. We're continuing to win new accounts. We're growing in new geographies and particularly in the metro, where that is over half the market in optical. We're on track, as I just mentioned to George, to integrate our own 400-gig BD in CFP2 ZR0+ modules. We'll start to see those in the margins in 24. We are increasing the vertical integration in the mix, as we've said. We believe there will be growth in both embedded engines and pluggables, and that's why we're investing in both. And let's not forget, we're investing $100 million a year in the pluggables that we're not yet seeing the return from, but we expect to start seeing it in something we control in our own products in 2024.

嗯，謝謝你，大衛。嗯，第二季度對我們來說又是一個穩定的季度。看，我們全面擊敗了你們的共識，同時在我們幾個月前 3 月份談到的 6 個里程碑中取得了戰略進展。我們正在繼續贏得新客戶。我們正在新的地區發展，特別是在地鐵，那裡佔據了光學市場一半以上的份額。正如我剛剛向 George 提到的那樣，我們正在將我們自己的 400-g BD 集成到 CFP2 ZR0+ 模塊中。我們將在 24 年開始看到這些邊緣產品。正如我們所說，我們正在增加組合中的垂直整合。我們相信嵌入式引擎和可插拔引擎都會增長，這就是我們對兩者進行投資的原因。我們不要忘記，我們每年在可插拔設備上投資 1 億美元，但我們尚未看到回報，但我們預計 2024 年將開始在我們自己的產品中控制的東西中看到回報。

Again, the technology and innovation to do what we do is getting harder to do and doing it in the U.S. is proving to be an advantage, both from a security standpoint and from a supply chain standpoint. So I'm feeling really good about where we're at in terms of the systems portfolio. And I'm really excited about the new subsystems business. Now that being said, the industry is going through a period of digestion. I've been seeing -- we've been seeing this from the competitive field in the industry over the last couple of quarters and in particular, the last 30 days. But our commitment is to continue like we have been over the last 5 years to continue to best out EPS in difficult times like this, because we think it ultimately will be valued. And again, there's less people that are able to do what we can do. So I do appreciate your support, your patience, your good questions. We're going to put our heads down, put our mouth pieces in and go back to work driving EPS expansion. Thank you, and have a great night. Great day.

同樣，我們所做的事情的技術和創新變得越來越難，而事實證明，無論從安全角度還是從供應鏈角度來看，在美國做這件事都是一種優勢。因此，我對我們在系統產品組合方面的現狀感到非常滿意。我對新的子系統業務感到非常興奮。話雖如此，該行業正在經歷一段消化期。我一直在看到——過去幾個季度，特別是過去 30 天，我們從行業的競爭領域看到了這一點。但我們的承諾是繼續像過去五年一樣，在這樣的困難時期繼續超越每股收益，因為我們認為它最終會受到重視。再說一次，能夠做我們能做的事情的人越來越少了。因此，我非常感謝您的支持、您的耐心以及您提出的好問題。我們將低下頭，咬緊牙關，回去工作，推動每股收益的擴張。謝謝您，祝您度過一個美好的夜晚。很好的一天。

Okay. This concludes today's conference call. You may now disconnect.

好的。今天的電話會議到此結束。您現在可以斷開連接。