Ciena CIEN · USD

SEGMENT AND ENTITY WIDE DISCLOSURESOperating segments are defined as components of an enterprise that engage in business activities that earn revenue and incur expense, for which discrete financial information is available, and for which such information is evaluated regularly by the chief operating decision maker for purposes of allocating resources and assessing performance. Ciena has the following operating segments for reporting purposes: (i) Networking Platforms; (ii) Platform Software and Services; (iii) Blue Planet Automation Software and Services; and (iv) Global Services. Ciena’s chief operating decision maker (“CODM”) is its chief executive officer, Gary Smith, who evaluates Ciena’s performance and allocates resources based on segment profit (loss) as compared to annual targets for these four operating segments.Segment Profit (Loss)The table below sets forth Ciena’s segment profit (loss) and the reconciliation to consolidated net income for the respective periods indicated (in thousands). The CODM excludes the following items in his assessment of performance of the operating segments: selling and marketing costs; general and administrative costs; significant asset impairments and restructuring costs; share-based compensation expense, amortization of intangible assets; acquisition and integration costs; interest and other income, net; interest expense; loss on extinguishment and modification of debt; and provision for income taxes. Effective as of the fourth quarter of fiscal 2025, Ciena recast its segment profit (loss) to align with the CODM assessment of performance of the operating segments to exclude share-based compensation expense.

REVENUESegment and Product Line Disaggregation of RevenueCiena’s disaggregated segment and product line revenue as presented below depicts the nature, amount, and timing of revenue and cash flows for similar groupings of Ciena’s various offerings. The sales cycle, contractual obligations, customer requirements, and go-to-market strategies may differ for each of its product categories, resulting in different economic risk profiles for each category. Effective as of the fourth quarter of fiscal 2025, Ciena renamed (i) its “Maintenance Support and Training” product line to “Maintenance, Support, and Learning”, (ii) its “Installation and Deployment” product line to “Implementation”, and (iii) its “Consulting and Network Design” product line to “Advisory and Enablement.” These changes, affecting only the presentation of such information, were made on a prospective basis and do not impact comparability of previous financial results. However, references to the prior reported product lines have been changed herein to the new names described above. Ciena has the following operating segments for reporting purposes: (i) Networking Platforms; (ii) Platform Software and Services; (iii) Blue Planet Automation Software and Services; and (iv) Global Services. See Note 24 below.

COMMITMENTS AND CONTINGENCIESTax Contingencies Ciena is subject to various tax liabilities arising in the ordinary course of business. Ciena does not expect that the ultimate settlement of these tax liabilities will have a material effect on its results of operations, financial position or cash flows. Litigation Ciena is subject to various legal proceedings, claims and other matters arising in the ordinary course of business, including those that relate to employment, commercial, tax and other regulatory matters. Ciena is also subject to intellectual property related claims, including claims against third parties that may involve contractual indemnification obligations on the part of Ciena. Ciena does not expect that the ultimate costs to resolve such matters will have a material effect on its results of operations, financial position or cash flows.Purchase Order Obligations Ciena has certain advanced orders for supply of certain long lead time components. As of November 1, 2025, Ciena had $2.1 billion in outstanding purchase order commitments to contract manufacturers and component suppliers for inventory. In certain instances, Ciena is permitted to cancel, reschedule or adjust these orders. Consequently, only a portion of this amount relates to firm, non-cancelable and unconditional obligations.

SHORT-TERM AND LONG-TERM DEBTOutstanding Term Loan PayableRefinanced 2030 Term LoanPursuant to a credit agreement, dated July 15, 2014, as amended (the “Credit Agreement”), by and among Ciena Corporation, the lenders party thereto and Bank of America, N.A., as administrative agent (the “Administrative Agent”), Ciena maintained a senior secured term loan with an outstanding aggregate principal amount, as of January 17, 2025, of approximately $1.16 billion and maturing on October 24, 2030 (the “2030 Term Loan”).On January 17, 2025, Ciena Corporation, as borrower, and certain of its subsidiaries, as guarantors, entered into a Refinancing Amendment to the Credit Agreement with the lenders party thereto and the Administrative Agent (the “Amendment”), pursuant to which Ciena incurred a new single tranche of senior secured term loans in an aggregate principal amount of approximately $1.16 billion (the “Refinanced 2030 Term Loan”). The proceeds of the Refinanced 2030 Term Loan, together with cash on hand, were used to refinance in full the 2030 Term Loan, including accrued interest, and pay transaction fees and expenses. The Amendment amends the Credit Agreement and provides that the Refinanced 2030 Term Loan will, among other things:•mature on October 24, 2030; •amortize in equal quarterly installments in aggregate amounts equal to approximately 0.25% of the principal amount of the Refinanced 2030 Term Loan as of the Closing Date (as defined in the Credit Agreement), or $11.6 million annually, with the balance payable at maturity; •be subject to mandatory prepayment upon the occurrence of certain specified events substantially similar to the 2030 Term Loan, including upon the occurrence of certain specified events such as asset sales, debt issuances, and receipt of annual Excess Cash Flow (as defined in the Credit Agreement); •bear interest, at Ciena’s election, at a per annum rate equal to (a) SOFR (subject to a floor of 0.00%) plus an applicable margin of 1.75%, or (b) a base rate (subject to a floor of 1.00%) plus an applicable margin of 0.75%; •be repayable at any time at Ciena’s election; and •except as described above or as set forth in the Amendment, have substantially identical terms as the 2030 Term Loan.Except as amended by the Amendment, the remaining terms of the Credit Agreement remain in full force and effect.

INCOME TAXESFor the periods indicated, the provision for income taxes consists of the following (in thousands): Year Ended November 1, 2025November 2, 2024October 28, 2023Provision for income taxes: Current: Federal$14,881 $70,208 $36,537 State4,208 14,106 18,860 Foreign37,034 28,390 28,281 Total current56,123 112,704 83,678 Deferred: Federal(36,359)(52,300)(8,010)State13,643 (4,868)(17,354)Foreign(458)(19,642)10,512 Total deferred(23,174)(76,810)(14,852)Provision for income taxes$32,949 $35,894 $68,826 For the periods indicated, income before provision for income taxes consists of the following (in thousands): Year Ended November 1, 2025November 2, 2024October 28, 2023United States$(22,804)$244 $93,682 Foreign179,091 119,606 229,971 Total$156,287 $119,850 $323,653 Ciena’s foreign income tax as a percentage of foreign income may appear disproportionate compared to the expected tax based on the U.S. federal statutory rate and is dependent on the mix of earnings and tax rates in foreign jurisdictions.For the periods indicated, the tax provision reconciles to the amount computed by multiplying income before income taxes by the U.S. federal statutory rate of 21% for fiscal 2025, fiscal 2024 and fiscal 2023 as follows: Year Ended November 1, 2025November 2, 2024October 28, 2023Provision at statutory rate21.00 %21.00 %21.00 %State taxes1.03 %5.60 %1.65 %Withholding and other foreign taxes5.87 %3.53 %(0.09)%Research and development credit(34.10)%(40.23)%(16.78)%Non-deductible compensation10.04 %13.92 %5.29 %U.S. Taxation on foreign activity1.20 %9.59 %5.08 %Foreign Nontaxable interest0.01 %(2.96)%(1.06)%Taxation on foreign inflation0.41 %3.03 %1.34 %Rate change7.58 %4.46 %(3.71)%Valuation allowance14.08 %2.15 %9.44 %Loss on equity transactions— %— %(1.72)%Uncertain tax positions(4.65)%8.09 %1.72 %Other(1.39)%1.77 %(0.89)%Effective income tax rate21.08 %29.95 %21.27 %Ciena’s future income tax provisions and deferred tax balances may be affected by the amount of pre-tax income, the jurisdictions where it is earned, the existence and ability to utilize tax attributes and changes in tax laws and business reorganizations.

SHARE-BASED COMPENSATION EXPENSECiena has outstanding equity awards issued under its 2017 Omnibus Incentive Plan (the “2017 Plan”), and certain legacy equity plans and equity plans assumed as a result of previous acquisitions. Ciena also makes shares of its common stock available for purchase under the ESPP. Each of the 2017 Plan and the ESPP is described below.2017 PlanThe 2017 Plan has a ten-year term and authorizes the issuance of awards, including stock options, restricted stock units (RSUs), restricted stock, unrestricted stock, stock appreciation rights (SARs), and other equity and/or cash performance incentive awards to employees, directors and consultants of Ciena. Subject to certain restrictions, the Compensation Committee of the Board of Directors has broad discretion to establish the terms and conditions for awards under the 2017 Plan, including the number of shares, vesting conditions, and the required service or performance criteria. Options and SARs have a maximum term of ten years, and their exercise price may not be less than 100% of fair market value on the date of grant. Repricing of stock options and SARs is prohibited without stockholder approval. Certain change in control transactions may cause awards granted under the 2017 Plan to vest, unless the awards are continued or substituted for in connection with the transaction. The 2017 Plan authorizes and reserves 21.1 million shares for issuance. The number of shares available under the 2017 Plan is also increased from time to time by: (i) the number of shares subject to outstanding awards granted under Ciena’s prior equity compensation plans that are forfeited, expire or are canceled without delivery of common stock following the effective date of the 2017 Plan, and (ii) the number of shares subject to awards assumed or substituted in connection with the acquisition of another company. As of November 1, 2025, the total number of shares authorized for issuance under the 2017 Plan was 21.1 million and approximately 8.5 million shares remained available for issuance thereunder.Restricted Stock UnitsA restricted stock unit is a stock award that entitles the holder to receive shares of Ciena common stock as the unit vests. Ciena’s outstanding restricted stock unit awards are subject to service-based vesting conditions and/or performance-based vesting conditions. Awards subject to service-based conditions typically vest in increments over a three or four-year period.

LEASESCiena leases approximately 1.2 million square feet of facilities globally. Ciena’s corporate headquarters are located in Maryland, United States. Ciena’s largest facilities are research and development centers located in Ottawa, Canada and Gurgaon, India. Office facilities are leased under various non-cancelable operating or finance leases. Ciena's current leases have remaining terms that vary up to 10 years. Certain leases provide for options to extend up to 10 years and/or options to terminate within 3 years.Leases included on the Consolidated Balance Sheets for the fiscal periods indicated were as follows (in thousands):ClassificationBalance at November 1, 2025Balance at November 2, 2024Operating leases (1)Operating ROU AssetsOperating right-of-use assets$38,613 $27,417 Operating lease liabilitiesOperating lease liabilities and Long-term operating lease liabilities$46,472 $39,562 Finance leases:Buildings, grossEquipment, building, furniture and fixtures, net$67,242 $67,517 Less: accumulated depreciationEquipment, building, furniture and fixtures, net(38,348)(34,206)Buildings, net$28,894 $33,311 Finance lease liabilitiesAccrued liabilities and other short-term obligations and other long-term obligations$43,344 $47,917 (1) Ciena added two new ten-year operating leases to its portfolio in the second quarter of fiscal 2025. The addition of these operating leases increased both operating right-of-use (“ROU”) assets and lease liabilities for fiscal 2025.ROU assets that involve subleased or vacant space aggregate to an amount of $3.5 million as of November 1, 2025. Finance lease buildings, net, that involve subleased or vacant space aggregate to an amount of $3.9 million as of November 1, 2025. These assets may become impaired if tenants are unable to service their obligations under the sublease, and/or if the estimates as to occupancy are not realized.

BUSINESS COMBINATIONSFiscal 2025 Acquisitions: Nubis CommunicationsOn October 7, 2025, Ciena acquired 100% of the equity in Nubis Communications, a company specializing in high-performance, ultra-compact, low-power optical and electrical interconnects tailored to support AI workloads, including co-packaged optics, near packaged optics and electrical active copper cables that complement Ciena’s optical networking portfolio and high-speed interconnects. Nubis was acquired for an aggregate of approximately $270.5 million. This transaction has been accounted for as the acquisition of a business under ASC 805. The purchase price of $232.6 million was paid in cash at the time of the acquisition. In addition, there were $37.9 million of future payable arrangements including $28.9 million of contingent compensation and $9.0 million of unvested options converted to a right to receive cash over a four year period. These arrangements are tied to future employment and accordingly are being recognized as post-combination compensation expense over the associated service period. ASC 805 requires that the allocation of the purchase price to the assets acquired and liabilities assumed be based on their fair values as of the acquisition date. Ciena has made the determination of fair values using the best information available at the time. ASC 805 allows Ciena to adjust the provisional amounts recognized in the table below to be adjusted retrospectively for a period no later than one year from the acquisition date in case subsequent events identify a necessary adjustment. These adjustments could materially impact the amounts of goodwill, identified intangible assets, and deferred tax assets. During fiscal 2025, Ciena incurred approximately $1.1 million in acquisition-related costs associated with this acquisition. These costs and expenses primarily include fees associated with financial, legal, and accounting advisors and employment-related costs. These costs were recorded in acquisition and integration costs on the Consolidated Statements of Operations.