Infinera Reports 12% Revenue Decline in Fiscal Year 2024, Anticipates Merger with Nokia

Infinera Corporation (INFN) reported a 12% decrease in total revenue for fiscal year 2024, reaching $1,418.4 million compared to $1,614.1 million in 2023. This decline stemmed from decreased sales in the Tier 1 carrier, other service provider, and cable markets, partially offset by growth in the internet content provider (ICP) sector. Gross margin remained relatively stable at 38% in 2024, compared to 39% in 2023. Operating expenses increased slightly to $628.2 million in 2024 from $627.8 million in 2023, primarily due to merger integration expenses and higher professional fees. The company anticipates a more diversified customer base in 2025, aiming to boost revenue through increased adoption of its vertically integrated solutions.

The company's top ten customers accounted for approximately 53% of its total revenue in 2024, with one customer representing 12% of total revenue. This concentration highlights the company's reliance on a small number of key clients. Infinera's sales are primarily conducted through a direct sales force (63% of revenue in 2024), supplemented by indirect channel partners. The company's product portfolio includes compact modular platforms, packet-optical platforms, optical line systems, and coherent optical subsystems, all managed by the Infinera Transcend Software Suite. The company also provides professional services and support.

Infinera's key strategic developments include the 2021 launch of coherent optical pluggable solutions designed for point-to-point and point-to-multipoint transport applications. The company also completed the acquisition of Coriant in a prior period, expanding its global customer base and solution offerings. Infinera's ongoing research and development focuses on higher-speed transmission, lower cost per bit, and new intra-data center optics. The company employs 3,418 people globally, with 2,190 employees located outside the United States.

Infinera's 10-K filing also details a merger agreement with Nokia Corporation, anticipated to close around February 28, 2025, subject to regulatory approvals and other closing conditions. Under the agreement, Infinera shareholders will receive cash and/or Nokia shares, with the exact amount dependent on the election made by each shareholder and subject to proration. The filing extensively outlines the risks associated with the merger, including regulatory uncertainties, potential employee attrition, and the fixed exchange ratio for Nokia shares.

The company's outlook for 2025 includes continued efforts to optimize its cost structure while investing in technology innovation and global market expansion. The company acknowledges several risks, including competition, supply chain disruptions, macroeconomic conditions, and the potential for significant fluctuations in quarterly results. The filing also notes material weaknesses in internal control over financial reporting, specifically related to revenue recognition, inventory valuation, and the financial statement close process. Infinera is actively implementing remediation measures to address these weaknesses.