Lumentum Holdings Inc ((LITE)) has held its Q4 earnings call. Read on for the main highlights of the call.
Elevate Your Investing Strategy:
- Take advantage of TipRanks Premium at 50% off! Unlock powerful investing tools, advanced data, and expert analyst insights to help you invest with confidence.
Lumentum Holdings Inc. recently held its earnings call, revealing a strong performance in its Cloud & Networking segment. The company is experiencing robust growth, particularly in optical components and modules, which is driving profitability. Despite challenges in the Industrial Tech segment and supply constraints, the company’s positive momentum in cloud and AI markets suggests a promising future.
Cloud & Networking Segment Growth
The Cloud & Networking segment saw a remarkable increase in revenue, with a 16% sequential growth and a 67% year-over-year surge, primarily driven by hyperscale cloud customers. Lumentum Holdings anticipates surpassing $600 million in quarterly revenue by June 2026 or even earlier, underscoring the segment’s significant contribution to the company’s overall growth.
Record EML Shipments
Lumentum achieved an all-time high in EML shipments, nearly doubling its revenue compared to the June quarter of 2024 baseline. The company also received a significant order for 200-gig lane speed EML chips for the December quarter, highlighting strong demand in this area.
Strong Financial Performance
The fourth quarter financial results were impressive, with revenue reaching $480.7 million and non-GAAP EPS of $0.88, both exceeding revised guidance. The non-GAAP gross margin improved significantly, rising by 260 basis points sequentially and 1,000 basis points year-on-year.
Expansion of Optical Circuit Switches
Lumentum recognized its first revenue from optical circuit switches with shipments to two hyperscale customers. Additionally, a third hyperscale customer has committed to deploying the OCS product in calendar 2026, indicating a growing market for these products.
Commitment to Co-packaged Optics
The company received its largest single purchase commitment in history for ultra high-power lasers, alongside investments in a U.S.-based indium phosphide wafer fab to support this demand, demonstrating its commitment to co-packaged optics.
Positive Outlook for Fiscal 2026
Looking ahead, Lumentum’s guidance for the first quarter of fiscal 2026 projects record revenue between $510 million to $540 million and an operating margin between 16% to 17.5%. This outlook reflects the company’s strategic focus on high-value products and disciplined cost management.
Industrial Tech Segment Decline
The Industrial Tech segment experienced a 6% sequential revenue decline, although it was up 6% from the same quarter last year. Declines were particularly noted in industrial lasers and 3D sensing, presenting challenges for this segment.
Demand Outpacing Supply
While manufacturing capacity for narrow linewidth lasers is ramping up, demand is expected to outpace supply throughout fiscal 2026, indicating potential supply chain challenges.
High Operating Expenses
The fourth quarter saw an increase in non-GAAP operating expenses by $5.9 million from the third quarter and $7.9 million from the same quarter last year. This rise is attributed to employee cash incentives and investments aimed at capitalizing on cloud opportunities.
Forward-Looking Guidance
Lumentum Holdings provided optimistic guidance for future growth, driven by the cloud and AI infrastructure market. The company expects cloud revenue to grow over 20% annually, with gross margins surpassing 40% and operating margins targeted above 20%. They aim to reach $600 million in quarterly revenue by June 2026 or earlier, focusing on high-value products and disciplined cost management to sustain growth and profitability.
In summary, Lumentum Holdings Inc.’s earnings call highlighted a strong performance in the Cloud & Networking segment, with significant growth prospects in the cloud and AI markets. Despite challenges in the Industrial Tech segment and supply constraints, the company’s strategic focus on high-value products and disciplined cost management positions it well for future growth. Investors and market enthusiasts can look forward to Lumentum’s continued success in the coming years.