Lumentum Holdings Inc. (NASDAQ:LITE) reported better-than-expected first-quarter financial results and issued strong second-quarter guidance on Tuesday.Lumentum reported quarterly earnings of $1.10 per share which beat the analyst consensus estimate of $1.03 per share. The company reported quarterly sales of $533.800 million which beat the analyst consensus estimate of $525.367 million.Lumentum said it sees second-quarter adjusted EPS of $1.30-$1.50 versus estimates of $1.16. The company expects sales of $6 ...

Corporate Earnings Drive Pre-Market Activity - Amgen Inc. reported a 12% increase in total revenues to $9.6 billion and non-GAAP EPS of $5.64, exceeding forecasts and leading to a 3% rise in stock [3] - Lumentum Holdings Inc. saw a 17% stock increase after reporting Q3 2025 EPS of $0.57 on revenues of $425.2 million, driven by growth in its Cloud and Networking segment [4] - Rivian Automotive, Inc. reported Q3 2025 revenues of $1.56 billion, surpassing estimates, with a narrower loss per share of -$0.65 and a 47% year-over-year increase in automotive sales [5] - Johnson Controls International plc reported an adjusted EPS of $1.05 and sales of $6.1 billion, representing a 6% organic increase year-over-year, with an 11% growth in backlog [6] - The New York Times Company added 460,000 digital-only subscribers, boosting total revenue by 9.5% year-over-year to $700.8 million [7] Media and Global Trade Developments - China's Foreign Minister announced willingness to negotiate a free trade agreement with the European Union, emphasizing cooperation over rivalry [9] - The New York Times Company demonstrated strength in digital transformation, contributing to its revenue growth [7] Crude Oil Markets Face Headwinds - WTI crude oil prices are trading near $60.59, facing downward pressure from a stronger U.S. dollar and increased U.S. crude inventories [10] - OPEC+ has paused output hikes for Q1 2026, agreeing to a modest increase in December, but market sentiment remains cautiously bearish [10]

Core Insights - Premarket trading is showing notable activity with significant price movements indicating potential trading opportunities before the market opens [1] Premarket Gainers - SMX (Security Matters) Public Limited Company (SMX) increased by 52% to $2.24 [3] - Entravision Communications Corporation (EVC) rose by 33% to $2.66 [3] - Babcock & Wilcox Enterprises, Inc. (BW) saw a 28% increase to $4.79 [3] - NeuroPace, Inc. (NPCE) gained 24% reaching $11.71 [3] - Kennedy-Wilson Holdings, Inc. (KW) also increased by 24% to $9.30 [3] - Rigel Pharmaceuticals, Inc. (RIGL) rose by 22% to $34.72 [3] - Digital Turbine, Inc. (APPS) increased by 21% to $7.20 [3] - Lumentum Holdings Inc. (LITE) saw a 15% increase to $218.06 [3] - AsiaStrategy (SORA) rose by 14% to $3.63 [3] - Marine Petroleum Trust (MARPS) increased by 7% to $5.05 [3] Premarket Losers - Biohaven Ltd. (BHVN) decreased by 42% to $7.96 [4] - Trex Company, Inc. (TREX) fell by 34% to $30.65 [4] - Soleno Therapeutics, Inc. (SLNO) saw a 23% decline to $49.00 [4] - Axon Enterprise, Inc. (AXON) decreased by 19% to $572.00 [4] - Clover Health Investments, Corp. (CLOV) fell by 19% to $2.82 [4] - Pinterest, Inc. (PINS) decreased by 18% to $26.91 [4] - SSR Mining Inc. (SSRM) saw a 17% decline to $17.91 [4] - Upstart Holdings, Inc. (UPST) decreased by 16% to $38.81 [4] - WF International Limited (WXM) fell by 12% to $2.25 [4] - Corsair Gaming, Inc. (CRSR) decreased by 11% to $6.66 [4]

Group 1 - Dow Jones futures increased slightly, while S&P 500 and Nasdaq futures experienced minor declines [1] - Advanced Micro Devices (AMD), Astera Labs (ALAB), Arista Networks (ANET), Lumentum (LITE), and Super Micro Computer (SMCI) reported earnings related to AI hardware [1] - The stock market faced significant losses on Tuesday, with the Nasdaq leading the declines [1] Group 2 - Super Micro Computer (SMCI) missed Wall Street's targets for its fiscal Q1 and provided mixed guidance for the current period [2]

Core Insights - Lumentum reported quarterly earnings of $1.1 per share, exceeding the Zacks Consensus Estimate of $1.03 per share, and showing significant growth from $0.18 per share a year ago, resulting in an earnings surprise of +6.80% [1] - The company achieved revenues of $533.8 million for the quarter ended September 2025, surpassing the Zacks Consensus Estimate by 1.43% and increasing from $336.9 million year-over-year [2] - Lumentum's stock has increased approximately 137.7% since the beginning of the year, significantly outperforming the S&P 500's gain of 16.5% [3] Earnings Outlook - The future performance of Lumentum's stock will largely depend on management's commentary during the earnings call and the company's earnings outlook, including current consensus earnings expectations for upcoming quarters [4][6] - The current consensus EPS estimate for the next quarter is $1.15 on revenues of $559.74 million, and for the current fiscal year, it is $4.90 on revenues of $2.3 billion [7] Industry Context - The Communication - Components industry, to which Lumentum belongs, is currently ranked in the top 13% of over 250 Zacks industries, indicating a favorable outlook compared to the bottom 50% [8] - The performance of Lumentum's stock may also be influenced by the overall industry outlook, as empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions [5][8]

Revenue and Demand - Lumentum's revenue is driven by the demand for optical and photonic products, essential for cloud, AI/ML, telecommunications, and industrial applications[178] - The company experienced significant fluctuations in demand through fiscal year 2024, with revenue impacted by customer inventory management and supply chain constraints[187] - In the first quarter of fiscal year 2025, demand from AI and cloud customers increased as network equipment manufacturers normalized inventory levels[187] - Lumentum's products support high-capacity optical links for various applications, including cloud computing and IoT, driving long-term market opportunities[183] - The transition to digital and virtual work environments is expected to continue driving demand for Lumentum's technologies[179] Financial Performance - Net revenue increased by $196.9 million, or 58.4%, to $533.8 million for the three months ended September 27, 2025, compared to $336.9 million for the same period in 2024[202][203] - Components products accounted for 71.0% of net revenue, with a $147.8 million increase, while Systems products represented 29.0% with a $49.1 million increase[201][203] - Gross profit rose to $181.5 million, a 133.0% increase from $77.9 million, resulting in a gross margin of 34.0%, up from 23.1%[202][209] - Net income for the three months ended September 27, 2025, was $4.2 million, compared to a net loss of $82.5 million for the same period in 2024[201] Expenses and Investments - Research and Development (R&D) expenses increased by $7.1 million, or 9.6%, totaling $81.4 million, representing 15.2% of net revenue[211][202] - Selling, General and Administrative (SG&A) expenses rose by $8.8 million, or 11.5%, totaling $85.1 million, representing 15.9% of net revenue[213][202] - Cash used in investing activities was $67.8 million during the three months ended September 27, 2025, primarily for capital expenditures of $76.2 million[243] Cash and Liquidity - Cash and cash equivalents increased to $772.9 million as of September 27, 2025, up from $520.7 million as of June 28, 2025[225] - Cash from operating activities for the three months ended September 27, 2025, was $57.9 million, reflecting a net income of $4.2 million and non-cash items of $108.3 million[241] - Cash and cash equivalents increased by $252.2 million from $520.7 million as of June 28, 2025, to $772.9 million as of September 27, 2025, driven by operating cash flow of $57.9 million and financing activities of $262.1 million[240] - The company believes its cash and cash equivalents will be sufficient to meet liquidity and capital spending requirements for at least the next 12 months[229] Debt and Obligations - The company had contractual obligations totaling $4,274.9 million as of September 27, 2025, with $882.1 million due within one year[230] - The net carrying amount of the 2032 Notes was $1,254.6 million as of September 27, 2025, with a maturity date of March 15, 2032[233] - As of September 27, 2025, the aggregate principal amount of the company's convertible notes (2032, 2029, 2028, and 2026 Notes) totals $2,199.6 million, with interest rates ranging from 0.375% to 1.50%[250] Tax and Foreign Exchange - Lumentum released $153.1 million of valuation allowances on UK deferred tax assets, indicating a positive outlook based on future taxable income forecasts[195] - Unrecognized tax benefits for uncertain tax positions amounted to $57.0 million as of September 27, 2025[239] - For the three months ended September 27, 2025, the company recorded a net foreign exchange gain of $1.5 million compared to a net foreign exchange loss of $0.7 million for the same period in 2024[247] Market and Strategic Outlook - The ongoing global trade environment poses risks, including potential tariff increases that could affect costs and gross margins[188] - The company is investing in new technologies and customer programs to maintain market leadership and expand into emerging markets[180] - The company plans to indefinitely reinvest funds held outside the United States, with no immediate need to repatriate them for domestic operations[227]

Financial Data and Key Metrics Changes - In Q1, revenues surged more than 58% year-over-year, reaching $533 million, the highest revenue in a single quarter in the company's history [6][17] - Non-GAAP gross margin improved to 39.4%, up 160 basis points sequentially and 660 basis points year-on-year [17] - Non-GAAP operating margin was 18.7%, up 370 basis points sequentially and 1,570 basis points year-on-year [17] - Cash and short-term investments increased by $245 million to $1.12 billion [19] Business Line Data and Key Metrics Changes - Components revenue was $379 million, up 18% sequentially and 64% year-over-year, driven by strong demand in data centers [10][19] - Systems revenue was $155 million, down 4% sequentially but up 47% year-over-year, with cloud transceiver revenue remaining flat [13][19] - The company initiated CW laser deliveries for 800-gig transceiver manufacturers, marking a significant milestone [11] Market Data and Key Metrics Changes - Over 60% of total revenue now comes from cloud and AI infrastructure, indicating a shift in market demand [7] - Strong growth in data center interconnect components, with shipments of narrow linewidth laser assemblies for DCI transmission growing over 70% year-over-year [12] Company Strategy and Development Direction - The company has reorganized to report financials as a single reportable segment, allowing for quicker responses to market changes [9] - Future growth is driven by cloud transceivers, optical circuit switches, and co-packaged optics, with expectations to surpass $600 million in quarterly revenue earlier than previously targeted [8][15] - The company aims to leverage its strong market position in optics for scaling AI compute and is entering a period of sustained expansion [15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in sustained growth driven by the accelerating adoption of AI and optical technologies [15] - The demand-supply imbalance for EML products has increased, with demand outstripping supply by 25%-30% [77] - The company is focused on long-term agreements with key customers to ensure sustainable business growth [56] Other Important Information - The company expects to see significant increases in shipment volumes in the second half of calendar 2026 as adoption accelerates [12] - The guidance for Q2 anticipates net revenue in the range of $630-$670 million, with a midpoint representing a new all-time quarterly revenue record [20][21] Q&A Session Summary Question: Can you discuss the confidence in sustaining growth in transceivers? - Management highlighted improved execution and participation in early customer ramps, expecting to ship 1.6T transceivers by mid-next year, contributing to a layering effect in revenue [27][28] Question: What does the 40% increase in capacity for data comm chips mean for revenue? - The increase in capacity is expected to enhance output and shift the product mix towards higher-margin 200G EMLs, contributing positively to revenue [30][31] Question: How is the continuous wave laser output being targeted? - The CW laser is being positioned for internal transceivers, with expectations for full production by mid-2026 [37] Question: What is the competitive environment for narrow linewidth lasers? - The company holds a strong market share in narrow linewidth lasers, with challenges in ramping capacity but a solid competitive position [40][41] Question: How is the supply-demand balance for EML products changing? - The demand-supply mismatch has worsened, with a 25%-30% shortfall relative to customer demand, despite increased supply [77][78] Question: What are the key milestones for the OCS business? - The hardware is generally qualified, with ongoing work on software qualification expected to be completed by mid-2026 [92]

Financial Data and Key Metrics Changes - In Q1, revenues surged more than 58% year-over-year, reaching $533 million, the highest revenue in a single quarter in the company's history [6][17] - Non-GAAP gross margin improved to 39.4%, up 660 basis points year-on-year, while non-GAAP operating margin increased to 18.7%, up 1,570 basis points year-on-year [17][18] - Non-GAAP net income was $86.4 million, with non-GAAP EPS at $1.10, reflecting strong operational performance [17][18] Business Line Data and Key Metrics Changes - Components revenue was $379 million, up 64% year-over-year, driven by strong demand in data centers [10][19] - Systems revenue was $155 million, up 47% year-over-year but down 4% sequentially, with cloud transceiver revenue remaining flat as manufacturing capabilities were increased [13][19] - The company initiated CW laser deliveries for 800-gig transceiver manufacturers, marking a significant milestone in its product roadmap [11] Market Data and Key Metrics Changes - Over 60% of total revenue now comes from cloud and AI infrastructure, indicating a strong alignment with market trends [7] - Shipments of narrow linewidth laser assemblies for data center interconnect grew over 70% year-over-year, demonstrating robust market demand [12] - The demand-supply imbalance for EML products has increased, with a shortfall of 25%-30% relative to total customer demand [77][78] Company Strategy and Development Direction - The company has reorganized to report financials as a single segment, allowing for quicker responses to market changes and better resource allocation [9] - Future growth drivers identified include cloud transceivers, optical circuit switches, and co-packaged optics, with expectations for sustained growth in cloud transceivers [8][15] - The company aims to leverage its strong market position to drive long-term shareholder value through expanded manufacturing capacity and new product ramps [15][21] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in sustaining growth due to improved execution and customer ramp participation, particularly in transceivers [27] - The company anticipates a revenue midpoint of approximately $650 million for Q2, surpassing previous targets [8][20] - Management highlighted the importance of software qualification for new products, particularly in the optical circuit switch market, as a key milestone for future revenue [92] Other Important Information - The company expects to see a significant increase in shipment volumes in the second half of calendar 2026 as adoption accelerates [12] - Cash and short-term investments increased by $245 million to $1.12 billion, benefiting from a convertible notes transaction [19] Q&A Session Summary Question: Can you discuss the confidence in sustaining growth in transceivers? - Management highlighted improved execution and participation in early customer ramps as key factors driving confidence in growth [27] Question: What does the 40% increase in capacity for data comm chips mean for revenue? - The increase in capacity is expected to layer on top of existing growth, with a shift towards 200 gig lasers contributing to revenue increases [31] Question: How do you view the continuous wave laser output market opportunity? - The company is targeting CW lasers for internal transceivers, with expectations for full production by mid-2026 [37] Question: What is the competitive environment for narrow linewidth lasers? - The company holds a strong market share in this area, with challenges in ramping laser capacity being a key focus [40][41] Question: How should we think about the split between components and systems for indium phosphide capacity? - The majority of output will be sold into the external market, with a small portion allocated for internal consumption [45] Question: How has the supply-demand imbalance for EML changed? - The demand-supply imbalance has increased to 25%-30%, indicating a significant shortfall relative to customer demand [77][78] Question: What is the approach to pricing given the supply-demand imbalance? - The company is using the demand-supply imbalance to impact pricing, with targeted price increases expected [80]

Financial Data and Key Metrics Changes - In Q1, revenues surged more than 58% year-over-year, reaching $533 million, the highest revenue in a single quarter in the company's history [5][15] - Non-GAAP gross margin for Q1 was 39.4%, up 160 basis points sequentially and 660 basis points year-over-year [15] - Non-GAAP operating margin was 18.7%, up 370 basis points sequentially and 1,570 basis points year-over-year [15] - Cash and short-term investments increased by $245 million to $1.12 billion during Q1 [17] Business Line Data and Key Metrics Changes - Components revenue was $379 million, up over 18% sequentially and 64% year-over-year, driven by strong demand in data centers [8][17] - Systems revenue was $155 million, down 4% sequentially but up 47% year-over-year, with cloud transceiver revenue remaining flat [11][17] - The company initiated CW laser deliveries for 800-gig transceiver manufacturers, marking a significant milestone [9] Market Data and Key Metrics Changes - Over 60% of total revenue now comes from cloud and AI infrastructure, driven by hyperscale customers [5] - Shipments of narrow linewidth laser assemblies for data center interconnect grew over 70% year-over-year [10] - The company expects significant increases in shipment volumes in the second half of calendar 2026 as adoption accelerates [10] Company Strategy and Development Direction - The company has reorganized to report financials as a single reportable segment, allowing for quicker responses to market changes [7] - Three major drivers of future growth have been identified: cloud transceivers, optical circuit switches, and co-packaged optics [6] - The company aims to leverage its leadership in optics for scaling AI compute and anticipates sustained growth in cloud applications [13] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in surpassing $600 million in quarterly revenue by June 2026, with a Q2 outlook of approximately $650 million [6] - The company highlighted a broad-based improvement in demand across all segments, with transceivers expected to contribute significantly to revenue growth [65] - Management noted that the demand-supply imbalance has increased, with a shortfall of 25%-30% relative to total customer demand [70][71] Other Important Information - The company expects to see revenue layering benefits from new 800-gig and 1.6T products ramping in future quarters [12] - The company is focused on expanding manufacturing capacity to support cloud and AI customers, with $76 million invested in CapEx during Q1 [17] Q&A Session Summary Question: Can you discuss the confidence in sustaining growth in transceivers? - Management highlighted improved execution and participation in early customer ramps, expecting to ship 1.6T transceivers by mid-next year [25] Question: What does the 40% increase in capacity for data comm chips mean for revenue? - Management indicated that the increase would lead to higher output and a shift towards 200 gig lasers, contributing to revenue growth [27][28] Question: How is the continuous wave laser output being targeted? - The company is shipping CW lasers to other customers and plans to use them in its own transceivers by mid-2026 [34] Question: What is the competitive environment for narrow linewidth lasers? - Management noted strong market share and limited competition, with a focus on ramping laser capacity [36][37] Question: How is the supply-demand imbalance for EML characterized? - The demand-supply mismatch has increased, with a shortfall of 25%-30% relative to customer demand [70][71] Question: What milestones are expected for the OCS business? - Management expects to ramp to $100 million quarterly by December 2026, with hardware generally qualified and ongoing software development [82]

Core Insights - Lumentum's recent quarter performance highlights the growing demand for AI-driven optical infrastructure, indicating a positive market trend for the company [1] Financial Performance - The company reported significant revenue growth, driven by increased investments in AI technologies and optical solutions [1] - Specific financial metrics, such as revenue figures and percentage increases, were not detailed in the provided content [1] Market Trends - The demand for optical infrastructure is being propelled by advancements in AI, suggesting a robust future for companies operating in this sector [1] - Lumentum's performance may serve as a bellwether for the broader industry, reflecting the potential for growth in AI-related investments [1]