Lumentum(LITE) - 2025 Q3 - Quarterly Report

Revenue and Profitability - Cloud & Networking segment accounted for 85.9% of net revenue for the three months ended March 29, 2025, compared to 85.6% for the same period in 2024[207]. - Net revenue increased by $58.7 million, or 16.0$51.4 million increase in Cloud & Networking revenue and a $7.3 million increase in Industrial Tech revenue[209]. - For the nine months ended March 29, 2025, net revenue increased by$113.4 million, or 10.8%, primarily due to a 156.5 million increase in Cloud & Networking revenue, offset by a 43.1 million decrease in Industrial Tech revenue[210]. - Gross profit for the three months ended March 29, 2025, was $122.5 million, representing a 105.9$27.2 million, or 59.3%, during the three months ended March 29, 2025, primarily due to higher sales of products for cloud and AI/ML applications[222]. - Industrial Tech segment profit increased by $5.3 million, or 196.3$34.3 million, or 44.1%, during the three months ended March 29, 2025, driven by a $29.1 million increase in stock-based compensation[227]. - Restructuring and related charges recorded were$7.2 million and $17.6 million for the three and nine months ended March 29, 2025, respectively, mainly due to integration efforts and cost reduction initiatives[231]. Acquisitions and Investments - The company completed the acquisition of Cloud Light for a total cash consideration of$705.0 million on November 7, 2023, enhancing its capabilities in advanced optical modules[197]. - The acquisition-related costs incurred for the Cloud Light acquisition totaled 9.6 million, recorded as general and administrative expenses[197]. - The company plans to continue investing in R&D and new products to differentiate itself in the marketplace[226]. Customer and Market Focus - For the three months ended March 29, 2025, two customers accounted for 17% and 15% of total revenue, indicating a high customer concentration[211]. - Net revenue from customers outside the United States represented 83.4% of total net revenue for the three months ended March 29, 2025, an increase from 64.7% in the prior year[215][216]. - The company expects revenue from customers outside the United States to continue to be a significant focus for growth opportunities despite potential regulatory impacts[217]. Cash and Financial Position - Cash and cash equivalents as of March 29, 2025, were 516.4 million, an increase from $436.7 million as of June 29, 2024[244]. - As of March 29, 2025, the company had cash, cash equivalents, and short-term investments totaling$866.7 million[268]. - The company reported a net loss of $187.4 million during the nine months ended March 29, 2025, with cash from operating activities reflecting non-cash items of$309.4 million[258]. - Total contractual obligations as of March 29, 2025, amount to $3,339.0 million, with$639.4 million due within one year and $2,699.6 million due beyond one year[248]. - The company has a share buyback program with an authorization of up to$1.2 billion, of which $630.4 million has been utilized to repurchase 7.7 million shares at an average price of$81.66 per share[254]. Risks and Challenges - The company experienced ongoing supply chain challenges but noted signs of inventory normalization among network equipment manufacturers since the first fiscal quarter of 2025[200]. - Potential risks include the impact of domestic and international financial institution failures on the company's ability to fund operations[270]. - The value of the investment portfolio could be affected by holding debt instruments from failing or illiquid institutions[270]. - The company's supply chain and cash collections may be impacted if vendors or customers experience liquidity issues[270].