Why Lumentum Holdings Rose After Posting Fourth-Quarter Results

Core Viewpoint - Lumentum Holdings has experienced a significant rebound in stock price following its fiscal fourth-quarter earnings report, despite reporting a year-on-year revenue decline and an operating loss in GAAP terms [1][2]. Financial Performance - Lumentum reported a revenue of $308.3 million for Q4 FY24, down 16.9% year-on-year, with a non-GAAP earnings of $0.06 per share and a GAAP diluted net loss of $3.72 per share [2][3]. - The company’s revenue from the cloud and networking segment was $254.7 million, down from $286.5 million in Q4 FY23, while industrial tech revenue was $53.6 million, down from $84.3 million in the same period [3]. Segment Insights - The cloud and networking segment showed a profit margin of 10.1% in Q4 FY24, down from 17.7% in Q4 FY23, indicating a decline in profitability [3]. - Lumentum is focusing on expanding its cloud customer base and scaling up component and module capacity for AI solutions, which is expected to drive future growth [2][3]. Future Guidance - For Q1 FY25, Lumentum is guiding net revenue between $315 million and $335 million, with a non-GAAP operating margin projected to be between 0% and 3% [4][5]. - Management anticipates improved gross margins due to better manufacturing utilization driven by an improved telecom outlook and increased Datacom laser shipments [4][5]. Market Opportunities - The company sees Datacom as a potential revenue driver, with initial shipments from Thailand expected to start in the current quarter [7]. - Telecom demand is recovering faster than expected, with strong demand for new ROADM products and initial shipments of Coherent components [8]. Competitive Positioning - Lumentum is viewed favorably in terms of valuation compared to peers like Infinera and F5, although it has underperformed in stock momentum [9].