Lumentum (NasdaqGS:LITE) Q2 2026 Earnings call February 03, 2026 05:00 PM ET Company ParticipantsGeorge Notter - Managing Director of Equity ResearchKathy Ta - VP of Investor RelationsMichael Hurlston - President and CEORuben Roy - Managing Director of Equity ResearchSimon Leopold - Managing DirectorVijay Rakesh - Managing DirectorWajid Ali - EVP and CFOWupen Yuen - President, Global Business UnitsConference Call ParticipantsPapa Sylla - VP and Equity Research AnalystRyan Koontz - Managing Director and Equi ...

Core Insights - Lumentum (LITE) is expected to report Q2 fiscal 2026 results on February 3, with projected revenues between $630 million and $670 million and non-GAAP earnings per share in the range of $1.30 to $1.50 [1][10] Revenue and Earnings Estimates - The Zacks Consensus Estimate for revenues is $652.4 million, reflecting a 62.2% increase from the same quarter last year, while the earnings consensus is $1.41 per share, up by a penny over the past 30 days [2] - Lumentum reported earnings of 42 cents in the year-ago quarter [2] Growth Drivers - Over 60% of Lumentum's current revenues are derived from AI infrastructure and cloud demand, primarily driven by hyperscaler customers [8][10] - Strong demand for laser chips and optical transceivers is expected to continue, with significant contributions from data center interconnect (DCI) components [9][19] - Lumentum anticipates sustainable growth from cloud transceivers over the next four to five quarters, with a notable increase in narrow line width laser assemblies for DCI transmission, which rose 70% year over year [9][21] Market Performance - Lumentum shares have increased by 353.3% over the past year, outperforming the Zacks Communication Components industry's return of 119.7% and the broader Zacks Computer and Technology sector's appreciation of 27.8% [13] - The stock is currently trading at a forward price-to-sales ratio of 8.84X, which is higher than the industry average of 4.42X and peers like Ciena and Coherent [16] Future Prospects - The company expects continued strong demand for its laser chips, with a projected 40% increase in capacity at its indium phosphide-based wafer fab [20] - Lumentum's components are anticipated to remain the primary revenue and earnings growth drivers in the near term, supported by rapid scaling of systems with cloud transceivers and optical circuit switches [21] - The company holds a Zacks Rank 2 (Buy) and a Growth Score of A, indicating a favorable investment opportunity [22]

Core Insights - Lumentum Holdings (LITE) shares have surged 326.9% over the past year, significantly outperforming the Zacks Communication Components industry and the broader Zacks Computer and Technology sector [1][8] - The company's strong financial performance, favorable industry trends, and robust fundamentals are key drivers of this growth [1] Company Performance - Lumentum's stock closed at $386.11, nearing its 52-week high of $401.60 [1] - The company has consistently outperformed competitors such as Ciena, Coherent, and Marvell Technology in the past year [3] - Fiscal Q2 revenues are projected to be between $630 million and $670 million, with earnings per share (EPS) guidance of $1.30 to $1.50 [8][15] Competitive Landscape - Lumentum is well-positioned against competitors like Coherent, Ciena, and Marvell Technology in the AI infrastructure market [2] - The company has a strong portfolio that helps it maintain a competitive edge in high-speed optical modules and transceivers [2] Valuation Metrics - Lumentum's forward 12-month price-to-sales (P/S) ratio is 9.18X, significantly higher than the industry average of 3.85X and its peers [6] - The company's premium valuation is supported by its strong growth prospects [6] Growth Drivers - Over 60% of Lumentum's current revenues are derived from AI infrastructure and cloud applications, driven by demand from hyperscalers [13] - The company anticipates that half of its sequential growth in fiscal Q2 will come from component products serving cloud applications [15] - Strong demand for laser chips and optical transceivers is expected to continue, with record EML laser shipments reported [17][18] Earnings Estimates - The Zacks Consensus Estimate for fiscal Q2 2026 earnings is $1.40 per share, reflecting a 21.7% increase over the past 60 days [19] - For fiscal Q3 2026, the earnings estimate is $1.52 per share, indicating an 18.8% rise from the previous year [20] Investment Outlook - Lumentum's expanding footprint in AI infrastructure supports its growth prospects and justifies its premium valuation [21] - The stock is rated as a strong buy, making it an attractive option for growth-oriented investors [21]

Core Insights - Lumentum (LITE) is experiencing strong demand for its laser chips and optical transceivers, primarily driven by AI infrastructure and cloud applications, with over 60% of its revenues coming from this sector [2][10] - The company anticipates fiscal Q2 2026 revenues between $630 million and $670 million, reflecting significant growth compared to the previous year [5][10] Company Performance - Lumentum's components business is thriving due to robust demand for laser chips and related products used in data centers and long-haul applications, with laser chip shipments expected to remain strong due to a 40% capacity increase at its indium phosphide-based wafer fab [3] - The company expects that approximately half of the sequential growth in Q2 2026 will come from component products for cloud applications, while the other half will be from systems products serving cloud customers [5] Competitive Landscape - Lumentum faces competition from Ciena and Marvell Technology in the AI infrastructure space, with both companies benefiting from increased customer spending and demand for bandwidth due to AI applications [6][7][8] - Ciena has raised its fiscal 2026 revenue outlook to $5.7-$6.1 billion, indicating nearly 24% growth at the midpoint, while Marvell Technology is gaining traction with its Alaska PCIe 6 retimer product line [7][8] Stock Performance and Valuation - Lumentum shares have appreciated 359.4% over the past year, significantly outperforming the broader Zacks Computer and Technology sector, which returned 21.6% [9] - The stock is currently trading at a premium, with a forward 12-month price/sales ratio of 9.29X compared to the industry average of 3.75X, and the Zacks Consensus Estimate for fiscal 2026 earnings is $12.59 per share, reflecting a 3.2% increase over the past month [12][14]

Core Insights - Lumentum Holdings Inc. (NASDAQ:LITE) has reached a new 52-week high, driven by bullish analyst coverage and improved earnings performance in Q1 FY2026 [1][2] - The stock price increased by 23.57% to $232.75, with an intra-day high of $240.71 [1] - Wolfe Research raised its price target for Lumentum to $240 from $150, maintaining an "outperform" rating, citing benefits from the AI industry's growth [2] Financial Performance - Lumentum reported a net income of $4.2 million in Q1 FY2026, a significant turnaround from a net loss of $82.4 million in the same quarter last year [3] - Net revenues surged by 58.4% year-on-year, reaching $533.8 million compared to $336.9 million [3] Market Outlook - The company anticipates over 20% sequential revenue growth, even before contributions from new growth engines like optical circuit switches and co-packaged optics [5] - The CEO highlighted strong momentum in data center markets and expressed confidence in supporting the rapid expansion of AI compute with their optical portfolio [4][5]

Q1 FY26 Results - The company's Q1 FY26 revenue reached $533.8 million[12, 13, 15], compared to $480.7 million in Q4 FY25[12, 13] and $336.9 million in Q1 FY25[12, 13], demonstrating a significant year-over-year increase of 64%[11] - GAAP gross margin was 34.0%[12], while non-GAAP gross margin was 39.4%[13] - GAAP operating income was $6.7 million[12], a significant improvement from an $82.4 million loss in Q1 FY25[12], while non-GAAP operating income was $99.8 million[13], compared to $10.0 million in Q1 FY25[13] - GAAP diluted EPS was $0.05[12], compared to $(1.21) in Q1 FY25[12], while non-GAAP diluted EPS was $1.10[13], compared to $0.18 in Q1 FY25[13] Revenue Breakdown & Key Drivers - Systems revenue increased 47% year-over-year, driven by cloud transceivers[11] - Cloud and AI business is accelerating, driving Q1 revenue up 58% and expanding operating margin >1,500 bps (YoY basis)[11] - 3D sensing revenue is below 5% of total company revenue[11] Q2 FY26 Guidance - The company projects Q2 FY26 revenue between $630 million and $670 million[15] - The company anticipates a non-GAAP operating margin between 20.0% and 22.0% for Q2 FY26[15] - The company expects non-GAAP diluted EPS to be between $1.30 and $1.50 for Q2 FY26[15]