Lumentum(US:LITE)2024-08-15 04:00Financial Data and Key Metrics Changes - In Q4, the company reported revenue of $308.3 million and non-GAAP EPS of $0.06, exceeding the midpoint of guidance ranges [20] - GAAP gross margin for Q4 was 16.6%, with a GAAP operating loss of 43.3% and a GAAP diluted net loss per share of $3.72, primarily due to restructuring charges and amortization of acquired intangibles [20][21] - For the full fiscal year 2024, net revenue was $1.36 billion, down 23.1% from fiscal 2023, with a GAAP gross margin of 18.5% [24] Business Line Data and Key Metrics Changes - The cloud and networking segment revenue in Q4 was $254.7 million, down 18.8% sequentially and 11.1% year-over-year [26] - The industrial tech segment revenue was $53.6 million, up 1.7% sequentially but down 36.4% year-over-year [26] Market Data and Key Metrics Changes - The company experienced a 19% sequential decline and an 11% year-over-year decline in the cloud and networking segment, attributed to soft overall demand for telecom products [14] - There was an increase in shipments for narrow line tunable lasers used in 400 ZR modules, indicating a potential recovery in the traditional networking market [15] Company Strategy and Development Direction - The company is focusing on expanding its customer base in the data center market, scaling up production capacity outside of China, and executing differentiated technology roadmaps [6][7] - A three-pronged strategy is being implemented to grow the cloud business, including expanding customer base, increasing manufacturing capacity, and delivering innovative technologies [12][14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving a quarterly revenue target of $500 million by the end of calendar 2025, driven by strong demand in the cloud and AI sectors [19] - The company anticipates continued strong EML shipments throughout fiscal 2025 and into fiscal 2026, supported by record orders for Datacom chips [9][19] Other Important Information - The company invested $43 million in Indium Phosphide wafer fab facilities in Q1 and plans to continue investing to meet growing demand [11] - A valuation allowance of $139.8 million was recorded for U.S. deferred tax assets due to historical GAAP losses [20][21] Q&A Session Summary Question: Can you provide more details about the new customer announcement? - Management indicated that the new customer is significant, but specifics were not disclosed. The run rate will depend on execution and customer engagement [32][33] Question: What is the outlook for Datacom revenue between Q4 and Q1? - Management noted that while telecom is expected to grow, Datacom revenue is in a transition phase, and Q4 to Q1 numbers are expected to be depressed [34] Question: Can you discuss capacity and ramp timing for chips and transceivers? - Management confirmed record bookings for the chip business and expects incremental capacity in the first half of calendar 2025, with initial shipments from Thailand starting in Q1 [35][36] Question: What is the status of the telecom business recovery? - Management acknowledged existing inventory challenges but noted strength in new products and anticipated growth in telecom shipments [38] Question: Can you clarify the difference between an award and a qualification? - Management explained that an award indicates a commitment from a customer, while qualification involves meeting specific performance standards before revenue can be generated [51][52] Question: What is the timing for the 1.6 terabit transceivers? - Management is focused on providing high-quality samples and expects to ramp production as customer needs arise, with multiple designs in progress [55] Question: How will gross margins progress into fiscal 2025? - Management expects gross margins to improve due to better manufacturing utilization and increased Datacom shipments [57]