Lumentum(US:LITE)2021-05-12 17:42Financial Data and Key Metrics Changes - Net revenue for Q3 was $419.5 million, down 12% sequentially but up 4% year-on-year [35] - Non-GAAP gross margin was approximately 50%, with GAAP gross margin at 44.1% [36] - Non-GAAP operating margin was 27.9%, down 760 basis points sequentially but up 290 basis points year-on-year [38] Business Line Data and Key Metrics Changes - Revenue from Optical Communications segment was $387.9 million, up 14% sequentially and 8% year-on-year [43] - Revenue from Telecom and Datacom, particularly indium phosphide-based components, was up 28% year-on-year [21] - Revenue from EML chips increased over 40% year-on-year, driven by demand from cloud data centers [23] Market Data and Key Metrics Changes - The global market for 3D sensing lasers is expected to decline by approximately 20% to 25% in fiscal 2022 [17] - DML revenue was significantly below year-ago levels due to delays in 5G fronthaul deployments in China [25] - The company expects Telecom and Datacom revenue to increase quarter-on-quarter in Q4 [26] Company Strategy and Development Direction - The company is focused on organic growth opportunities and has authorized a share buyback program of up to $700 million over the next two years [20][42] - Management believes strategic M&A will create long-term value, despite recent setbacks with the Coherent transaction [19][84] - The company is optimistic about long-term market trends driven by digital transformation and 5G deployment [12][14] Management Comments on Operating Environment and Future Outlook - Management anticipates near-term headwinds in telecom and 5G-related components but expects a market reacceleration in the second half of fiscal 2022 [16][18] - The company remains optimistic about long-term growth due to a strong product portfolio and design wins [15][32] - Management noted that the impact of COVID-19 continues to affect market dynamics, particularly in regions like India [10][87] Other Important Information - The company ended the quarter with approximately $2.1 billion in cash and short-term investments, up $354 million quarter-on-quarter [41] - The company has seen a significant increase in kilowatt fiber laser sales after four quarters of decline, indicating a recovery in the commercial lasers segment [30] Q&A Session Summary Question: Can you elaborate on the first half guide for fiscal 2022 regarding Telecom and Datacom? - Management expects moderate growth in Telecom but challenges in Datacom due to 5G rollout delays in China [52][54] Question: What is the outlook for 3D sensing market share? - Management is confident in maintaining a solid market share despite recent shifts and believes the share has stabilized [60][70] Question: How do you see the pricing dynamics with smaller chips in 3D sensing? - Management indicated that ASPs are expected to decrease with smaller chip sizes, but margins should remain stable [75][76] Question: What is the impact of the Coherent deal on M&A strategy? - Management remains open to strategic M&A but currently prioritizes organic growth opportunities [84][86] Question: How is the company addressing semiconductor shortages? - Management acknowledged the challenges posed by semiconductor shortages but is actively working to expedite supply [66]