Lumentum(US:LITE)2021-04-30 01:53Financial Data and Key Metrics Changes - The company reported revenue of $61 million for Q1 2021, which was in the upper half of the guidance range [10] - Non-GAAP gross margin was 22.4%, slightly above the expected range, driven by a favorable product mix and cost reductions [37] - Non-GAAP operating loss for the quarter was $7.8 million, resulting in a non-GAAP net loss of $7.5 million, equating to a loss per share of $0.15 [38][39] - The company ended the quarter with $111 million in cash, investments, and restricted cash, down $12 million from the previous quarter [40] Business Line Data and Key Metrics Changes - Revenue from products at 400 Gigabits and above grew 134% year-over-year, comprising 52% of total revenue in the quarter [10][36] - The company had four customers contributing 10% or more to revenue, together accounting for 74% of total revenue [12] Market Data and Key Metrics Changes - Demand for high-speed products remains strong, particularly in cloud and datacenter applications, although near-term demand in western carrier markets is muted due to pandemic-related deployment pauses and semiconductor shortages [19][21] - The China telecom market is also experiencing muted demand, with modest tenders from China Telecom and light business levels from China Mobile [20] Company Strategy and Development Direction - The company is focused on driving growth in its 400G and above product lines and expanding into the hyperscale market with new customers for its 400ZR and 400ZR+ modules [46] - The company anticipates a substantial revenue ramp in the second half of 2021, driven by unsatisfied demand from Q2 and stronger revenue from China [43] Management's Comments on Operating Environment and Future Outlook - Management noted that while demand for high-speed products is strong, supply chain constraints, particularly semiconductor shortages, are impacting the ability to meet demand [19][61] - The company expects to return to profitability in Q3 2021 on a non-GAAP basis, despite current challenges [46] Other Important Information - The company is conducting qualifications with multiple potential customers for its 400ZR modules, expecting initial deployments in the second half of 2021 [18] - The company is also exploring applications for its coherent technology in adjacent markets, including inter-satellite communication and LIDAR for autonomous vehicles [34] Q&A Session Summary Question: What is the definition of volume production for 400ZR? - Management defined volume production as 1,000 or more units per month [50] Question: What is the expected revenue impact from Huawei in Q2? - Management expects Huawei to be a modest-sized customer, contributing immaterial revenue in Q1 and a level of materiality in Q2 [54] Question: How should investors think about the break-even model for Q3? - Management indicated that break-even would require revenue of approximately $80-$85 million, with expected gross margins around 28%-29% [57] Question: What is the impact of chip shortages on current operations? - Management acknowledged that chip shortages are affecting the ability to meet demand, particularly for high-end products [61] Question: How does the company view the demand outlook in the U.S. and China? - Management noted current softness in demand in both markets but expects improvement in the second half of the year [21][102]