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Lumentum Announces Fiscal Second Quarter 2024 Financial Results

Lumentum Holdings Inc. (“Lumentum” or the “Company”) today reported results for its fiscal second quarter ended December 30, 2023. “Lumentum stands at the leading edge of photonics innovatio...

Business Wire
  • Net revenue of $366.8 million
  • GAAP gross margin of 17.4%; Non-GAAP gross margin of 32.6%
  • GAAP operating loss of 28.7%; Non-GAAP operating margin of 3.5%
  • GAAP diluted net loss per share of $1.47; Non-GAAP diluted net income per share of $0.32

SAN JOSE, Calif.: Lumentum Holdings Inc. (“Lumentum” or the “Company”) today reported results for its fiscal second quarter ended December 30, 2023.

“Lumentum stands at the leading edge of photonics innovation, partnering with customers to enable the future of data centers and the networks that connect them. Given the surging bandwidth demands of AI data centers, and our strong traction on new transceiver opportunities, we are strategically expanding our leading-edge transceiver manufacturing capacity. As a key part of this expansion, we are investing in state-of-the-art production lines at our manufacturing facility in Thailand. This factory has proven photonics manufacturing capabilities and has received numerous customer accolades, giving us confidence in our ability to ramp rapidly. We will be ramping capacity this summer and expect to lead the first wave of 1.6T transceivers for multiple customers at this site,” said Alan Lowe, President and CEO.

“Second quarter revenue and EPS results were above the midpoints of our guidance. Based on sluggish carrier capex spending and our latest customer discussions, we now expect customer inventory digestion to extend through the balance of fiscal 2024. Nevertheless, we are highly confident in our market position and the ultimate recovery and growth in this business,” concluded Mr. Lowe.

Fiscal Second Quarter Highlights:

Net revenue for the fiscal second quarter of 2024 was $366.8 million, with GAAP net loss of $99.1 million, or $1.47 per diluted share. Net revenue for the fiscal first quarter of 2024 was $317.6 million, with GAAP net loss of $67.9 million, or $1.02 per diluted share. Net revenue for the fiscal second quarter of 2023 was $506.0 million, with GAAP net loss of $31.7 million, or $0.46 per diluted share.

Non-GAAP net income for the fiscal second quarter of 2024 was $21.7 million, or $0.32 per diluted share. Non-GAAP net income for fiscal first quarter of 2024 was $23.4 million, or $0.35 per diluted share. Non-GAAP net income for the fiscal second quarter of 2023 was $104.1 million, or $1.52 per diluted share.

The Company held $1,224.0 million in total cash, cash equivalents, and short-term investments at the end of the fiscal second quarter of 2024, down $720.3 million from the end of the fiscal first quarter of 2024. On November 7, 2023 (the “Closing date”), we completed the acquisition of Cloud Light Technology Limited (“Cloud Light”) for a total purchase price consideration of $728.5 million, of which $705.0 million of cash consideration was paid on the Closing date.

Financial Overview – Fiscal Second Quarter Ended December 30, 2023

 

 

GAAP Results ($ in millions)

 

Q2

 

Q1

 

Q2

 

Change

 

FY 2024

 

FY 2024

 

FY 2023

 

Q/Q

 

Y/Y

Net revenue

$

366.8

 

 

$

317.6

 

 

$

506.0

 

 

15.5

%

 

(27.5

)%

Gross margin

 

17.4

%

 

 

24.1

%

 

 

32.8

%

 

(670)bps

 

(1,540)bps

Operating loss

 

(28.7

)%

 

 

(25.4

)%

 

 

(4.3

)%

 

(330)bps

 

(2,440)bps

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP Results ($ in millions)

 

Q2

 

Q1

 

Q2

 

Change

 

FY 2024

 

FY 2024

 

FY 2023

 

Q/Q

 

Y/Y

Net revenue

$

366.8

 

 

$

317.6

 

 

$

506.0

 

 

15.5

%

 

(27.5

)%

Gross margin

 

32.6

%

 

 

34.9

%

 

 

44.9

%

 

(230)bps

 

(1,230)bps

Operating margin

 

3.5

%

 

 

3.3

%

 

 

23.1

%

 

20bps

 

(1,960)bps

 

Net Revenue by Segment ($ in millions)

 

Q2

 

% of

 

Q1

 

Q2

 

Change

 

FY 2024

 

Net Revenue

 

FY 2024

 

FY 2023 (1)

 

Q/Q

 

Y/Y

Cloud & Networking

$

286.7

 

78.2

%

 

$

229.7

 

$

382.9

 

24.8

%

 

(25.1

)%

Industrial Tech

 

80.1

 

 

21.8

%

 

 

87.9

 

 

 

123.1

 

 

(8.9

)%

 

(34.9

)%

Total

$

366.8

 

 

100.0

%

 

$

317.6

 

 

$

506.0

 

 

15.5

%

 

(27.5

)%

(1) Prior period amounts have been recast to conform to the new segment structure effective the fiscal first quarter of 2024.

The tables above provide comparisons of quarterly results to prior periods, including sequential quarterly and year-over-year changes. A reconciliation between GAAP and non-GAAP measures is contained in this release under the section titled “Use of Non-GAAP Financial Measures.”

Business Outlook

Lumentum expects the following for the fiscal third quarter 2024:

  • Net revenue in the range of $350 million to $380 million
  • Non-GAAP operating margin of 2.0% to 5.0%
  • Non-GAAP diluted earnings per share of $0.20 to $0.35

We have not provided reconciliations from GAAP to non-GAAP measures or the equivalent GAAP measure for non-GAAP measures in our outlook, as they cannot be provided without unreasonable effort. A large portion of non-GAAP adjustments, such as restructuring charges, stock-based compensation, non-GAAP income tax reconciling adjustments, acquisition related costs, and other costs and contingencies unrelated to current and future operations are by their nature highly volatile and we have low visibility as to the range that may be incurred in the future.

Related Announcement and Conference Call

Lumentum will host a conference call today, February 8, 2024, at 5:30 am PT / 8:30 am ET to discuss its fiscal second quarter results. A live webcast of the call will be available in the Investors section of the Lumentum website at http://investor.lumentum.com. To listen to the live conference call, dial (833) 470-1428 or (404) 975-4839 and reference the conference ID 255741. Supporting materials outlining the Company’s latest financial results will be posted on http://investor.lumentum.com under the “Events and Presentations” section concurrently with this earnings press release. Lumentum has used, and intends to continue to use, its Investor Relations website as means of disclosing material nonpublic information and for complying with its disclosure obligations under Regulation FD. This press release is being furnished as an exhibit to a Current Report on Form 8-K filed with the Securities and Exchange Commission and will be available at http://www.sec.gov/.

About Lumentum

Lumentum (NASDAQ: LITE) is a market-leading designer and manufacturer of innovative optical and photonic products enabling optical networking and laser applications worldwide. Lumentum optical components and subsystems are part of virtually every type of telecom, enterprise, and data center network. Lumentum lasers enable advanced manufacturing techniques and diverse applications including next-generation imaging and sensing capabilities. Lumentum is headquartered in San Jose, California with R&D, manufacturing, and sales offices worldwide. For more information, visit www.lumentum.com and follow Lumentum on LinkedIn, X (formerly known as Twitter), Facebook, Instagram and YouTube.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These include statements regarding our belief and expectations with respect to our markets, customers and industry, any anticipation or guidance as to demand for our products and technology from our customers and their end customers, including drivers of that demand and the timing of the increased capex spending by the telecom industry and the inventory correction cycle, statements regarding our product roadmaps and investments, statements regarding revenue growth and trends in our markets, and our guidance with respect to future net revenue, non-GAAP diluted earnings per share, and non-GAAP operating margins, and related assumptions. These forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those projected. Among the factors that could cause actual results to differ from those contemplated are: (a) uncertainty and volatility in the global markets, including uncertainty and volatility in the macroeconomic environment, volatility and uncertainty in banking and financial services sectors, inflationary pressures, changes in the political or economic environment, such as geopolitical conflicts, war, trade and export restrictions and the imposition of tariffs or other duties, and the effect of such market disruptions on demand for our products, technology spending by our customers and our ability to obtain components for our products; (b) quarter-over-quarter product mix fluctuations, which can materially impact profitability measures due to the broad gross margin ranges across our portfolio; (c) decline of average selling prices across our businesses or increase in costs, either of which will also decrease our margins; (d) effects of seasonality; (e) the ability of our suppliers and contract manufacturers to meet production, quality, and delivery requirements for our forecasted demand; (f) changes in customer demand, including due to changes in inventory practices and end-customer demand; (g) our ability to attract and retain new customers, particularly in the imaging and sensing market; (h) the risk that Lumentum’s financing or operating strategies will not be successful; (i) risks that the acquisition of Cloud Light disrupts our current plans and operations; (j) failure to successfully integrate Cloud Light into our business and (k) our failure to accurately identify liabilities and risks in Cloud Light’s business. For more information on these and other risks, please refer to the "Risk Factors" section included in the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2023 filed with the Securities and Exchange Commission and the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended December 30, 2023 to be filed with the Securities and Exchange Commission. The forward-looking statements contained in this press release are made as of the date hereof and the Company assumes no obligation to update such statements, except as required by applicable law.

Category: Financial

The following financial tables are presented in accordance with GAAP, unless otherwise specified.

LUMENTUM HOLDINGS INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in millions, except per share data)

(unaudited)

 

 

Three Months Ended

 

Six Months Ended

 

December 30, 2023

 

December 31, 2022

 

December 30, 2023

 

December 31, 2022

Net revenue

$

366.8

 

 

$

506.0

 

 

$

684.4

 

 

$

1,012.8

 

Cost of sales

 

281.3

 

 

 

315.1

 

 

 

504.2

 

 

 

597.7

 

Amortization of acquired developed intangibles

 

21.5

 

 

 

24.7

 

 

 

39.5

 

 

 

47.7

 

Gross profit

 

64.0

 

 

 

166.2

 

 

 

140.7

 

 

 

367.4

 

Operating expenses:

 

 

 

 

 

 

 

Research and development

 

78.3

 

 

 

75.8

 

 

 

151.8

 

 

 

148.5

 

Selling, general and administrative

 

85.1

 

 

 

98.4

 

 

 

158.1

 

 

 

204.1

 

Restructuring and related charges

 

5.8

 

 

 

13.9

 

 

 

16.8

 

 

 

23.2

 

Total operating expenses

 

169.2

 

 

 

188.1

 

 

 

326.7

 

 

 

375.8

 

Loss from operations

 

(105.2

)

 

 

(21.9

)

 

 

(186.0

)

 

 

(8.4

)

Interest expense

 

(9.7

)

 

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