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Lumentum Announces Fiscal Third Quarter 2024 Financial Results

Lumentum Holdings Inc. (“Lumentum” or the “Company”) today reported results for its fiscal third quarter ended March 30, 2024. “Lumentum is well-positioned to capitalize on surging cloud dat...

Business Wire
  • Net revenue of $366.5 million
  • GAAP gross margin of 16.2%; Non-GAAP gross margin of 32.6%
  • GAAP operating loss of 31.3%; Non-GAAP operating margin of 4.1%
  • GAAP diluted net loss per share of $1.88; Non-GAAP diluted net income per share of $0.29

 

SAN JOSE, Calif.: Lumentum Holdings Inc. (“Lumentum” or the “Company”) today reported results for its fiscal third quarter ended March 30, 2024.

“Lumentum is well-positioned to capitalize on surging cloud data center demand driven by the exponentially increasing requirements of artificial intelligence,” said Alan Lowe, President and CEO. “We are making significant strides in developing new products and customer programs, and expanding production capacity to capitalize on exciting opportunities that we expect will meaningfully increase calendar 2025 revenue and beyond.”

“Our third-quarter revenue and EPS exceeded guidance midpoints, with data center revenues achieving a record quarter. The next few quarters’ revenue will continue to be burdened by telecom customer inventory challenges as telco spending has slowed but we are highly confident in our market position and the future recovery and growth in our telecom business,” concluded Mr. Lowe.

Fiscal Third Quarter Highlights:

Net revenue for the fiscal third quarter of 2024 was $366.5 million, with GAAP net loss of $127.0 million, or $1.88 per diluted share. 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 third quarter of 2023 was $383.4 million, with GAAP net loss of $39.3 million, or $0.57 per diluted share.

Non-GAAP net income for the fiscal third quarter of 2024 was $19.6 million, or $0.29 per diluted share. Non-GAAP net income for fiscal second quarter of 2024 was $21.7 million, or $0.32 per diluted share. Non-GAAP net income for the fiscal third quarter of 2023 was $51.8 million, or $0.75 per diluted share.

The Company held $870.9 million in total cash, cash equivalents, and short-term investments at the end of the fiscal third quarter of 2024, down $353.1 million from the end of the fiscal second quarter of 2024. In March 2024, we paid the remaining $323.1 million principal amount of the convertible notes due in 2024 in full upon maturity.

Financial Overview – Fiscal Third Quarter Ended March 30, 2024

 

 

GAAP Results ($ in millions)

 

Q3

 

Q2

 

Q3

 

Change

 

FY 2024

 

FY 2024

 

FY 2023

 

Q/Q

 

Y/Y

Net revenue

$

366.5

 

 

$

366.8

 

 

$

383.4

 

 

(0.1

)%

 

(4.4

)%

GAAP gross margin

 

16.2

%

 

 

17.4

%

 

 

29.2

%

 

(120) bps

 

(1,300) bps

GAAP operating loss

 

(31.3

)%

 

 

(28.7

)%

 

 

(13.4

)%

 

(260) bps

 

(1,790) bps

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP Results ($ in millions)

 

Q3

 

Q2

 

Q3

 

Change

 

FY 2024

 

FY 2024

 

FY 2023

 

Q/Q

 

Y/Y

Net revenue

$

366.5

 

 

$

366.8

 

 

$

383.4

 

 

(0.1

)%

 

(4.4

)%

Non-GAAP gross margin

 

32.6

%

 

 

32.6

%

 

 

40.8

%

 

— bps

 

(820) bps

Non-GAAP operating margin

 

4.1

%

 

 

3.5

%

 

 

13.4

%

 

60 bps

 

(930) bps

 

Net Revenue by Segment ($ in millions)

 

Q3

 

% of

 

Q2

 

Q3

 

Change

 

FY 2024

 

Net Revenue

 

FY 2024

 

FY 2023 (1)

 

Q/Q

 

Y/Y

Cloud & Networking

$

313.8

 

85.6

%

 

$

286.7

 

$

293.0

 

9.5

%

 

7.1

%

Industrial Tech

 

52.7

 

14.4

%

 

 

80.1

 

 

90.4

 

(34.2

)%

 

(41.7

)%

Total

$

366.5

 

100.0

%

 

$

366.8

 

$

383.4

 

(0.1

)%

 

(4.4

)%

 

(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 fourth quarter 2024:

  • Net revenue in the range of $290 million to $315 million
  • Non-GAAP operating margin of (3.0%) to 1.0%
  • Non-GAAP diluted earnings per share of ($0.05) to $0.10

These projections also exclude certain unusual expenses, including factory under-absorption, due to factory consolidations and transitions, restructuring, other synergy attainment and integration activities, and inventory reduction activities, related to prior acquisitions and the COVID-19 pandemic. These expenses are related to one-time events, and we expect these will decline over the coming quarters. These expenses for our third fiscal quarter can be found in our GAAP to non-GAAP reconciliation tables.

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, May 6, 2024, at 2:00 pm PT / 5:00 pm ET to discuss its fiscal third 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 840104. 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 future revenue and 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 cloud photonics and imaging and sensing markets; (h) the risk that our markets will not grow or develop as expected or that our strategies and ability to compete in those markets are not successful, (i) the risk that Lumentum’s financing or operating strategies will not be successful; (j) risks that the acquisition of Cloud Light disrupts our current plans and operations; (k) failure to successfully integrate Cloud Light into our business or that we will not achieve the expected benefits, and (l) 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 December 30, 2023 filed with the Securities and Exchange Commission and the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended March 30, 2024 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.

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

 

Nine Months Ended

 

March 30, 2024

 

April 1, 2023

 

March 30, 2024

 

April 1, 2023

Net revenue

$

366.5

 

 

$

383.4

 

 

$

1,050.9

 

 

$

1,396.2

 

Cost of sales

 

284.7

 

 

 

252.7

 

 

 

788.9

 

 

 

850.4

 

Amortization of acquired developed intangibles

 

22.3

 

 

 

18.7

 

 

 

61.8

 

 

 

66.4

 

Gross profit

 

59.5

 

 

 

112.0

 

 

 

200.2

 

 

 

479.4

 

Operating expenses:

 

 

 

 

 

 

 

Research and development

 

77.2

 

 

 

85.4

 

 

 

229.0

 

 

 

233.9

 

Selling, general and administrative

 

77.7

 

 

 

76.4

 

 

 

235.8

 

 

 

280.5

 

Restructuring and related charges

 

19.2

 

 

 

1.6

 

 

 

36.0

 

 

 

24.8

 

Total operating expenses

 

174.1

 

 

 

163.4

 

 

 

500.8

 

 

 

539.2

 

Loss from operations

 

(114.6

)

 

 

(51.4

)

 

 

(300.6

)

 

 

(59.8

)

Interest expense

 

(9.0

)

 

 

(8.7

)

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