Lumentum Holdings Inc at Morgan Stanley Technology, Media & Telecom Conference Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Meta Marshall - Morgan Stanley & Co LLC - Analyst : Lumentum has undergone a number of changes, over the past few years. How does the company look at the market opportunity and ways in which it can participate in the multiple avenues of growth, after Cloud Light, NeoPhotonics, and the AI explosion?

Question: Meta Marshall - Morgan Stanley & Co LLC - Analyst : You've mentioned a lot of opportunities, a lot of different ways in which you're participating in those opportunities. You've just had a CEO transition. Just why was this the time? And how does Mike best position you for success, as you try to ramp to all of these opportunities?

Question: Meta Marshall - Morgan Stanley & Co LLC - Analyst : All right. Got it. And we've talked about some of these opportunities ahead of you. You're ramping Cloud Light, you're ramping EMLs, you're ramping VRs, you're vertically integrating Cloud Light, in addition to just ramping the traditional industrial lasers business. Just how are you, as Chief Strategy Officer, figuring out what to focus on?

Question: Meta Marshall - Morgan Stanley & Co LLC - Analyst : Okay. And so, maybe, starting with EMLs, you noted on the fiscal Q2 call that despite these additions to capacity you're going to have throughout the year, you expected it to be in a state of capacity constraint through the end of calendar year 2025. How has the customer base expanded, here, over the past year? And just how much visibility do you have into that demand, as you invest in expanding capacity?

Question: Meta Marshall - Morgan Stanley & Co LLC - Analyst : Okay. Would you expect EML pricing to remain attractive throughout it being capacity-constrained? Or are you seeing normal contracts being put into place where: Yes, we'd like you to continue to invest in capacity but we'd like to enter into these multi-year contracts?

Question: Meta Marshall - Morgan Stanley & Co LLC - Analyst : Okay. Got it. Maybe, turning to that transceiver business on Cloud Light. You've had one late customer when you acquired the company but you've added two additional customers, who are ramping. Just what are the ramp path for these three customers? And what's the line of sight to qualifying additional customers?

Question: Meta Marshall - Morgan Stanley & Co LLC - Analyst : Got it. Given geopolitical concerns, it would be natural for customers to try to line up multiple sources. Just how do you assure that qualifications turn into meaningful volumes that justify your investment?

Question: Meta Marshall - Morgan Stanley & Co LLC - Analyst : In those cases, are they minimums or are they, like, true volumes? (multiple speakers)

Question: Meta Marshall - Morgan Stanley & Co LLC - Analyst : Got it. Today, the transceivers you sell are not vertically integrated from Cloud Light. Just when do you think or what is that timeline for when the transceivers could have more Lumentum content?

Question: Meta Marshall - Morgan Stanley & Co LLC - Analyst : You spoke about supply chain limitations around areas like CW lasers, on the fiscal Q2 call, how does that impair your ability to gain share, currently?

Question: Meta Marshall - Morgan Stanley & Co LLC - Analyst : And when do you think that CW laser constraint should clear? Is it similar timing as EMLs, where, maybe, we are constrained for most of the year?

Question: Meta Marshall - Morgan Stanley & Co LLC - Analyst : Okay. All right. We've got 16 minutes in, before we mention CPO. So just how do you think about CPO, as a threat versus an opportunity for Lumentum? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MARCH 04, 2025 / 6:45PM, LITE.OQ - Lumentum Holdings Inc at Morgan Stanley Technology, Media & Telecom Conference

Question: Meta Marshall - Morgan Stanley & Co LLC - Analyst : In terms of content that you would put into a CPO system, should we think of it as higher-dollar EMLs but you have the loss of potential transceiver revenue? Just, like, how do you, guys, think about that -- what your content was before versus what your content becomes?

Question: Meta Marshall - Morgan Stanley & Co LLC - Analyst : Got it. You talked about that incremental opportunity -- more in scale scale-up networks, because of replacing copper. Can you just give us a sense of both, in this industry, a long time -- talking about CPO, for a long time. Just how you see that timeline of, maybe, a difference between scale-up and scale-out CPO.

Question: Meta Marshall - Morgan Stanley & Co LLC - Analyst : Got it. So you've talked about how we're in the initial days of 1.6T. Just how do you see that adoption path being different for 1.6T than, maybe, what we saw with 800 gig? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MARCH 04, 2025 / 6:45PM, LITE.OQ - Lumentum Holdings Inc at Morgan Stanley Technology, Media & Telecom Conference

Question: Meta Marshall - Morgan Stanley & Co LLC - Analyst : Got it. And, then, just how do innovations like DeepSeek change how you think about either the amount of speed transitions or just overall demand?

Question: Meta Marshall - Morgan Stanley & Co LLC - Analyst : Okay. I have a ton of other questions on the rest of the business but I wanted to, maybe, open it up to questions to see if anybody had any transceiver datacom questions. Maybe, one in the back. You can just yell it and I'll repeat it. Unidentified Participant 1 (inaudible - microphone inaccessible)

Question: Meta Marshall - Morgan Stanley & Co LLC - Analyst : Okay. I can take off my tariff question, then. All right. So one of the things that caused a transition, during the quarter or fiscal Q2, was that you had shut down the NeoPhotonics fab. Just how has that influenced the timing of how you think about the ZR ramp or some of the telco business being able to capture that telco business recovery?

Question: Meta Marshall - Morgan Stanley & Co LLC - Analyst : Got it. You've had this $500 million-dollar quarterly exit run rate, exiting calendar year '25 target, as you look forward, just what are the biggest factors towards meeting or exceeding that, as well as this 40% gross margin target, longer term?

Question: Meta Marshall - Morgan Stanley & Co LLC - Analyst : Got it. Okay. And, then, maybe, just last question on the industrial tech side. You're seeing demand remain challenged, just given weaker industrial end markets. Just how are you thinking about recovery or opportunities, within this market?

Question: Meta Marshall - Morgan Stanley & Co LLC - Analyst : Great. Well, Chris, thanks so much for being here, today.