Lumentum Holdings Inc Q4 2025 Earnings Call Transcript

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

Question: Simon Leopold - Raymond James - Analyst : Thanks for taking the question. First one, I wanted to talk a little bit about the OCS award. My recollection is that you previously suggested you'd see first revenue in the December quarter. So this is two quarters earlier than what we're thinking and we're thinking one customer, not two. So I, I'd love to get an update of how to think about the trajectory. In that should we be envisioning a very gradual ramp? How should we think about the trajectory and the potential of this new product category? Thank you.

Question: Simon Leopold - Raymond James - Analyst : Thanks. And then as a follow up, wanted to check in on the CPO opportunity as well. So that sounds like it's progressing. Last we spoke, it sounded like you were the only approved supplier in the ecosystem for the high-powered laser. Wondering how you're thinking about your position in that market in terms of quantifying as well as your ability to remain a sole source supplier. How's the competitive landscape? Thank you.

Question: Tom O'Malley - Barclays - Analyst : Hey guys. Thanks. Hey guys, thanks for taking my question. So it sounds like the trajectory to the $600 million is moving a little bit forward to the fourth fiscal quarter. Maybe you could walk through the contributions to the $600 million. In the quarter, EMLs were a bit better, but modules were also good as well. Maybe walk through the moving parts of where you see the upside to get you to that $600 million.

Question: Tom O'Malley - Barclays - Analyst : Helpful and then I kind of wanted to address a little bit of an off top. I do. So I just wanted to address a press release that came out in the last week. So Apple is talking about investment in the US, and there was a press release specifically out with one of your competitors with their lasers out of a US manufacturing site. Traditionally, you guys have always been kind of first to innovate there. I was curious, do you guys see a future in which that type of business becomes more significant for you, or do you think that this is an announcement that kind of is talking about existing infrastructure that's in place versus new opportunities that are kind of burgeoning? Thank you.

Question: Samik Chatterjee - JPMorgan - Analyst : Yeah. Hi, thanks for taking my questions and congrats on the results here. Maybe for my first one, Michael, if I can press you a bit on the timing of the $600 million revenue guide here for fiscal 2Q '26 because, you did have a strong sort of $50 million plus quarter over quarter increase into the June quarter and now you're guiding it for September to like a 40 million increase at the midpoint, 40 million or more. And I'm just wondering, given your comments about acceleration in terms of data com chips with more capacity coming on and there's the cloud line business as well accelerating into December and March, is there any other part of the business that necessarily slows down to sort of push that timeline to the June quarter, or is there a potential of achieving that target in the March quarter itself, kind of a follow up?

Question: Samik Chatterjee - JPMorgan - Analyst : Got it. And for my follow up. Yeah, yes, please, and, my follow up was really on sort of any thoughts you have on the semiconductor tariffs or section 232 investigation, whatever you want to call it, and in relation to sort of speculation around 100% tariffs on semiconductors given your fabs in Japan. And I did see you made an announcement of additional investment here in the US advanced optics and how you're thinking about the likelihood of being exempted from any potential tariffs on the semiconductor side given your location of fabs any thoughts on that would be useful. Thank you.

Question: Blayne Curtis - Jefferies - Analyst : Hi Ezrawina, I'm for Blayne. Thanks for taking my question. I guess a two parter instead of a follow up, but first you talked about a big 200g EML order in December, and then also discussed that you're going to see a big ramp next year in 100G and 200g. Can you talk a little bit about what you're seeing timing wise between the two of those in that transition? And then the follow up question is kind of your lead times and visibility into both demand in those ramps and kind of inventory for both of those.

Question: Blayne Curtis - Jefferies - Analyst : Yeah, thank you, Michael. Yeah, definitely, I think it's really important to keep in mind that there's no transition, down and up kind of situation is, it's layered on top of. So, 80gig is running very strong. Most hydro scalers are still on the 800G platform and for probably the next couple of years at a minimum. 1.60 just getting started. So it's really additive to our revenue going forward and then our visibility into the future business actually is really good. We have, six to nine months of visibility, not longer and then in the general consensus, what we can see in the market is that we are in a supply, constraint, situation. And therefore, we would anticipate the basic demand will continue to be very strong and will continue to see very good visibility, going forward. And of course, given that situation, inventory is very low and, we're basically shipping everything that we can make and try to keep our customers, satisfied, for their deployment. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 12, 2025 / 9:00PM, LITE.OQ - Q4 2025 Lumentum Holdings Inc Earnings Call

Question: Blayne Curtis - Jefferies - Analyst : No, that was it. As my two.

Question: Meta Marshall - Morgan Stanley - Analyst : Great thanks. Apologies for the background noise. Just a couple of questions for me and I'll, say them both at once. Just in terms of kind of the, you had a lead customer on the transceiver side. You clearly talked about kind of supplying the additional two customers this order. Just how should we think about kind of the ramp of additional customers, just given kind of how strong the demand the customer one has been? And then maybe just as a second question, particularly strong, gross margins this quarter, just trying to get a sense of like directionally is that more mixed, is it more yield improvement just how to kind of think about, kind of capacity for that to increase further.

Question: Ryan Koontz - Needham & Company LLC - Analyst : Great thanks. I want to ask about the telecoms side of the world obviously ZR is the main driver there. I wonder if you have any commentary on how fast you think that market's growing. Can you expand on your opportunities in that market from a component perspective and how you think about that business, over the next 12, 18 months? Thank you.

Question: Ryan Koontz - Needham & Company LLC - Analyst : Yeah. Just a quick question about transceivers and you know share for EM email designs versus, Vixel and Silicon Photonics and do you pick up any share shifts from a demand perspective going on with this migration to higher speeds, maybe due to do to the AI infrastructure? Thank you.

Question: David Vogt - UBS Equities - Analyst : Great. Thanks, guys, for taking my question. I have two questions. Thank you. So maybe, guys, can you talk about where you actually stand from an EML wafer fab capacity? I know in the past you've talked about expanding capacity but I think upwards of 40%, and I think I just heard Michael say that we're completely sold out. So where do we stand today, and how do you think that kind of plays out? And then along those lines, the second question is related. When you think about the pricing dynamics, given the limited supply of wafer chips going forward, how much should we think about that being an impact on gross margin going forward from a pricing perspective? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 12, 2025 / 9:00PM, LITE.OQ - Q4 2025 Lumentum Holdings Inc Earnings Call Obviously you need to be careful in terms of how you price, but just try to get a sense for how should we think about that as we go into fiscal '26. Thanks.

Question: David Vogt - UBS Equities - Analyst : Kathy, can I sneak one more in?

Question: David Vogt - UBS Equities - Analyst : Yeah, just on OCS, obviously it's exciting to hear about a second customer and then a third customer coming online. How should we think about sort of the arc of the profitability of that particular product offering as it expands from one hyperscale or a two to three into next year? Is this kind of a corporate average kind of product cycle and just trying to think how we should think about what the impact is in '26 and '27 from OCS?

Question: Meta Marshall - Morgan Stanley - Analyst : Great. Thanks Michael.

Question: George Notter - Wolfe Research - Analyst : Hi guys. Thanks very much. I was curious about just the capacity expansion down at the Nava facility. Any insights you can give us there on in terms of scale, capacity, new additions, would be great.

Question: George Notter - Wolfe Research - Analyst : Got it. Super. And then one other quick one, I think you mentioned at one point you were looking at doing some portfolio clean up or adjustments. Is that something that you are indeed looking at? Is there any timelines or things you might be particularly focused on there? Thanks.

Question: George Notter - Wolfe Research - Analyst : Thank you.

Question: Vivek Arya - BofA Global Research - Analyst : Thanks for taking my question. Michael, how large is the cloud module business now and how large does it need to be for your quarterly sales to get to $600 million and at that point, will it be levered to a single customer or will it have multiple customers?

Question: Vivek Arya - BofA Global Research - Analyst : Yes, thank you, Kathy. So follow up on, gross margins, Wajid, how are you thinking about gross margins heading into September and then when you do get to the $600 million quarterly run rate, do you think gross margins can get close to 40%, or is there a different mix that we should be thinking about? Thank you.

Question: Alek Valero - Loop Capital - Analyst : Yeah. Thanks guys appreciate it. I guess maybe this could be Michael and watch it just kind of sticking there. Is there is there a sort of theoretical mix of transceivers of modules relative to components that you think about as you've seen Michael the last handful of months, sort of this new model. How they come into shape, would love to get any thoughts there and recognize it could change over time, but just whatever your current thoughts are. Thanks.

Question: Alek Valero - Loop Capital - Analyst : Thank you. But I guess the quick one would be just OCS in terms of materiality. I think Michael made comments back at OFC that in some context, that it could be a noticeable product, product line. Just wanted to sort of get his context about how noticeable it could be over time. Thanks.

Question: Alek Valero - Loop Capital - Analyst : All right. Thanks so much.