Lumentum Holdings Inc. Q2 FY2020 Earnings Call

· Earnings call transcript and AI-powered summary

Quarter Overview

  • Q2 FY2020 revenue reached 457.8 million dollars, up 2 percent sequentially and 23 percent year-over-year. Growth was primarily driven by Telecom and Datacom.
  • Record non-GAAP gross margin of 47.4 percent, up 160 basis points sequentially and 730 basis points year-over-year, driven by stronger Telecom/Datacom margins and acquisition synergies from Oclaro.
  • Non-GAAP operating margin reached a record 28.8 percent, up 150 basis points sequentially and 680 basis points year-over-year.
  • Non-GAAP EPS was 1.53 dollars per share.
  • Cash flow from operations was 162 million dollars; cash and short-term investments ended at 1.3 billion dollars.
  • Lumentum repaid its Oclaro acquisition term loan, issued 1.05 billion dollars of new convertible notes, and repurchased 200 million dollars of stock.

Business Segment Highlights

Telecom and Datacom

  • Revenue up 7 percent sequentially and 29 percent year-over-year.
  • Strong demand for coherent transmission products and high-speed EML transmitter chips for datacenters and 5G fronthaul.
  • Supply constraints affected high-end ROADMs, coherent components and modules, and laser transmitter chips.
  • Telecom transport, which had softened entering the quarter, showed strengthening demand in Q2.

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Operator: Good day, everyone. And welcome to the Lumentum Second Quarter Fiscal Year 2020 Financial Results Conference Call. As a reminder, today's call is being recorded for replay purposes through February 11, 2020. I would now like to turn the conference over to Mr. Jim Fanucchi of Darrow Associates. Mr. Fanucchi, please go ahead. Jim Fanucchi: Thank you, Sharon. Welcome everyone to Lumentum's Second Quarter Fiscal 2020 Earnings Call. This is Jim Fanucchi from Darrow Associates, assisting Lumentum with its investor relations. And joining the call today from the Company's management team, we have Alan Lowe, President and Chief Executive Officer; Wajid Ali, Chief Financial Officer and Chris Coldren, Senior Vice President of Strategy and Corporate Development. Today's call will include will include forward-looking statements, including statements regarding the markets in which we operate, including potential market sizes; market trends and our position in such markets trends and expectations for our products and technology, including product development and projected new product releases; purchasing trends and demands for our products; our expected financial performance, including our guidance, expenses, risks associated with potential disruption caused by the coronavirus, as well as statements regarding our business initiatives and the achievement of synergies following our acquisition of Oclaro. These statements are subject to risks and uncertainties that could cause actual

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