Lumentum Holdings Inc. Q3 FY2021 Earnings Call

· Earnings call transcript and AI-powered summary

Overview

  • Q3 FY2021 revenue was $419.5 million, down 12% sequentially but up 4% year-over-year.
  • Non-GAAP gross margin rose to 49.9%, up 440 basis points year-over-year due to improved product mix and lower manufacturing costs.
  • Non-GAAP operating margin was 27.9%, up 290 basis points year-over-year.
  • The company received a $217.6 million termination fee related to the Coherent transaction.
  • Lumentum announced a new $700 million share repurchase program over two years.
  • Management provided first-half FY2022 revenue expectations: approximately 5% lower than the first half of FY2021 due to near-term market headwinds.

Key Business and Market Highlights

Telecom and Datacom
  • Indium phosphide coherent components and modules: up 28% year-over-year (adjusted for the extra week).
  • Strong demand for next-generation contentionless MxN ROADMs; record sales and expanding design wins in both China and Western markets.
  • EML chip revenue grew more than 40% year-over-year; received $90 million in EML orders from cloud operators.
  • DML products significantly impacted by delays in China 5G fronthaul deployments; Q4 DML revenue expected to be down more than $20 million year-over-year.
  • Datacom mix shifting heavily toward EMLs as the market transitions from 100G to 200G/400G.

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Operator: Good day, everyone, and welcome to the Lumentum Holdings Third Quarter Fiscal Year 2021 Earnings Call. All participants will be in a listen-only mode. [Operator Instructions] Please also note today's event is being recorded. At this time, I'd like to turn the conference over to Jim Fanucchi of Darrow Associates. Sir, please go ahead. Jim Fanucchi: Thank you, operator. Welcome to Lumentum's Third Quarter Fiscal Year 2021 Earnings Call. This is Jim Fanucchi from Darrow Associates, assisting Lumentum with its Investor Relations. 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 forward-looking statements, including statements regarding the markets in which we operate and our position in such markets; the impact of COVID-19 and responsive actions thereto on our business and continuing uncertainty in this regard; trends and expectations for our products and technology; our markets, market opportunity and customers; and our expected financial performance, including our guidance as well as statements regarding our future revenues, our financial model and our margin targets. These statements are subject to risks and uncertainties that could cause actual results to differ materially from our current expectations, particularly the risk factors described in our SEC filing

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