Lumentum Holdings Inc. Q3 FY2023 Earnings Call

· Earnings call transcript and AI-powered summary

Quarter Overview

  • Q3 FY23 revenue was $383.4M, down 24% sequentially and down 3% year-over-year. Results landed within the range of the company’s April preannouncement.
  • Management emphasized that the company is “under-shipping end‑market demand” due to customer inventory digestion across multiple segments.
  • Sequential declines were driven primarily by Telecom & Datacom and Industrial & Consumer, with Commercial Lasers also softening.
  • Despite the near-term softness, Lumentum remains confident in mid- and long‑term demand trends driven by bandwidth growth, AI/ML data center buildouts, LiDAR adoption, and new industrial laser applications.

Key Financial Metrics

  • Q3 revenue: $383.4M (down 24.2% QoQ; down 3% YoY).
  • Non‑GAAP gross margin: 40.8% (down QoQ and YoY due to mix and lower volumes).
  • Non‑GAAP operating margin: 13.4%.
  • Non‑GAAP EPS: $0.75.
  • Cash & short‑term investments: $1.67B.
  • Inventories expected to decline by ~$40M by end of CY23.
  • CapEx to moderate over next few quarters.

Segment Performance

Telecom & Datacom
  • Revenue down 24% sequentially but up 20% YoY.
  • Main driver of decline: customer inventory digestion across multiple product categories.

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A - Alan Lowe: Operator: Good day, everyone, and welcome to the Lumentum Holdings’ Third Quarter Year 2023 Earnings Call. All participants will be in a listen-only mode. Please note, today’s event is being recorded for replay purposes. [Operator Instructions] At this time, I’d like to turn the conference call over to Kathy Ta, Vice President of Investor Relations. Ms. Ta, please go ahead. Kathy Ta: Thank you and welcome to Lumentum’s fiscal third quarter 2023 earnings call. This is Kathy Ta, Lumentum’s Vice President of Investor Relations. Joining me today are Alan Lowe, President and Chief Executive Officer; Wajid Ali, Chief Financial Officer; and Chris Coldren, Senior Vice President and Chief Strategy and Corporate Development Officer. Today’s call will include forward-looking statements, including statements regarding our expectations, regarding synergies at recent acquisitions, including NeoPhotonics, financial and operating results, macroeconomic trends, trends and expectations for our products and technology, our ad markets, market opportunities and customers, and our expected financial performance, including our guidance, as well as statements regarding our future revenues, financial model, and 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 filings. We encourage you to review our most recent filings with the SEC

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