Lumentum (LITE) 14 Aug 242024 Q4 Earnings call transcript

Good day, everyone, and welcome to the Lumentum Holdings Fourth Quarter Fiscal Year 2024 Earnings Call. [Operator Instructions]. Please also note that today's event is being recorded for replay purposes. [Operator Instructions].

At this time, I would like to turn the conference call over to Kathy Ta, Vice President of Investor Relations. Ms. ahead. go please Ta,

welcome Call. Fiscal Lumentum's This Relations. of and Year Vice Quarter XXXX Investor Earnings is to you, Fourth Lumentum's Full President Thank Kathy Ta,

Officer; Alan Financial Chief and and Chris President and Joining Corporate President Vice Officer; Lowe, Senior Chief today Executive Vice are Chief me Executive and Wajid Coldren, Development Ali, and President Strategy Officer.

model our markets our forward-looking our margin expectations regarding strategies, financial market expectations trends, our regarding for well including Today's and customers, our regarding trends demand, guidance our performance, including end statements call as statements targets. products statements, will future and technologies, including our recent financial and Cloud include opportunities, acquisitions, expected our and Light, as operating and beliefs and including macroeconomic revenues,

that We subject actual in filings most to expectations, in and particularly recent be our are to cause risk factors XX-Q differ from in uncertainties XX-K filed our described encourage SEC, with filings. factors described most the and risks our our recent could materially will statements SEC that you soon. the current particularly to the results our These review risk

website fiscal section. under not and www.lumentum.com financials Investors forward-looking the are momentum's Lumentum's supplemental beliefs Lumentum law. are financial and with XXXX Please based are expectations unless stated, this considered during that financials reasonable press otherwise for statements, to GAAP. today. statements and on projections the to are all prepared call fourth undertakes available accompanying Non-GAAP results non-GAAP. with as superior required on of update obligation a results by quarter this our applicable slides fiscal to provided and no discussed these accordance at be The as as call except also in substitute in or release note

With that, call turn over the Alan. to I'll

in orders the both the for revenue quarter. We We our and good record Kathy, midpoint everyone. and booked fourth market. in center saw -- used exceeded you, data Thank for positive networking EPS and applications of the trends datacom afternoon, chips guidance for emerging

progress made is our cloud substantial provider including in grow as AI to AI opportunities. solutions of infrastructure Lumentum a a and business significant broaden strategy customer photonic We leading data center and executing base, new module and emerging cloud our our and cloud operators providers. for

delivers comprehensive built the Our challenges in-house portfolio bottlenecks photonics that differentiated connectivity and innovative address manufacturing volume technology proven of solutions power on and critical consumption.

and X-pronged cloud our achieve AI implementing To are strategy. we a goals,

operators as are focused First, expanding center they base infrastructure AI customer data to on we higher migrate providers include and our speeds. multiple to

scaling are differentiated we executing Second, up future of and support China. data capacity road third, are And maps our Lumentum center and technologies architectures. interconnect optical module production data scaling outside of established technology generations to we component center compute for at across facilities on

like to our I in elaborate would each these progress of on areas.

Our our data first advanced leveraging proven priority center laser and connection. customer base within the high-speed optical is to capabilities expand by transmitter transceiver our market

per lane by driven valuable data well and these XXXG indium particularly the X.XT our limitations plays optics single-mode leadership the As technology differentiated speeds, the to to higher and our positions. becomes in our optics phosphide industry to shift growing speeds, transceivers customers. importance market strength. aligns technology in multi-mode lasers optical Within centers, The increasingly of to transitions with

reputation reliability volumes. for currently and XXXG performance, shipping EML record quality have are in and established transmitter industry-leading Our components strong a

us per position industry favorably capabilities technologies. adopts proven Our the XXXG as lane

ramp in deployments and in initial fiscal of a EMLs transceivers we are X.X EMLs as subsequent multiple integration key qualified up by infrastructures. range their year. wide laser later for XXXG transceiver cloud and into being a deployment We being XXXG Our this customers anticipate supplier

XXXX. shipments fiscal initial strong will fiscal we of achieved continued this EML secured volume fulfill on foresee we leading be XXXX. we Based record EMLs and bookings, throughout XXXG substantial EMLs orders momentum, throughout includes QX, working This and customers. AI XXXX for from shipments fiscal In to into

Additionally, broadening content data the photonics-based within further we our differentiated sources center market. laser transceivers, opportunity for are silicon supplying

also our developments. newest transceiver made energy on product have progress and We X.XT significant initial

We are deeply providing to engaged and after customers. product favorable received with feedback have samples multiple customers, these we

We have additional multiple actively and with award secured to a customer major X finalize working customers. with are new awards

facilities both prong The expansion critical China. This capacity manufacturing while security. transceivers for ensuring our at strategy supply established cloud second AI our optical customers' cloud optical involves supporting is expanding workloads to chain Lumentum of components outside and growing and cloud of

earlier, scaling invest next our the for least million in capacity current technologies. mentioned $XX indium infrastructure. Due growing phosphide at to fully our invested indium growing and phosphide up quarter, to the laser subscribed wafer therefore, end the fiscal lasers for to In indium XXXX, are calendar only facilities, over first our essential this of is to several critical technology, our keep have demand with in the center we expect and already of we demand can indium data to enabling meet fab we continue quarters by capacity. these demand As phosphide phosphide overwhelming capacity

mitigate Although the of these additions constraints. our time, industry indium capacity faces will lasers, a phosphide shortage broad over help

of allocation will XXXX. least However, at calendar output remain that through we anticipate end the our production on

engagements strong our we to over of next the in demand. in Our up significant expansion multiple infrastructure keep hyperscale current as AI optical capacity facility phases this scheduled and on operators expect operations our additional XX the Based months to customers, complete planned the with manufacturing Thailand capacity cloud expansion with production line progressing with start first is quarter. transceivers for to expected

focuses enhanced third of increased challenges both evolving address data strategy scaling, delivering center and prong encompassing differentiated the on of our link the efficiency. technologies data capacity cloud Finally, to energy

breakthrough maps. are and cloud road with technologies We infrastructure customers deliver that support collaborating will to actively AI leading-edge multiyear

of a Optical us switching, AI component for presents cloud Lumentum. future a critical opportunity architectures and networking significant at

flexibility advantages offer development latency, products switch power and reduced bandwidth, in in efficiency, increased optical agility. Our

customers units and have been overwhelmingly We evaluation feedback has positive. initial multiple the shipped to

enabling area Another technology high-density, future low-power key optical transition for to links is generations. the

infrastructure Our considerable have developing ultra and optical technologies cloud customers, high-density AI from high-power interconnects. laser attracted interest

delivering of high-performance, in this high-volume position emerging us production heritage favorably environment for Our market. lasers high-reliability

are we to per beyond speeds such on Lastly, the the lane focused per XXXG lane XXXG as generation. shift enabling

photonic capabilities phosphide indium to essential years applications honed experience and high-performance are advanced integrated of future through center circuit demand. Our data in telecom and meeting

customer of development these the long-term technologies years deployment and few collaboration. away, are While products early is a and requiring close investment these

their engaged together, are are with actively customers of the We future teams we R&D shaping optical technology. and and

fiscal product and fourth Now revenue let additional move highlights. quarter me to

sequentially with our year-over-year. XX% revenue Networking As had and segment Cloud XX% challenging expected, a quarter, declining

laser products increase as quarter trends are tunable business. we for with by shipments anticipate telecom narrow used wins, market in in modules data the line overall interconnect and a this soft part share was saw years. for an XXX encouraged ZR emerging While in ZR+ this for position the we in coming lasers We maintaining for our in and our demand within of fiscal applications expected, With leading positive several ZR center design components applications. year

still and is to signs traditional in continued are with industry the there improvement our brought Recent normalization. by next-generation customer indications have customer market. of recent coherent newest of demand encouraged While we transmission networking leading-edge inventory challenges, products, increased weeks transport lingering along inventory

for L-band ROADM leading-edge early our products. demand customer are ROADM growth. XXX high for driven gigabaud coherent spectral fueled gigabaud products. demand advanced increased XXX and showing This bandwidth coherent products by and this, solutions encouraging with excellent port and is trends seeing In continued growing integrated promise with Consistent we transmission, efficiency C+ demand is demand capacity count traction for by with demand

technology and for years. Our us broad continued important differentiated set the products manufacturing and in capabilities wins in of these leadership design position coming

cloud our fiscal networking expect improvement and in show We sequential business QX.

Industrial to Tech segment. move me let Now our

growing their end for X% -- such femtosecond precise levels extremely rapidly due transition as these displays, segment possibilities without market Industrial is inventory. customer expected. higher processing developing increased in and packaging. laser new more revenue address opening declined short to others -- advanced sequentially Our as we sensitive innovative semiconductors, face on driving Like offered to demand heat The lasers but this growing that the damage, year-over-year laser to with from space, significant demand Industrial and high chip to products continue focus In challenges industrial we and of a Tech, picosecond Tech in continue applications. XX% material precision applications weak

by and turn These growth support AI. computing. immense demands driven computational are of packaging innovative AI the semiconductor in areas of to in market The significant advancements high-performance technologies requires

lasers semiconductor ultrafast actively with leading and advanced packaging. manufacturers semiconductor for develop equipment are interposer We to collaborating

In the demo units FemtoBlade high both advanced fourth delivered equally and applications. low quarter, for power display also we

in and adjustments XD to weak Tech sequentially ongoing down end with inventory modest QX, revenue. seasonal a increase and demand customer Industrial we be Looking expect to due continued sensing to fiscal market

business. To grow We production executing summarize, meet help our significant for have capacity customer made additional us strategy cloud in booked orders in record chips demand. datacom to we to progress and investing our

made a have transceiver with multiple with including transceiver new progress We securing customer major optical engagements, new high-speed X excellent customer. award

awards actively additional new from other customers. are working secure to We

quarterly Our We and This highlighted to in networking into XXXX robust earnings the XXXX. pipeline of we growth of $XXX the continued reinforce the confidence calendar call. trends last end grow our and our revenue XXXX. traditional cloud on engagements is customer improving market by significant million foresee to in target

the business elevate that multibillion-dollar We and to AI are run we annual in our executing opportunities coming years. cloud on new cloud will rate a expect

Before for and call I worldwide to all over turning customers express unwavering employees and the focus, to sincere their want to my collaborative Wajid, spirit. our gratitude dedication

Wajid? that, With

non-GAAP net of $XXX.X GAAP acquired ranges. by of a driven tax loss loss margin guidance related EPS and amortization quarter large of net a was midpoint Alan. Thank above sets. intangibles valuation GAAP for was quarter our $X.XX the GAAP XX.X%, loss and with share operating per allowance you, and GAAP portion Fourth XX.X%. primarily of fourth $X.XX to restructuring charges, certain were the diluted was million the revenue of gross

calculation the assets deferred need determined of record the sheet tax company's Due determine allowances allowance to the of on backward-looking recent company requirement losses The assets. balance its a period. company a most frac valuation the fiscal for historical on to million to of valuation as the the to $XXX.X the GAAP and U.S.

asset. we Given in position in the to the this we and related expectations business use the opportunities ahead and a growth will Alan the future, be highlighted, allowance release believe

AI customer believe partners new meet in-house our our can significant and ASICs To significant ASICs, opportunities, and programs. customer new RFICs. accelerate of from to we increase exposure R&D investments third-party towards programs AI development needs stop to DSPs reallocating cloud including decided using coherent certain while in we communications that We spending

As restructuring assets. intangible development including we recorded of million of this result a $XX.X and research in million related a and in-process charges write-off $XX.X decision, QX, of

future In quarters, laser non-GAAP our down anticipate as margin shipments. was to Fourth increase gross sequentially non-GAAP outlook, in improves company which an results. gross and we XX.X%, sequentially utilization an revenue. increase telecom well Turning manufacturing was due on as year-on-year datacom will to quarter improved margin as lower

Fourth quarter was non-GAAP expenses of quarter expense and of $X.X on operating Alan lower of decrease or earlier. was strong the million Fourth operating operating X.X%, and quarter sequentially $X.X $XXX increased spoke The which million. despite adjusted from down down quarter $XX.X year that EBITDA from the Fourth and the loss lower revenue, traction datacom spending loss transceivers achieved was million in on non-GAAP third given revenue. our was was QX R&D ago customer million, million quarter. a XX.X% $X.X non-GAAP operating totaled year-on-year

income was non-GAAP non-GAAP $XX.X $X.XX. other non-GAAP was non-GAAP by investments. income on diluted QX expense expense cash interest was million Interest million. $XX.X on and SG&A our R&D driven $X.X earned a $X net net share per and was quarter Fourth Non-GAAP income basis, was and million. million

the share a million quarter for diluted on fourth basis. was fully non-GAAP Our count shares XX.X

to XX.X%. revenue was results. fiscal XX.X% Fiscal 'XX. XX.X% for loss diluted GAAP Turning was GAAP fiscal billion, the was gross per was which was full operating share 'XX $X.XX and from GAAP down margin net $X.XX. year loss net 'XX

X.X%, down Fiscal non-GAAP demand fiscal due year fiscal utilization. margin. operating year 'XX 'XX which due non-GAAP and 'XX to adjusted Fiscal operating lower million $XXX.X million. was down and income from to overall gross lower EBITDA margin fiscal relative $XX.X margin to 'XX was non-GAAP Full 'XX factory gross was was was XX%,

count on Non-GAAP For was fiscal per and diluted million net was XX.X million income non-GAAP income $XX.X was shares. share $X.XX. fully diluted share basis 'XX, non-GAAP a net our

Turning to balance the sheet.

to a overall cash and achieved increase fourth million as by increased primarily $XXX $XX to sequential our Lumentum's due million. the quarter, capital $XX million short-term performance inventory This During working levels. investments reduction was improved in we

our by QX, $XX In additions CapEx, we site. transceiver at capacity in primarily invested Thailand million driven manufacturing high-speed

we're in beyond, eventually in the X.XT 'XX and for anticipate demand move and support X.XT on capital expenditures capabilities As fiscal to We level transceivers. through high-speed we capacity of transceiver in focused anticipated proactively components. to and datacom expanding and 'XX meet an elevated our XXXG high-speed surge fiscal Thailand transceivers

segment and Networking and revenue decreased segment cloud to decreased quarter million Cloud segment XX.X% at and Fourth at decreased year-on-year. Turning XX.X% year-on-year. sequentially sequentially and XX.X% networking details. $XXX.X decreased profit

Our Industrial Industrial segment sequentially segment X.X% Year-on-year down Tech million quarter Tech fourth $XX.X declined. and sequentially. quarter was at Fourth profit loss segment year-on-year. X.X% up improved revenue XX.X% of

let me which on as guidance move and to basis is for is Now of non-GAAP based quarter our 'XX on first our a of the assumptions fiscal today.

to an to due and improvement driven telecom demand of sequentially, year-over-year forecast growth following QX million XXXX. 'XX offset in tech cloud to be revenue revenue sequentially shipments in quarter and million. the of net assumptions: seasonality. networking to fiscal by we of laser to industrial revenue networking uptick typical industrial $XXX approximately midpoint, show for $XXX by the with first includes the primarily compared QX fiscal flat when range expect We to decreased be XD At to be sensing This the a in expect modest and up

Based the per income we in be first $X.XX. project range margin to non-GAAP net in share the on quarter to be and of X% operating to X% this, $X.XX to of diluted range

of non-GAAP EPS projections based of on share non-GAAP rate first Our effective XX.X for quarter assume million These is tax an approximate guidance shares. a count also XX.X%. annual

EPS and approximately previously non-GAAP $X.XX Mainly our methodology. presentation. excluded guidance our this from QX periods capacity abnormal to non-GAAP change certain our from were presentation in compared includes excess those QX in relate our expenses with were guidance that This prior note, results. excluded that prior by Please reduces presentation

of QX For impact guidance to non-GAAP the EPS includes $X.XX new of presentation. the clarity, our $X.XX

start call the turn I'll session. to that, Q&A the to back With Kathy

everyone Wajid. question and you, X an Thank To to to X ask questions, follow-up. opportunity allow please keep

Q&A the session. let's Now begin

[Operator Instructions].

The first line Chatterjee question Samik of is JPMorgan. from with the

I'll questions both goal. my of ask the at same

And one of talk customer of at more opportunity new mentioned the how business thinking web the about customer? So of run the just relation of customer, you didn't about magnitude think QX, the Can relative to the for I in announcement to first really you any I the the prepared follow-up, a type my of sort of you are QX us the datacom guess side. to terms give relation a we your to Or whether bit module scale? guidance sequential telecom. in of on I hear think rate your color And about type sort that this was time. remarks. in how in you should you growth highlighted the in the it's

between what also in and QX us datacom help QX So about sequentially, if business going to the just think not and you Datacom can in then -- between because and how QX revenue decline the is it's if sequential driving QX.

type used big. say want our customer, too that imagine, I rate say and don't -- can major so will the it I to to Samik. earn we what think how given but we I'd we much as Yes. we big, well you on would business of earn customer, comment comes much from our wise, as so Thanks, execution. word we down run

with first I as line good so prepared far, quarter and and beginning to this part first And in out production so ready ramp shipping our calendar happening so, said we're we'll of a early And in start. remarks, qualifications be units off the XXXX. quarter, operation in Thailand, of this is

past. said with in consistent we've So the what

variable, with performance far really going and run delivery. we given that's comparison have it, be we and to execute very earn quality rate stuff, to have as good to well to So as and

said So I that, as we've on more and could award the have certainly hesitate the on customer a bigger. certainly, consumes to if but big, comment lot not gotten that we certainly be

-- question second go ahead. sorry the On

[indiscernible]. the on was I

not converse we We're was seen we've some improvements say Yes. in Telecom. to out going Data What telecom. did break

we're quarter-on-quarter. product in a expect that earnings said that's the in call, can transition. to you So last we And going grow as

QX the numbers so depressed, to And QX, and that's fruition. so coming are

in quarter. to pick our that second up expect We fiscal then

& from The is next Needham Alex Company. question Henderson with

could in year about stream and available you quarter the that business cadence they say, as capacity what those give well coming Light. should chips hoping look what My the that I that capacity on of flattish at months understanding terms should look the transceiver of So the versus you both calendar ramp like, us the was X be is of capacity ramping December out you of Can and the that half of in talk timing plans in any starting Cloud first quarter, now business as be might fairly 'XX. coming new on sense and business June like kind ago? in

Yes.

As our invested for prepared fab bookings record we remarks, said the in address our and $XX to capacity already that. this again in quarter million we chip business, we had

time for but incremental so the 'XX that the half given et relatively cycle And see calendar it fixed in right, of online, where time the we fab, takes first in to come should you're but the term, -- of short cetera. capacity it's

chip in need we CapEx, or less monthly the to evaluate order I'd off. in meet and say more So fact, hold or if we all on business,

too trying increasing have customers the to the without that And much our we capacity capacity cost put are fixed idle to make that sure so and it have that's business. our we're when the need that discipline into process we don't the

have shipments qualifications out 'XX the in first said really And growing of is done the have ramp-up the when about calendar we'll quarter been starts end samples. quarter we there. of line quarter, our calendar XXXX why the up But by we calendar confidence the that's through achieving million customers capacity the shipping be 'XX. in Thailand that we'll our get until volume said as But side, before, transceiver $XXX initial the per Thailand so and that this On won't any wise. of I

you question. Alex. have Thanks, a follow-up Did

are component the on level or the capacity down what OEMs. think -- telecom customers, I'm seeing is a going in? bit the a at inventories demand areas And you're to the high Yes, do little talk that come in the you're that are September seeing? side. telecom you out space just you of fast the surprised that how the that the the about that given follow-up recovering inventories little a Can quarter, is product based on that

Yes.

inventory Alex. right, products. still I year customers in years these strength beyond. products ago weren't or buildup ago shipping There no is You're and we've so in X say our the pandemic during a there's inventory of and therefore, that seen we

demand So the XXX components year XXX as are our then gigabaud, OEM coherent in strong And weren't seeing gigabaud just coherent we differentiated high and components, shipping count our new starting today. are integrated products a new port the that well as C+ ago WSS.

what of kind seeing. that's we're So

the We seeing lot a ] them business [ that campus data within as apart is has further interconnect narrow longer lasers modulator the of off strength think are given no -- centers of with burned data center place the connect can having people and requirement. are I a in line to power because the inventory

say we're what that's in general seeing the in strength in So telecom. I'd

products. clarity. new appreciate products to the [indiscernible] opposed I as older

Leopold from Raymond James. is Simon The question next with

with the old it line. XXX Any give is products could and there? or color some associated wanted I guessing new you these more First little not product wondering maybe I single whether than the datacom think a ask more But to be I'm award, specifically, would color there's a products. to bit gig, one, us on if

business want about quarter, And originally decline. to you June a $XX talked as had also I on Telus the a sequential your understand million in follow-up,

run I'm June think of we of, getting And trying sort are to quarter? recovery, before growth occur? about so to a close understanding the did back rate sequential September? the better the that How get And when prior in we

Simon. Thanks, Yes.

but technology. said, deal products I specific want customers, that designing I say much I'd old As people aren't comment right, with too don't to about you're to new

very, very to develop to to is and confident So and in single-mode this transceiver qualify ability XXX gig leading-edge this customer. our we the that for feel ship

question, June the do The that On coming Chris, revenue the June that telecom want in quarter one? down, for you telecom. happened to take

telecom, Your right? question Simon? was

still of Yes. you Yes. well, from go used a I wanted you you to distance and be. XX big sort up go where Yes. understand if to up X, that's

that telecom don't the I I know specifics. up datacom we say strength. as telecom and would said, is business the Yes. the from mostly

And QX. period the before, QX we our happening grow to expect and we business, for said that is QX, datacom and transceiver in so as transition

of from growth coming a datacom in telecom from the So quarter. the really telecom bounced most June in is and point back

is question George from next Notter Jefferies. with The

an transceiver. curious you guys have on if Just single-mode XXX NVIDIA this qualification gig

the Yes, most as we're customer comment products George. are with would not don't is, I going I before, us have. working say to who that, customers they said on on already

instance, for transceivers X.X this customers there's are that. quarter terabit so designing would we and good. quite consuming And that be few and sampling is on leaders plan a We performance X.XT the so

so not what we're to specifically can that. customer. individual And from you about you speak But want any going imply

Got it.

I you're Or then not framework this or given transceiver you second on say said, I'd minimum I you being a certain this And can was in source, market guess, Anything there volumes any or more love that details is third about are or provide. based by curious customer? this just whether relationship of arrangement? you something share can minimum contractor Okay. customer, source first terms

And new down right? ability product, it a so Well, is to our comes to execute. this

and manufacturing should earn we share China. I so tariffs the company will combination headquartered the certainly shipping U.S. the as Thailand, what there's we think ability of when competitive be to of fear execute. out next And the or of happens election impact I And say, in earn in more share,

amount there. very going execute down our lot well So good in capture how it will positioned a of favor. of then to a come we well I And think we've share things think ramp. I we're significant to the got And

Morgan from line with of the Meta is question Marshall Stanley. next The

if answer here, Thanks. get worth it's don't I but ask. an know an Great. I'll

million just capacity we of you run kind $XXX mentioned kind the exiting transceivers should of You've and about rate exiting fiscal calendar 'XX. 'XX. chips have how think between quarterly But would the datacom

then just your kind second design their Has today lead kind a with changed patterns customer of as the shift calendar maybe of on exit anything 'XX. of And we and ramp kind there. of question transceivers

Yes. I'd adding capacity. say the chips

We and chip are more see orders We market adding next why, months. capacity. the we should And -- above in growth think significant output have over we our growth are I XX that's than that.

So it's really add improve chips. constrained and lane XXX per to by our yields gig ability to capacity, transition then

And experience XXX shift so to -- would there's I as pickup that gig well. per per XXX say should ship revenue the chip that from in, gig in as a we kicks

On through, the to as monthly and what and put much that. it's things with is the before, capacity awards place we I based on meetings in where like capital determine and how traction going qualifications we're said transceivers, and customers

about the infrastructure we in to the So facilities overall million well we're over for I'm in place talking sure support the revenue. in put $XXX place, what making certainly quarter per

So it to win comes I with. think and the for market each to share execution we're ability our mine and down customer working share

QX, about said happening and and in QX quarter. was in in the as far before, customer, revenue But had transitions customers. to want pickup don't lead really talk what a reiterate December then we just I'd As expect in I the I specifics which product datacom

Tom with from Barclays. is question O'Malley The next

clarification with wanted A, a customer. award. get I the major new transceiver on new just the to

and you and me explain an the versus kind a that Thailand with you in can facility I'm of award me difference as wrong, would out QX, just, that a to qualification And QX. what just the be of the versus think correct Thailand I I also win calendar I qualification facility. because So you wouldn't ready defined believe happen would until you be said it said if

imagine will to in is you just because award you what actually it's frame product what hard that time can And is qualified it's product an would have qualified. is talk the about until revenue the launch? versus for getting if So qualified a that that, something QX,

I'm So time am laying I mistake a the in that making here frame out?

Well, plan I'd operational accurate. correction, to we build Thailand you're in ship production our line say and for just the quarter, is a generally quarter product and this qualification. first this

Now work months takes to done. them get the qualification it

it's not done, your And until so it's done to absolutely. point,

Now to volumes talking support we're capital in ability confident be we're to they're staging our to about. perform. material because able We're staging the

down I'd from really perspective, performing. gets So us that to it say,

doesn't not a Now going that if doesn't to the work. product buy work, they're product

So you're right.

We have to be qualified.

have and to We are the ability is important and the can have to for control, we're is what to have the the the design, and quality, us. this have who -- sure product controlling critically capacity quality we that which making we we materials support customer

qualified, would or under? Because customers? Like from would work a what R&D like this -- So an award not them? are hyperscale future kind I you customer, potential an guess if what you're be potential what fall to other kind the sounds committing of isn't versus kind difference be follow-up is other the between just more different would of it on all development of with capital award and you're doing which

to these of right? and X have want they has been don't customers So they suppliers, select us. with I the really. each engineering work their down have that ones mean to Not time chosen with to

for And develop we something as awarded we customers. we're that the us earn it's as with business so a to anything that have and we're they've person that says made, not and choice the to sure. for only have perform it But we given they've that

out working I've customer. than with can different you just it's suppliers chosen that say I'd the of I choose. the So

And again, for multiple manufacturing. reasons, proven technology, proven China vertical outside integration, U.S. of headquartered

us, which customer and the reasons Thailand, us, to confidence in chose to of we So is execute. perform out this of just there's now able to I that a be but lot have new team have to

is with Stifel. question Ruben next from The Roy

terabit on back changes of of wondering was into X.X about could you're timing on of next talked about sort I timing. sort ramps. you XX days how this But a ago, we Alan, perhaps any if little bit year. comment of thinking half year,

come to and in on of I ramping think availability switch dependence there's a some customers limited number XXXX.

helpful. any about So you're that be on how would thinking detail

Yes.

I think control, this can samples quality, our we high-performing what high customer providing is with is quarter which really X.X transceivers. high controlling focus reliability,

have this works working we're very that hand few And interested designs look gig. customers we you would say, so be And that are today get to to promising. most in XXX still the in multiple working with, the as because in hand

our we have ready go. When we're need the issue customers whether is that's going will And ready say want to a said, to when transceivers to they be shipping switch or focus. we So unless go. not there's be other everything silicon it, that issues, But it.

so that's with get on it to designs multiple done. And we're why multiple have and now working that customers working

And Yes, comment the around quick detail expectations sort If Wajid, as can for fiscal for on lasers ramp year-end? you thinking and about progression follow-up then for any get just record on how that continue a of listening your to a of margin sets follow-up into through give gross the margin quick into Wajid. more you 'XX. gross us

the mentioned giving factories gross manufacturing prepared Yes. telecom new into an as Thanks, certainly giving Ruben. us multiple fiscal outlook, the a Yes, both tailwind utilization improved on in is across remarks, our of benefit better so year. margins we moving or us

tailwind larger of chip Alan that, going for then talked XXXG provide it's the the that into datacom to being a you a tailwind over a given Along backlog will is that record that mix us. as part that EMLs and give about also with shipments transition also us fulfilling business, know,

quarters progress that So shipments will those happen. as through the

is America. Arya with Bank of Vivek from next The question

landmark the assumptions telco this for that to end need to get towards telco $XXX the making in does calendar in are $XXX So your to that to getting million, part year? add be i.e., path as of million, by next what recovery business of you what

we're recovering back telecom. that think need don't much We counting pandemic doesn't on that because It -- I growth overstated not in was to levels shipments.

And for so than in the certainly, because for probably that, the higher is June point I low telecom were think, shipments. we quarter us

And EML X of to in get that's XXXX some that in datacom, to calendar to Most kick should transition is improvement XXXX, switching So by from X but optical throughout able all not we as well really huge $XXX gig it or be million. wins. expect optical telecom. growth as need we calendar to chips XXX transceiver coming

right. All

you the could on of visibility how from substitutable your allocate do will the would to different be the transceiver accelerator specific or potentially think For share some better switch suppliers? your you my think share, suited how that are What's How be next -- customer what the know our right? products products for side, you follow-up year? level do combination? Like going

Yes.

performance I comes the supply. security think down it of and to

outside of employees know but again, our having outside lot an we of partners thousands And there with are our moving to China, engineers. so and chips who footprint back And buy manufacturing established of of have a China. I good

a think plan lot. to product to So to earn we credibility I -- back Thailand have in we going of going And we share. to we're gets I to in be earn, high-quality site how questions ramp and where and going, lot earn to that up a get, able get are our think we much it these what are

and when to I So high-quality need materials provide and drive need make earn down it capacity people to their to and the being the think able the business. comes the we what sure and engineers it they be have and able they to product

the and to but interoperability, switch work to sure there the with is we specs and make there are pretty providers have Now clear. is, various consistent

able as know do to be what interrupt needed. we So to to we need

Karl is The with Paribas. from BNP Ackerman next question

you. Yes. Thank

in address least off, pause for in-house Is I consider? at seeing coherent market? factors DCI could Or why are related you're limited you any other gig First stopping the DSPs? for are applications? to optics uptake demand you that broadly, coherent guess, development of to you as question, in discuss that access coherent XXX And there

fixed to we a say can we Yes, that we R&D amount faster. of make growing a shifting we're difference spend, and where are into have markets that I'd can big

the of so combination And that.

us and that to a that's our overall parties independent So of ability to as a adding third-party combination the of allows to third as from ownership developing more cost get from we than chip an we at what datacom partnering the get less business, transceiver with we're think manufacturers customers need that X-nanometer both well DSP.

from perspective, But interconnect we at market. said, on data to spending in will the the center able that to inside pay be pay DSPs dividends. DSPs I and to data from spending have competitive ability to pivoting believe, off markets center the that like confidence address higher-growth believe I our secure prices, So on

Operator, we next can question, please? we take our

Loop next question Absolutely. The Baruah is with Ananda Capital. from

are of talking the have call Congrats progress. doing just ahead you follow going guess to kind sort way OFC, Alan, it in began there's the But a about I quarter, And I are talked And as on I with new I win about, on this then the of here. maybe language you just clarification calls just around mostly that as tracking one I take some guys shipping data beginning it, was center talk the that Tom back recall here. the that to some the year. the you're know of think, category. dynamics about, at to place

it activity? that ask be helpful. just of would me Are let That just some tracking ahead call you way. of So the

Yes. a to out done Thanks, equipped We've We now clean We've on that to Thailand Ananda. in it. I'd say qualification ready building we're room. facility. had schedule. start We're right tracking our units. pinch

And that's into to until track. this will right be It allow time frame. qualification year. January late production say, won't ramp I done on as us the calendar the so And

So our that's with what year. and plan thought track I at has right had least at on discussed internal been we earlier this OFC what

Capital Savageaux Markets. The next Tim from is Northland question with

tripling plane a doubling, don't relative EMLs. phosphide mentioned different mean, got I the you. have extent of capacity couple indium you you at I of you've Or what focus you are know, capacity Maybe over, there addition from capacity the want on or us to you're in back capacity, the year? quantify what to next now, perspectives. I can

current relative question module rate to on side. same really the And your run

this think it's add to was Thailand over time that? quarter fluid are to in to relative with expected a come down what it looking transition of sounds there And But capacity I sort frame? like that situation. the product you what

I equipment growing, fiscal market to easy the this expected is of faster earlier, grow today to as or to XX% planning there market the a on this one is has year. XX% say the growing because be I'd this Sure. But for we're much growing and calendar it said is than year, capacity difference make year. to

a the take quarter. not distract to the quarter XX% feasible. would I'd probably lot effort next try just something limit. team we and of from the lot of double That June if to it's that So would capital in side, the a think north not can chip June and say you of of on it's XX months,

run of that year. thing ready. at And And said cheaper to then transceivers, will production rapidly. of in with can say, And rate equipment as that's we capacity We're to fruition. to of year for are, in where first Like next part ready putting shell that large into be as kind of sure place clean you much more the on come go the were the needs we're in capacity putting the rooms I as happen. when we in this talked made ramp early we we we put from to about down we have then this end we're quarter. in opportunities construction before, And the

more going the dollars. it's dollars in the we're say in go we've XX x certainly, on to next able than Xx to to the from of done But X what do to hesitate months. I we're past, transceivers, to So Xx

effectively incremental? in shutting you as it follow-up, a here. maintaining capacity Got down would that I Understood. want it. And And Thailand be moving Are over I'll for to don't entirely all? base? leave capacity get that that greedy a at there. you or from quick Are China

them incremental inside China question. capacity want move because China. that's more more to new I'd of we'll in team good us as Yes, products, outside than adding of bring on this that products, a don't initially, customers say it's but we be ramping

got over time, over to in there add gives to And years, center that or I will the want. Thailand of our be capacity us with workforce China think excellence Thailand and what say, move should I a of because mainly a of capacity we've transition next there. that's in outside couple in customers So Thailand capability that our having

Joe, squeeze more in I'd to to be Tim. like question, Thanks, able could. we if X

with Craig-Hallum. is Richard Shannon next question from Absolutely. The

most I of think spend on going I'm one multiparter questions to my here.

here here, how of from On said X part here. revenues $XXX calendar ending if e-mail Alan, much path some order think about or And of you maybe transitioned next question it your be plus million is guidance to X to ways, in EMLs, I'm optical last telecom the where pretty number from also response to that sure was I'll don't maybe level the switching of datacom would year? be to them But could most topic, there, was interesting your in that or earlier about of stuff broach it current get transceiver need chips not to that, comment ascending intended that great. expecting you XXX-gig descending that on like contribution. and a

to just guess, much expecting not if which be switching, that $XXX that contributor it? growth telecom? you also, the upside to one specifically, I'm you optical from a this, X I interested is, expected Or this And of get is are aspects is is to to of quite in million? meaningful And then get

and wanted it transceivers less in that you optical meaningful 'XX, I'm say that, multipart That really I I'd if on swing center. growth 'XX bigger was is the because setting priorities. growth #X I'd up wouldn't Thanks, inside there I in say glad my I on me question. switching calendar for rambling would 'XX we're data say significant us the meaningful revenue no but wrote down. in counting probably optical method think do I'd say in of is I a say Richard. area. be to

I've on then think when although anymore, I over bouncing $X to do XX already next get talked are And XX% months. don't hoping levels, not not we're that projection ] be need say of I the will we about the that And last for that seeing the term. and we north of counting and growth telecom the give short to some EMLs I'm back we pandemic [ that been that you I'd so growth on in counting that million per quarter. to back year,

to transition per EMLs than execution and your really answers XXX where I and is about for and transceivers on that the it gig, it's XXX awards more unit say gig. all is I'd the question. revenue hope So

Thank you, Richard.

back going concluding I portion we're and over call, to with the I'll some Alan of the remarks. that, wrap to for pass think the So call Q&A

Thanks, wrap as few a thoughts Kathy. you we And the thank I'd call. like just up you, with leave everyone. to

and to manufacturing automated agility challenges chips. current revolution, center leadership at Our data market hyperscale and scale the photonics, cloud position navigate the of us is chip Lumentum photonics driving forefront and opportunities. per

cloud and on rapidly rate are and scaling meet demands. capitalize to R&D to data opportunities We manufacturing surging

by this production, joining quarters, the As is call a revenue calendar to cloud seeing Hy-Vee end Have our all you multibillion-dollar for Cloud quarterly conferences you accelerating and qualifications the today. acquisition XXXX. prior for Thank our upcoming $X and over at revenue and great million us meetings forward we quarter. of discussed Light positioning again transceiver a We look day. investor in

That concludes today's conference your participation. call. Thank you for

disconnect You lines. your now may