Lumentum (LITE) 7 Nov 242025 Q1 Earnings call transcript

Good day, everyone, and welcome to Lumentum Holdings First Quarter Fiscal Year 2025 Earnings Call. [Operator Instructions] Please also note today's event is being recorded for replay purposes. At this time, I would like to turn the conference over to Kathy Ta, Vice President of Investor Relations. Ms. Ta, please go ahead.

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

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

risks and include customers, including for expectations our statements results particularly cause will including filings review future and revenues, that you will factors most technologies, that regarding our as products recent to SEC opportunities, margin in well our XX-K and our markets factors uncertainties to beliefs including our market strategies, statements in particularly encourage model our call recent operating be the guidance, materially our including macroeconomic expectations, current targets. SEC Today's our acquisitions, regarding forward-looking in soon. statements, demand, actual end and These XX-Q regarding as the expected performance, our our risk expectations Cloud our trends and trends to filed recent and and financial our most light, from described could are and We differ financial described our the and statements filings. with risk subject

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

for XXX-gig our including chip high earnings both a exceeded record Thank laser and the first we infrastructure revenue expanding EML quarter. We broader quarter, demand in from set of in In we strong Kathy, end sequential double-digit customers, the multiple orders, per on you, trends and share. everyone. Based guidance the second an the new revenue improving AI reflecting expect cloud Datacom growth good demand afternoon, for and networking chips including market, customer.

we and initial During secured and AI cloud strategy an first with the hyperscale customer and our quarter, transceiver advanced diversify orders. opportunities. expand We our new additional a to qualification volume

new beyond last award This highlighted is quarter. we the

shipping in calendar to expect with new XXXX, of We start out set the ramp the through awards volume targets and against production they the first half will previously. consistent customer these we revenue year,

outlined business. quarters, grow Over the our a few past cloud strategy I to data three-pronged center

first component levels the customer customers speeds. cloud to transceiver prong higher to and migrate is at and reminder, a AI expand As the opportunities our as

second to China. scale And significant The of generations is capacity customers of future is maps, components third to our to share for advance production center the and in differentiated scale enabling like areas. outside and recent of road technology transceivers these details manner. higher more more a and capacities architectures cost AI I each effective data cloud to on power-efficient in to progress would compute

valuable, transitions our of speeds market industry differentiated expansion opportunities, as especially customers. to becomes technology the technology-leading higher customer or the and increasingly Regarding to

and with and transition well aligns XXXG transmitters. This indium single-mode increase to will example, laser the the lane market in and phosphide year, speeds optics importance coming the growth technology For of our drive leadership. shift

for next generation the of to XXXG customers upcoming a strong for wide now performance, a high EMLs for us reputation EML well transceiver transmitters are high this, in These importantly, currently designing quality XXXG suppliers into shipping transceivers. transceivers reliability. have and established and optical our high XXXG EMLs use XXXG phosphide to Underscoring range more in our transition indium optical per their lane. Our leading-edge are positioning volumes single-mode XXXG of

made also have significant business. opportunities the our our expanding in We transceiver on progress side high-speed of datacom

shipments quarter production our to increase As by and AI expected sequentially datacom our we throughout XXXX, this transceiver demand December multiple expect are hyperscale transceiver we continue year to calendar from customers. cloud previously and forecasted, driven growing

As in I expect shipping new new orders an the we calendar mentioned customers received first these of transceiver earlier, initial half and for customers hyperscale production start from volumes of set to XXXX.

other additional finalize to working actively are we multiple opportunities. awards addition, In for

is a for outside our prong expansion second to strategy of reliable center AI cloud cloud expand China. to Lumentum our is manufacturing AI of and and ensuring and customers. secure The established data facilities our essential This at chain capacity supply

Our indium to data critical phosphide laser center infrastructure. chips are

of call, last track we in indium QX earnings fiscal discussed XXXX. industry-wide of our capacity are meet in to demand, the shortage QX to the XX% production to capacity. will help of compared by growing increase alleviate expansion As phosphide fiscal EMO our in XXXX capacity This on

throughout be allocation year expect calendar still we on However, to XXXX.

our capacity Our datacom transceiver Thailand at is progressing planned. as campus expansion

The demand now to customers. first next expansion line meet from over months is our production the phases high and the additional we completing anticipate XX operational, volume of

completing includes X-story new schedule. campus, our same on on clean construction of room This remains facility which the

scaling on of technologies escalating prong the delivering center third of cloud challenges capacity. AI The to our innovative and data compute focuses strategy address

to demands to multiyear energy AI be for enable efficient, to evolving critical collaborating meet enhanced these data switches expected leading network optical bandwidth center, is with high Lumentum edge with switching and link future AI architectures. will the well and low-latency power Inside is cloud of generation the optical that and networks. are higher maps. to cloud road breakthrough efficiency infrastructure capacities support data are solutions We develop customers their positioned

our shipped have performance. positive who provided have We units customers overwhelmingly already on feedback evaluation to

unique in require ultra-high yet will are While architectures, XXXG technologies optics new are generations such alignment ramp optical we we lasers. links chips, laser beginning power our as per for to lane customers co-packaged with future on of XXXG higher-speed already close including and which working

upcoming circuit advanced essential meeting phosphide photonic Our these integrated and indium for demands. capabilities are

deployment optical X-pronged fueled our these until new don't actively the opportunities cloud positions strategy to combined with of XXXX, utilization margin will in technologies This to customers to drive are our Executing the future and capacity shape revenue collaborating business technology. growth maintain significant us start double-digit strict a growth, to we While expect we as fiscal by return our we centers. and discipline. operating improves, data network recovering a AI cost with of

an are once per As spring, OFC quarterly quarter. XX% we targeting last to million outlined at XX% margin of conference surpasses the our $XXX revenue we operating

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

market by and centers. within XX% as cloud grew from segment Our and driven strong XX% hyperscale customers invest demand outside cloud of revenue end first AI sequentially year-over-year, and they quarter in networking part data

a and combined growth We by efficiency the by future. robust are area, fiscal with also newest are continued lasers growth. products is customers improving capacity encouraged for wins for shipments coherent ZR+ our interest with for applications. as inventory line tunable our our our the transmission, and XXX networking anticipate our XXXZR laser of levels coherent for Customer spectral in continued solutions next-generation components gigabaud in In as share increase transmission in well solutions sequential transport and this products. amid greater year is This on in XXX this and leading encouraging had demand need demand existing DCI look networking long-haul market products. of narrow in high-speed is This, in at coherent used our as experiencing applications design maintaining beyond. to applications With We in and we ZR we rise. advanced bandwidth leading-edge and driven we the demand a higher-speed

win design products position capabilities Our us as strong these differentiated technology, leadership manufacturing in to maintain momentum and well. critical

line layer products sequential and systems. optical and in growing high-capacity cloud portfolio. C+ and product and networking AI QX transport high ROADMs addressing demand and demand anticipate the across multi-rail seeing in fiscal amplifiers. increased emergence count of next ROADMs strong in step due are we offering port growth rapid for in for our scaling cloud is our our demand components, for broad-based efficiently Complementing transport We and Multi-rail revenue transmission in our to integrated the in solutions, applications growth improvement flexibility coherent demand L-band the increased

to let segment. me Now move our Tech Industrial

being Industrial this on challenged quarter due space, In damage. last sensitive packaging. grew semiconductors, industrial are heat to displays in Like focused our while laser for be needs products to end Tech advanced tech, innovative This weak the from creates continues expected, others industrial XX% demand the segment minimal like developing year. in to revenue same products customers' As X% and market. sequentially we for our heat meet down applications industrial precision with laser ultrafast opportunities higher

display delivered power applications, packaging high customer semiconductor equipment manufacturers in Simtoblade feedback. working units and we for demo advanced closely We leading received are applications. have advanced low and recently positive We with and semiconductor interposer

significant made fulfill progress next to cloud our the a working this to grow to strategy by our an QX, due sequential are We be led for Tech flat record To approximately over ultrafast offset in orders revenue. datacom by sensing uptick we Looking a in ship executing new to XD business. lasers, summarize, fiscal have our expect sequentially set several diligently lasers we and in decline Industrial demand industrial to quarters.

engagements We also third optical made orders multiple strides including from with meaningful securing transceiver customer hyperscale excellent high-speed customer. transceiver a

working new Additionally, from awards secure more to actively more we are customers.

previously networking calendar market combined engagements, of target of confidence reinforces of quarter growing stated revenue $XXX the Our achieving with robust XXXX. our to in cloud million year in end customer the our by pipeline per trends traditional quarterly improving

cloud the into coming cloud as new opportunities growth positioning our rate a for years. [indiscernible] run on capitalize 'XX annual and multibillion-dollar we in XXXX and AI business

their call my Before the to I partnership our for sincere I focus employees worldwide to their our customers and to and Wajid, and turn dedication collaboration. for unwavering gratitude express over want Wajid? to

Thank you, Alan.

certain were in discussion excluded align to recast results, related for our consistent and our presentation we starting comparable results that this non-GAAP Before consistency. quarter in outline XXXX, with fiscal presentation first primarily our please QX have to historical our to with excess quarter, capacity financial charges last the that, periods of include note changed I previously

$XXX.X $X.XX. margin our above of loss share XX.X% for this revenue end was quarter quarter GAAP GAAP was net First $X.XX of high of GAAP ranges. non-GAAP million operating Gross guidance was were EPS and loss XX.X%. the per and

to our non-GAAP results. Turning

margins utilization XX.X%, anticipate non-GAAP an was sequentially improving telecom margin gross was will well revenue. an quarters, outlook, which higher future to sequentially In as on datacom we in as company improves increase flat increase quarter shipments. manufacturing laser up due year-on-year gross First as and

was non-GAAP quarter which X%, sequentially margin operating and First year-on-year. was up

profit First and adjusted operating was $XX quarter million. non-GAAP was EBITDA $XX million

as totaled $XXX.X quarter. despite ago million operating $X.X fourth the of of XXXX well First million from QX in down restructuring a overall and controls to the investment cloud company. operating actions our stringent or XX.X% quarter due expanding cost that non-GAAP year as lower million the fiscal increased [ were quarter taken decrease were $X from expenses across opportunities, revenue, expenses during ]

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

income was net First $X.XX. diluted million quarter per non-GAAP non-GAAP net share was $XX.X income and

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

million. and investments quarter, the During our increased short-term $XX first by $XXX cash million to

in in in Thailand capital production Our $XX by sites CapEx, inventory we indium came wells modules at investments additions business. million across expected, our revenue working wafer as in manufacturing support well sequentially expected phosphide transceiver increasing driven In capacity. as as our the to QX, capacity cloud primarily growth high-speed with invested

details. to Turning segment

and sequentially segment profit cloud increased year-on-year. million revenue and and networking sequentially Networking Cloud First year-on-year. XX% at quarter XX% at XX% segment increased and $XXX.X

down first year-on-year. and sequentially up quarter segment $XX.X Our was at Industrial XX% revenue million X% Tech

sequentially decreased First quarter Tech of X% increased Industrial and year-on-year. segment profit

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

to Industrial to quarter sequentially products 'XX and the forecast industrial of be this, project on diluted in cloud second to assumptions: million. with networking net Based in $XXX in demand. to to X.X%. $X.XX. the range of includes margin customer decline laser income in applications be growth And sensing. be to with the offset the This be range expect shipments to the XD for QX sequentially cloud flat in to up net approximately quarter strong revenue following million improving non-GAAP And We revenue by $XXX of Tech addressing $X.XX X.X% networking increased fiscal a per be and of operating range second share we

call shares. Our XX.X based non-GAAP Q&A million an effective projections the a for turn second on start Kathy? [ XX guidance to the of count rate non-GAAP tax annual I'll EPS quarter approximate share the With back that, ].X%. of also is to These assume Kathy session.

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

begin session. the Q&A let's Now

Instructions] [Operator

Chatterjee today comes Our first with question from JP Samik Morgan.

on here. And guide guide I congrats the the on strong talk first. just If can

that cloud us in much the quarter-over-quarter. of $XX Can I about and million, you can have million out is that think implied chips increase point maybe is that modules, of bit of datacom quarter-over-quarter for coming telecom sort from? a follow-up. improving most is us parse datacom in And to relation you networking versus improvement a versus how of sort I directionally to if $XX where

because say Sure. all until growth Thanks, comes of not a I'd capacity Alan. Samik. and of is next of it's a say lot the the I'd datacom increments mix This is in couple the quarters above. chunks. chip

than strong datacom through other but DCI the increased up, not expect to that The is into expect telecom applications, that XXXX. QX a things continue, calendar will in in said modest, script, on and but step quarter. a going this to lot that have And the so I and said modules, chips pickup don't growth be a large we are as the script of number as there's we I the

announced Got sort it. new of win. customer another follow-up, my And you for

in we have rate the about them how magnitude quarters, the new announced compared with new light? you've the customer I we How original new customer we you take recent was should both I -- maybe think think the ramp take Now mean, about for there if first when the what the customers magnitude of X after aggregate X in full a opportunity together. cloud customers should original the to of to

Yes.

our that need. and provide and kind to I to it's hard customers ability that's think capacity to the that answer and to going the quality execute and down of come delivery

in we'll first it positioning I So second we're well. I ours before, and of ourselves very start said next earn of business will the the half the be better half. new growth And to in customers ramping year, as their think

equipment. the having as I with We're well capacity clean place, in said, as rooms as

we consume But large of very, planning are all So that customers for that. we're still a success, but said, very lot to have transceivers. these -- earn that

share is the is we're getting so what now. step do earning door And and really in striving X bigger a to

Our from Leopold next Raymond with question James. comes Simon

sort third with last you when bit the light more you of into the cadence that sort give about going Thank a December. back fiscal a to very seen business. quarter where much. which year, had snapback what's pause in I Reflecting business September, wanted see we'd I a cloud on of think of talked the bit in on you reported in June your and of we've

And Is get outlook that of I'm below? versus on changed what in sort Cloud you assessment so what it above, is trying Light? several December what's of informing And to of in quarters ago? that what's thought terms different an expectation

really nothing's Yes, Simon. Thanks, changed.

I expected. it's think in coming as

new We're now. products As of products. the we've new talked the transition about ramping

we we as together come of our on had calls. kind had it's previous about X expected so earnings talked And and as

my unexpected perspective. from nothing So

to what just like follow-up, how terabit sort that market magnitude you then on would a as would of role perspective. and anticipate your devices get And you the market, timing in your evolving be perspective X.X for see really and I'd

There's is one using the one of -- lots customers version that X.XT lots one That this and from XXX-gig XXX products. of lanes. for X.XT in fact, also is of Yes. next of a kind generation gig tougher in interest of

next that today today And talked as component more is received our in towards our EMLs going the qualification in as script, and volume ramps summer about quite the really to capacity have constrained. XXX-gig stages But participate we're so orders we're the level, of year. the at with and I

at really So on customer well. we'll the timing the as just about the at the and We're transceivers. with then need the positive, we're mostly, hunt. to in and and to in and last and game, then -- call, level is transceivers feedback customers sampled so the we'll EMLs play continue to we up play component we very the We've talked very, as

of So year, by should in others. than calendar way. I'd a some significant But be end are X.XT ready the next that say sooner ramping

Stanley. next with Meta comes Morgan Our from question Marshall

This is on Meta. for Juvekar Karan

are shipments to congrats think with changes sort time Just the light? the integration sort on end of your any mentioned Cloud for guess, your and of there until vertical time but updated just quickly integration I quarter. you any line I no line on there? 'XX, of vertical

qualified. change. coming have help didn't XXXX VCSELs with working in have on and we But lasers be say market margins to and that and No more our real mean in before and products calendar that opportunities we we're timing are I'd to the mostly that fees, those into to I calendar unchanged EMLs is the change. were acquisition building XXXX. calendar in I'd that really the in late products But now year say certainly product should and

Telecom And or helpful. on infantry from previously had a That's sequential Okay. build products follow-up didn't then side. up. quick that you expecting primarily sort growth of Are the

I think of track you guess quarter to across the traditional how I mentioned sequentially that expect products year? last you sort telecom and do

Sure. in I are and as telecom anything that that CRs, side. mean, dramatic share to But a given ZR can we're built dramatic modules. our in say pickup that's data where go into to I'd centers anything take centers strength connect lasers going out of data the of form the tunable see ZR, being seeing we're that

light. line and that that solid is to transport needs the that and is off get muted includes or spending I'd say data of of there burned still So there. very open still say systems are outside inventory carrier the hyperscale center, growth signs But I'd

we're talked and returned at we're reductions inventory from of more products a away having to but of flowing as product out certainly -- good our customers. our about I we think normal are signs inventories, quarter seeing new So door the

question next Loop from with comes Ananda Our Baruah Capital.

positioning, Alan, I'd kind your topic of how days. to on car get risk, just these to about tariff hot love thoughts, think

thoughts of just So quick have the China? follow-up a there context well. diversifying as in out of And then the I

be going of don't company And be tariffs. U.S. of changing changing Yes, strategy to on is result not as think China. House. been to in manufacturing is is outside with We've a a our increased who headquartered strategy I a potentially White that based on the

we're it U.S. an would I facility that well and come say dramatically Japan. U.K. growing out And the had chips Thailand. established of that So the us as as well as in manufacturing our positions very laser we've

So that get with you from tariff we're to think free perspective, can future. I as our as respect

think to vertical I So happening. any I'd strategy outside a integration of with who and resonates is them, But both want that have resilience, China. lot and in with our that, well as don't a supply growing chain change footprint a limited China for provide say as we of that customers footprint

just is context. just helpful super that have constrained lasers, given there pro that. follow-up that a That's guess, pricing I a any, And EML this on using or then pounds position, quick guys is you're you

pricing slower And down look a things I go or think they at go think are constrained, basis. we as I on that portfolio up faster.

in And to and for think as lot a I I we capital so going to we environment, of pay have forward sit look here in as the straight think add capacity. is we today,

pricing justified those have implemented think that and we I at strategic in optimization products. we're looking on EML is for looking are one area some at price that So

line Rosenblatt, from open. Genovese your Mike now

telecom make And Or just part color visibility? comments you help all about and that visibility 'XX how the 'XX, of kind on when ask of of telecom side? guess that market. I datacom extend? the the Is for more

I the carrier telecom telecom -- is think not great. traditional I the or telecom, mean visibility

speed would of deployments I that demand have been say the the Although growth. bandwidth below

said on and visibility be networks. going to to I'd visibility telecom that 'XX and be they're some in is deployments there good carrier additional today in of so to that. -- And have network I seeing we're had new China you kidding as out rolling And new if spending networks I spending 'XX.

small we markets, for China, I future. in interconnect think with center our to compelling believe and small and customers share very our And fairly have frankly, footprint reason and think a data more come the center of the datacom to a headquarter be going so U.S. data way. and there's the manufacturing transceivers is we of outside strong I

not EML So only we share module expect gain and the chip years. our datacom business business, significant grow next to through but coming

more the And in then me helpful. guess, very That's it give what's data in going thinking on do Will or there's is kind about new completely Great. specifically optical the And I switch finally, a to Ethernet like anything anything. of you of can center? part And color center? whether products anything Like is data Or of I'm replace switches, this it next the replace function? there. kind the

Mike, is this Chris. Yes,

are, stab you tiering a main And optical performing. connectivity to that's take of large a me in needed large levels very across center, switches there's to a data it's Let at Obviously, multiple as center. It's data optical that. get know, the there switching. scale a

high be of the argue so of switches. I XXX a level in so bit architectures ability used and would today's intercorrect, can to that that's with some switches as NAND more produce for that more data kind you think, replacing XXX then you more so by scale of or consumption is, to et rates, AI you GPUs cetera, networking in power more enables center accelerators. I the today switches which guess that And electronics, to it the the scaled use little the level could efficiently optics,

bring a more about energy lot -- the going you're to when very So data is pipes that a idea center. efficiency across that's talking here large really big

The to the add added has is also, latency you latency. that switching little layers, have do advantage switches be very other and optical as clear,

size of centers. the that's you So advantage data a big as also increase

Sorry, saying. Mike, you were

to summarize. to you optical need cluster larger -- switches of was GPU sort going get they sounds sizes larger, like larger as just basically, of larger basis say I and

this of is several ROADM past that in I a and couple that space a things leveraging think over we've uses the natural the technologies that's for the decades. maybe to also pioneered other us, the point extension out

opportunity. of technologies that really to data had it's so center we've new an a adapting And

next from Our with Barclays. O'Malley comes question Tom

I transceiver qualification on wanted to the understand the side. process

won about So the of you qualification and with customer. talked in period kind award you've another quarter first time that first now last quarter

can them a of And So you're maybe new for the are going volume but feel you're you amount to the refresh different is when year. very into next end qualified you that confident up you So when get obviously, both is being us qualified, it customers actually qualified do a yet? shipping here? normally are and thing, different a that

just going So customers. can feel for you a you to have qualified? volume remind for And us where be those customers are forecasts these when will then those

I quarter would we received orders now beginning now, next is that this be earnings Yes, first talked with on new and I'd added time with customers to first year. happening that of said about the we still track we're last quarter. we that ramp calendar in first customer the say the qualification say qualified what on the last we'll X the with call we in half

the before, I bit thought. qualifications but as little got a that timing, we're earnings talk said a So different both. call, on with on about other happy we've going I we'll next of And lot

looking Super $XXX million kind get quarter. helpful. to moving parts at And the that of to then just

some on of a expressed guys increased You that. confidence little have perhaps there, kind bit

kind you're right $XXX quarter of now. So low in a the million

record. a hitting EML about talked You

million $XX about so you I think previously, were a quarter. or

sold there. above out just kind is you a So XXXX let's that. little about of But capacity basically assume bit talked outstrips

to look or transceiver of million incremental really million more would EML and when at about that the from where be the that helpful. of go Is range. you is low $XXX I of they're lasers ramping. cut $XXX more incremental So therapy customers Any is the qualifications here, the

Tom. Sure, Sure.

June is this I guidance we're guided, regarding bounce happens, traditional midpoint. year, guiding year a starting to carrier to anything June on say counting But between year midpoint million. the this data talked with to to interconnect get X is the big QX, that of telecom the is the we the year, And talked part which I And in business which last ] expect [ about in XX% coming just say we're kind combination of quarter are of and of from quarter growth, by capacity our then growth think that and for that the we grow. about of really there in with what back the our growing now midpoint we'll I'd prongs, to ] the center end we've not XXX and tremendously the in quarter our or in. grow script, if as the say [ really is December And next that's transceivers going calendar win sooner. drivers the EML are starting starting then fiscal center I'd from big but summertime in getting interconnect growing growth for as chips, the of fiscal is the transceivers us of really data XXX the there's X quarter $XXX that I'd

from BNP. with question comes Our next Ackerman Karl

click design the about well to last as I the wanted double on quarter. you win win spoke as hyperscale

connecting address If driven platforms. EMLs? on not, opportunities reference in processors? being by these your ramping transceiver being that that as new does of question, these perhaps the you now integrating are And customers products your customers transceivers ramp are you 'XX. Specifically, push included initial being maybe or of out GPU optical Or it is their large hyperscalers these hyperscalers by own AI driven designs or

Thanks, Karl. Yes.

transceivers. to I we our on don't get customer they're certainly into what think But deploying. can comment necessarily architectures and want we

will only but SKUs our and with introduce other so. not them, that of to we our more where in have execute more launch, year content. at these have you Alan's initial accounts And other are of we won't past transceivers there transceivers the and point, more types will these own have Obviously, opportunities general, as share, so been development because will, succeed if EMLs these, over in or be can and there be designed

yourself. TAM Yes, perhaps the reallocating you of you same addition quantify data And expand suppliers transceivers procurement customers the disaggregating of that maybe along scale-up Are are on wins these then are have the as now U.S. the in just perhaps seeing that? I you some like of architecture? could that, being guess these able comment to new you opco Could that of clusters also by to receiving opportunity? new you're to lines option a driven center the as components then, discuss whether that domiciled

that new maybe are opportunities. So these add

would they're that. that headquartered so we -- it's of not fact non-China like manufacturing certainly a long the I are reallocation. So road and customers are and that map a U.S. say

I 'XX definitely are more think -- that So new being, is and probably the have frame. building kind brought a all disaggregated is making -- transceivers turn are you more roll certainly the year calendar deploy people are out for towards think scale the of of people forward scale if But to 'XX. into more X pluggable of you'll up progress lot These some or the as if AI time we makes gear, in as clock I winning into think these that there a year traditional that. hyperscale an time of us I up out more level the only you really there's you back years opportunities. scale-out in opportunities these for word X.X ago, will, gear, introducement competitive a and And optics folks extent, AI architectures

Vogt next comes Our with UBS. from David question

and transceiver 'XX then in your clarify This I have if is contemplated -- these were a guide customers on for follow-up. David. Can Brian XQ you

to Yes. million. and calendar getting We $XXX about talked XXXX

their whether number. we need this think that all ones one plenty going don't in opportunities, to we're or We win the one of have I after. was

say on that had on. to with me planned we're X that, for right hard track these it's So we yes,

to answer. They the these a hard future we've us part certainly made that with to customers say be as as play in customers getting So that's one there progress on a and we I'd talking well expect calls. about other

in Got reachable it. you And you in That's the mentioned volume more my earn view? be have that for qualification would your follow-up, share to the that helpful. process, then

well to do. done And our as what any we quality and and a in we're does not say Well, of earn I'd to businesses, chain well. all of and our doing say resilient that's share result performing earn share in going performing trust shift businesses and we or that of supply through have execution

So that's there that big say one very mean supplier. is no one relies are intended demand discussion. hyperscaler and by that I on to what I'd

better X X ones the to they more are get run. long that the or So share as in perform up going ramp suppliers,

what us we're what resilience on. of So that customers their products sure more that's that that's count gain that on working to so really need, of make to supply can provide they and that and that working gain on trust we we're we

& Needham Our comes from next [indiscernible] Ryan Co. question

for tunable, circle you Are comments today company? ZR to I wanted module any your understand in investors for is wins can back space to you your think what and you talk exposure there around there? but about present opportunity the the in how And DCI ZR on about modules? design your I to maybe have that should opportunity

Yes.

to and We on outside is to tunable a good own U.S. exposure. the ZR ZR do the progress I people's well biggest to as said exposure the plus very lasers and module, ZR+ DCI other we're our and go degree, lesser before, what ZR and, ZR which would components say So making for as the is both into exposure I XXX-gig other revenue have of us modules. domestically

-- to So I'd we're XXX-gig were market. the encouraged by we progress favorably late module, there. say the frankly,

and that's doing and are customers there and our data growing apart. share to to small But winning best We our have in market centers is laser supporting business we're our share gain rapidly very try significant growing share further market who we're the a as very very, very moving are frankly, happy there. tunable in strong,

mature makes around a for about here? a think a question of kind quick and fiscal going year gross And kind of How the there. of , then margins lot on Wajid that market here. as we margins and more gross It's Yes, should puts sense. unfolds of takes

Thanks, Ryan. Yes.

the like talked it in improve script, expecting seeing margins about gross So QX. to We're we even in we're sequentially.

is significantly we different QX. profile You how what we can than operating -- in performed see our margin that

and expecting and into And of QX supply into expecting online said margin we that, our into see EMLs. QX Having move as in spend we're as to QX R&D more are well to QX. that increase so QX and improvement our for gross comes

the are tell can from opportunities as that strong customer quite comments well. quite probably You is and pull Alan's strong

an And ahead And so talked because R&D we're be of already from some making. of to that, investments capacity standpoint. we've revenue we're probably about of going spending the

customer up So the just operating margins year, of pull making fiscal because we're margin an tick of the given increased yes, through we'll see amount the bit sequentially will be muted have. gross -- we investment it but standpoint we'll a from R&D little

impact, a And about? capacity, about capacity have -- that just is does talked great. that does until there that And overhead an headwind also That's little talk adding fully... you

Thank move a Yes, Yes. our we're to building in facility you does does. more overhead as Yes. Thank because production we Thailand. out little our impact of transceivers it of It you. bit of Thailand have

with And we of quarters couple ramp as expenses up a and that be that. so that there move will overhead up, associated of

that up And see benefit contemplated to quarter. we'll be the in next in through calendar in increases margins. the able so already sequential as ramps volume moving the But part of that's then of middle that the year,

that So thank asking about more happened, about you we'll the but quarters explain for as that.

next question Rolland comes Our with SIG. Christopher from

question. the for Thanks

'XX benefits. particular, double the wanted around what wanted answer lasers And into So half know second I Alan, to actually integration. In to I change. prior vertical change margin Cloud your those mostly it you on the suggested said you did in for there. Light, then of didn't click

my first wrong that half. but assume would integrating would been may that's is assumption I be my here I integration. for in And So perhaps timetable in more a have assumption, the you meaningfully

what is pushing constraints, vertical delay? this a -- indeed timetable what's that causing a integration exact this Is know, that's for out just qualification love understanding I'd Was not issue? this this to a and Is bit EML my is wrong? So it?

Yes.

So our constrained. don't customers good question, Number already want one. one in is couple capacity to That's product number I'd of change that's flight. Christopher. laser us say two, things, which a of is

the decisions have buy transceiver the going around versus what product photonic to we based. mostly through So make business silicon today is

we lasers of -- that not and products shipping EML we're a yet CW the today. So lot in use lasers, lease the

critical So those good EML buy It lasers capacity product. very CW those add the to done There's makes CW or and We've a lasers capacity to it example. buy we free we laser math. e-mail CW our more that to sense externally to those lasers our use CW would EML up ship our lot can than for can be for of to CW customers us suppliers. into to convert that lasers capacity

lasers year. things of half until second into that products come that's of EML-based off pushing will to the the calendar that's our on I'd half. say designs, the those one integration market So are the CW we of that working and second in

using have are We products through based for and the qualified customers. to that. capacity go most that that lasers to supplier our producing partners from strategic our of EML But silcaphotonic today, we're get CW keep

Yes. e-mail And we and advantage performance, I'd that of higher talk to future add come performance the in of generations as real about X.XT starts X.XT.

natural using road much technologies also speeds. more are more those the where So map our at integration aligns vertical with differentiated

it trying mean to moving least up far et transceiver at more a if market have AI I the me, pulled which share, you up pipeline, seems big cetera. demands -- like as actually brings at one also units, just second clears cleans other understand into has lot customers, this available, market for new I my inflecting a is It capacity like to EML units it recognized whole here. as EMLs. customers, question, player about EML is lot probably seems actually there's me That least. your

versus number XX%? like why talking more And about capital-intensive is we are given here into building, why like like new you we how could importance here? right be seems the up? this of is why just you would if XXX% talking And about fast the part how cycle. aren't overbuilding or Like what So this like even to, new XX% wanted you this lines get under leaning on

Christopher, Board Directors. you sound like of lot a my

So does add capacity. time that's take to a very good question. It

that We and ramping One quarters wafer were fab fabs getting of as on we're did capacity, going we to now. in that that them integrating were working and one the things synergies. of up said we we and stopped consolidated. wafer X several ago close that extra We need Japan. had We

If wafer our you back go fab. idle capacity It years ago, X.X in to X.X years had capacity. add takes we

So of that's on. going what's kind

as are more. takes and larger sizes. epi We're takes wafer time We converting well. to time, That reactors adding that we're adding

barriers lead and XXX% just is new tools it. to is capital would of entry But equipment market. -- good in ability now and time that up to question. between So If very and qualifying June, I good add I the the the had that's bringing do there's painful. news But

going grow we we're to possibly new going the same we're to time, And products. fast as so as at it can. And introduce

typically get curve qualified. And that a lower And XXX lane that yield. product. and new and per so We're and That to gig takes getting learning resources we starts time through at that have yield.

not that. of the And sitting capacity sure June so to quarter. think we the the XX% year on half calendar second adding the But going We're well we're I are after do beyond in idle for for sure.

use one Okay. don't -- just you your Perhaps follow-up. more Why

your would It you bring I EML you new two use seems why -- your cloud-like don't one why be use don't to Okay. birds limited limited that stone. online? customers say, capacity like

good a that's question. Yes,

so photonics. have we think I

EML-based We're a have have transceivers. and those We given transceivers, we each for multimode application. of VCSEL-based designing

Some applications photonics. single-mode silicon work with better

have said, play Some especially cost Chris get EMLs new of a at better, generation next multi-wavelengths EMLs structure you lot EMLs. key A X.XT, role the better a as into with And there. really as like can where

advanced And gives I to going incremental competitors. the differentiation from really products. And So have year get yes, are our we're and that. differentiate us which second transceiver us to drive think higher really level calendar we probably EMLs, as sense half these more to going into in absolutely margins. X.XT we the ability do more the next-generation then the that XXX-gig of gross makes at It drive

we'll think question. more one Sierra, squeeze I in

final Our from Richard today Hallum. comes question Craig with Shannon

peer topic frame here. of on close talked I'll know as delineate get volume area, sense they're Maybe your or also, questions different who recently qualification on up of are in the you And a then can a and for I get there. or has maybe reported couple what here, how your product about doing. the optical ramps you to you to to circuit here just can wire of discuss complementary obviously follow differentiated the a switching just Maybe earlier and kind comments. the Glad time

I we're their can't I'm and comment they're what on Yes. is about doing. can unique tell really interesting. technology doing. sure you what I

think and different. approach technology is I our our

and WSSs MEMS is with earlier, like have multiple advanced Ours in fact, have, LCOS mentioned experience based, our MEMS designs as of Chris in and our MEMS. years most MEMS technologies and we WSSs

are that rearchitect we centers circuit circuit and are software customers to ready into feedback, positive getting [ to put ] optical customers. switches are our So their as data or there's customers then need that and optical said, more advanced right more from this to switching. we There enable

And And so would probably calendar it's the I ready win. growth realistic. really meaningful is calendar deployment say But are upon customers really XXXX that XXXX. a more will in be dependent which in

second detail. My great That's question... Okay.

operations. We've was transferred already the I to one our Thailand add Richard. Sorry. product thing, just to going

units today. we're in So making beta and units Thailand qualification

we'll And ready when go. so be say the customers

in Okay. kind in anything Great. been any a that's on while, on here give My has to markets past new improvement or soon. here that's and your signs going going of of growth asked that of us is either and markets question a second anytime topic

to and begins obvious in are a say look adopt folks thoughts short other we've all slower Android to hoped. sort No the as of helping in catalyst been the in world continue there's that have Richard, terms a automotive as into than application I would they augmented a that's space, no. will keep bit well applications new are application would specific And say things always of we leader is to those and the that muted been comes the but technology, those suggestion this little along. on But applications bit as we high-volume playing years that in I with metaverse, partner but yes invest I for like in that, a reality and several term say mature little that of adopt both not or obviously, midterm, in is little would bit that there a possibility. but strongly Chris. if opportunities mass. virtual that. have of of we'll to a until really as than in the we an to other leaders, that continue

over think I back you. pass Richard. Alan concluding Sierra, for the call some we'll Thanks, remarks. to Thank

like Great. a with everyone call. as we I'd leave Thank you. wrap few to the thoughts up

With business our quarter. call revenue $XXX today. we strong a great built term, you bottlenecks forward are technology for day. million our multibillion-dollar and meetings confident by the we again end cloud our comprehensive We Have run Thank long of calendar like differentiated progress critical in-house XXXX, annual upcoming growth expand that manufacturing power are to a and about will prospects and We consumption. rate. connectivity in on photonics investor reach highly proven joining our X-pronged conferences excited portfolio at you the to this challenges look capabilities seeing addresses on in quarterly strategy, and our

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