Lumentum Holdings Inc.

Lumentum Holdings Inc. is a global leader in optical and photonic technologies and an industry-leading provider of optical and photonic products based on revenue and market share. The company operates within global markets characterized by robust, long-term growth trends driven by the convergence of cloud computing, artificial intelligence and machine learning, and the increasing digitalization of society, which are expanding demand for higher-bandwidth network solutions. The manufacturing industry's pursuit of higher precision and efficiency fuels demand for industrial laser-based solutions, and Lumentum is well-positioned to capitalize on this trend through the provision of ultrafast lasers for micromachining and advanced material processing. The company also produces laser emitters for 3D sensing applications in consumer electronics. The industry is subject to fluctuations in supply and demand, and through fiscal year 2024, the company experienced significant demand fluctuations as customers delayed shipments or built up and then reduced inventory as supply chain constraints eased. Beginning in the first quarter of fiscal year 2025, network equipment manufacturers normalized inventory levels, and since then, the company has seen increasing demand from AI and cloud customers that is outpacing current supply, requiring decisions on supply allocation.

Lumentum maintains leading market positions in its fast-growing optical networking markets through an extensive product and technology portfolio and close relationships with a wide range of market-leading customers. The company competes against various public and private companies providing photonic components, modules, and systems, and some of these competitors are also customers for certain products. During fiscal years 2026, 2025, and 2024, net revenue from a single end customer which represented 10% or more of total net revenue included Customer A at 26.6% ¹, 15.4% ², and 18.9% ³ respectively, and Customer B at 15.0% ⁴, 16.0% ⁵, and 11.4% ⁶ respectively.

Lumentum generates revenue through the sale of optical and photonic products, disaggregated into Components and Systems. A Components product is an individual building block that goes into creating a larger solution, including semiconductor laser chips, laser sub-assemblies, line subsystems, and wavelength management systems, supplied to customers who integrate them into their own full system solutions. A Systems product is a complete, stand-alone solution that delivers full functionality, including optical modules, optical circuit switches, and industrial lasers such as short-pulse solid-state lasers and kilowatt-class fiber lasers. The company's products enable high-capacity optical links for cloud computing, AI/ML workloads, data center interconnect applications, and communications service provider networks, as well as enterprise network infrastructure needs including storage area networks, local area networks, and wide area networks. Industrial laser products are used for precision material processing across diverse industries including semiconductor and microelectronics fabrication, electric vehicle and battery production, metal cutting and welding, and advanced manufacturing. In the consumer electronics market, laser light sources are integral components of 3D sensing cameras used in smartphones, computers, and other consumer electronics devices.

Within data center and AI/ML applications, Lumentum's products enable high-speed interconnection across networked servers, AI accelerators, storage, and switches. The company offers optical transceivers and data interconnect solutions essential for connecting servers, switches, and routers within data centers, and manufactures key components including high-speed laser transmitters, photonic integrated circuits, photodiodes, and high-power laser light sources. For data center interconnects, Lumentum offers both its own coherent pluggable transceivers and the underlying ultra-narrow linewidth laser and coherent components. In metro and long-haul optical networks, the company offers a comprehensive suite of coherent and direct-detect optical transmission components, modules, and optical transport solutions, including tunable transceivers, transmitter modules, high-speed coherent components, ROADMs, optical amplifiers, and optical channel monitors. The portfolio also includes pump lasers for optical amplifiers and passive components such as switches, attenuators, and wavelength-division multiplexing systems, as well as optical circuit switches for data center applications.

Lumentum also offers a comprehensive range of industrial lasers, including fiber lasers delivering kilowatt-class output power and beam quality for sheet metal processing and general manufacturing, and high-power solid-state and ultrafast lasers for precision machining tasks like drilling in printed circuit boards, wafer singulation, glass cutting, and solar cell scribing. The company's 3D sensing products are primarily laser light sources, including higher-performance vertical-cavity surface-emitting lasers and VCSEL arrays. In optical networking, the company focuses on technology leadership through innovation in close partnership with customers, cost leadership, and functional and vertical integration, aiming to drive the next phase of data center infrastructure and communication data network scaling with technologies that are faster, more energy-efficient, more agile, and more reliable. In industrial lasers, the company leverages long-term relationships with OEM customers and a broad product and manufacturing technology portfolio to create innovative solutions.

During fiscal year 2026, Lumentum continued to add to its manufacturing footprint by acquiring a manufacturing facility in Greensboro, North Carolina. The company has undertaken various initiatives to consolidate and restructure certain manufacturing and operational sites, particularly in light of efficiencies and synergies achievable from prior acquisitions, while also expanding overall manufacturing capacity for new and high growth product lines across its global manufacturing footprint. The company has completed a number of acquisitions since its spin-off from JDSU in 2015, including Oclaro in 2018, NeoPhotonics Corporation and IPG Photonics' telecom transmission product lines in 2022, and Cloud Light Technology Limited in 2023, which have enhanced the product portfolio, broadened revenue mix, and strengthened the company's position to meet evolving customer needs. As of June 27, 2026, the company owned approximately 1,000 ⁷ U.S. patents and 900 ⁸ foreign patents with expiration dates through 2046 and had approximately 670 ⁹ patent applications pending throughout the world.

For fiscal year 2026, total net revenue was $1,996.2 million ¹⁰, compared to $1,359.5 million ¹¹ in fiscal 2025 and $1,258.3 million ¹² in fiscal 2024. Net income was $1,005.7 million ¹³ for fiscal 2026, compared to a net loss of $68.7 million ¹⁴ in fiscal 2025 and a net loss of $249.3 million ¹⁵ in fiscal 2024. Diluted net income per share was $14.41 ¹⁶ in fiscal 2026, compared to a diluted net loss per share of $1.00 ¹⁷ in fiscal 2025 and a diluted net loss per share of $3.66 ¹⁸ in fiscal 2024. Gross margin was 42.8% ¹⁹ in fiscal 2026, compared to 33.7% ²⁰ in fiscal 2025 and 32.1% ²¹ in fiscal 2024. Cash provided by operating activities was $607.0 million ²² in fiscal 2026, compared to $148.0 million ²³ in fiscal 2025 and $105.4 million ²⁴ in fiscal 2024.

The convergence of cloud computing and AI is driving rapid innovation and expansion in optical hardware for hyperscale operators, with the immense computational demands of training and running AI models shifting infrastructure from traditional copper interconnects to high-speed photonics. Lumentum is investing in next generation optical components for cloud data center and AI/ML applications, including higher speed and higher optical power laser chips for use in high-speed datacom transceivers and data interconnection solutions, and is also investing in the development of new high-speed optical transceiver modules for use in cloud data center, AI/ML, and DCI applications. The company is investing in the emerging optical circuit switching market to enable direct data transmission between fiber optic cables in data centers within the optical plane. In telecommunications networks, the company continues to invest in research and development to develop innovative components and modules such as higher capacity ROADMs and tunable laser and coherent components and transceiver modules needed for long-haul and metro applications.

The industrial laser market is driven by the pursuit of precision and efficiency in material processing, with fiber lasers having surpassed gas lasers in sheet metal processing and welding due to their superior power, beam quality, power efficiency, and cost-effectiveness. Lumentum continues to develop new solid-state, fiber, and ultrafast short pulse lasers targeted at serving customers in the semiconductor device, solar cell, display, and electric vehicle and battery manufacturing markets, as well as broader materials processing and precision micromachining end-markets. The company also continues to develop new and enhanced laser diode products with higher performance and efficiency at lower cost, primarily for the consumer end-market. In the consumer market, laser light sources are integral to 3D sensors primarily used in mobile devices, enabling applications spanning biometric identification, computational photography, virtual and augmented reality, and natural user interfaces.

Management did not provide specific margin or cost outlook figures or targets in the filing beyond the historical results discussed in the financial details.

The company is investing in manufacturing capacity, both internally and with contract manufacturers, to meet demand that is outpacing current supply. The supply chain is complex, and the company needs to manage supply of certain components required to build products while confronted with fluctuating demand from customers. From time to time, the company experiences logistics and supply chain issues and shortages of the types of components required, and when these shortages occur, the company has had to incur incremental supply and procurement costs to increase its ability to fulfill customer demands. The company uses a combination of its own wafer fabrication facilities, assembly and test facilities, as well as third-party contract manufacturers to produce its products, with significant manufacturing facilities located in the United States, Thailand, China, the United Kingdom, Slovenia, and Japan. Significant contract manufacturing partners are located primarily in Thailand, Taiwan, Malaysia, and the Philippines.

Lumentum devotes substantial resources to research and development for the development of new and enhanced products. The company is making significant investments in next generation optical components for cloud data center and AI/ML applications, including higher speed and higher optical power laser chips, new high-speed optical transceiver modules, and the emerging optical circuit switching market. The company continues to invest in research and development for telecommunications networks, including higher capacity ROADMs and tunable laser and coherent components and transceiver modules. The company also continues to develop new solid-state, fiber, and ultrafast short pulse lasers and new and enhanced laser diode products. Management did not disclose specific R&D spending levels, capital expenditure plans, share repurchase authorization amounts, or dividend policy figures for the upcoming period in the filing.

The company is actively monitoring and assessing the global trade environment, particularly with respect to various proposed and enacted changes in tariff regulations and trade restrictions. The ongoing uncertainty surrounding trading policies, including the potential for additional tariffs, restrictions related to customers, and retaliatory measures by non-U.S. governments, continues to create a volatile environment that could disrupt operations. The imposition of tariffs on certain imported goods and materials and export controls on critical components may increase costs and place upward pressure on the cost of goods sold, which may reduce gross margins if the company is unable to pass these costs onto customers through price increases. As a global business with operations spanning diverse geographic regions, the company is exposed to geopolitical risks including war, military conflicts, changes in export regulations, the effects of heightened, scheduled, or proposed tariffs, and shifts in national priorities and foreign relations policies, which can significantly impact the business.

Modifications to trade restrictions and export regulations can adversely affect both product demand and the company's ability to supply customers, which would harm revenue and profit margins. Disruptions in customers' supply chains due to geopolitical events could reduce or delay their demand for products, ultimately impacting revenue and operating results. The company and its customers are also subject to risks relating to the global trade environment due to worldwide operations. The company faces risks associated with reliance on third parties for the timely and reliable delivery of raw materials, and for certain components the company has sole or limited source supply arrangements, meaning the risk of loss or interruption of such supply could impact the ability to deliver certain products on a timely basis.

The company faces significant customer concentration risk, as Customer A represented 26.6% ²⁵ of net revenue in fiscal 2026 and Customer B represented 15.0% ²⁶, and the loss of either could materially harm results. The business is exposed to geopolitical and trade risks, including the imposition of tariffs on imported goods and materials and export controls on critical components, which may increase costs and reduce gross margins if the company cannot pass costs to customers. The company relies on a limited number of suppliers for certain components with sole or limited source supply arrangements, and the risk of loss or interruption of such supply could impact the ability to deliver products on a timely basis. The company's backlog is not necessarily indicative of actual revenue or the level of orders for any succeeding period due to possible changes in product delivery schedules and cancellation of product orders. The company's international operations expose it to risks relating to the global trade environment, and modifications to trade restrictions and export regulations can adversely affect both product demand and the ability to supply customers, harming revenue and profit margins.

Management's message emphasizes the company's position as a global leader in optical and photonic technologies and an industry-leading provider based on revenue and market share, with products essential to cloud, AI/ML, telecommunications, consumer, and industrial end-market applications. The strategic priorities emphasized for the period ahead include technology leadership through innovation in close partnership with customers, cost leadership, and functional and vertical integration in optical networking, aiming to drive the next phase of data center infrastructure and communication data network scaling with faster, more energy-efficient, more agile, and more reliable technologies. In industrial lasers, the strategic priority is leveraging long-term relationships with OEM customers and the broad product and manufacturing technology portfolio to create innovative solutions that enable customers to win in their markets. Management also highlights the company's commitment to investing in manufacturing capacity to meet demand that is outpacing current supply, and the ongoing assessment of the global trade environment, particularly regarding tariff regulations and trade restrictions.