[Management View]
Lumentum Holdings outperformed its revised guidance in both revenue and non-GAAP EPS for the fiscal fourth quarter ended June 28, 2025. Key metrics include $480.7 million in revenue, $0.88 non-GAAP EPS, and a 37.8% non-GAAP gross margin. Strategic priorities focus on cloud and AI infrastructure, with significant investments in U.S.-based manufacturing and optical circuit switch (OCS) capacity.

[Outlook]
For fiscal Q1 2026, Lumentum projects non-GAAP revenue between $510 million and $540 million, non-GAAP operating margin of 16%-17.5%, and non-GAAP diluted EPS of $0.95-$1.10. Long-term targets include surpassing $600 million in quarterly revenue by fiscal Q4 2026, with gross margins near or above 40% and operating margins above 20%.

[Financial Performance]
- Quarterly revenue: $480.7 million, up 16% sequentially and 67% YoY in the cloud and networking segment.
- Non-GAAP EPS: $0.88, above the upper bound of guidance.
- Non-GAAP gross margin: 37.8%, up 260 basis points sequentially and 1,000 basis points YoY.
- Non-GAAP operating margin: 15%, up 420 basis points sequentially and over 2,000 basis points YoY.

[Q&A Highlights]
Question 1: Did Apple Intelligence drive sales of the iPhone 16 series? Which features are most popular with users?
Answer: In markets where Apple Intelligence was introduced, the iPhone 16 series outperformed markets where the feature was not introduced. Users used features such as ‘Writing Tools,’ ‘Image Playground,’ and ‘Genmoji’ extensively, especially the ‘Clean Up’ feature. The ‘Clean Up’ feature received a lot of attention in Apple Store demos. Apple Intelligence is also continuing to expand language support, which is expected to further enhance user experience and demand.

Question 2: How should we think about the trajectory and potential of the new OCS product category?
Answer: The OCS product is ramping up, with meaningful revenue expected in Q1, Q2, and significantly in the back half of calendar 2026. The company is currently limited by capacity but is working to ramp up quickly to meet the high demand.

Question 3: Can you provide an update on the CPO opportunity and your competitive position?
Answer: Lumentum remains the sole-source supplier for high-powered lasers in the CPO market, leveraging its expertise from undersea lasers and Raman pumps. The company expects meaningful revenue from CPO in 2026, supported by significant customer commitments.

Question 4: What are the contributions to the $600 million revenue target for fiscal Q4 2026?
Answer: Continued strength in components, a step-up in cloud modules, and significant revenue contributions from OCS are expected to drive growth. The company is also focusing on high-value products and disciplined cost management.

Question 5: How is Lumentum addressing the semiconductor tariffs and potential impacts?
Answer: Management has determined that existing products are currently exempt from recent semiconductor tariffs based on the latest regulatory guidance, with minimal near-term impact recorded.

[Sentiment Analysis]
The tone of the management was confident and optimistic, highlighting strong demand and strategic investments. Analysts' questions focused on growth trajectories, competitive positioning, and potential risks, indicating a positive outlook on Lumentum's future performance.

[Quarterly Comparison]
| Metric | Q4 2025 | Q3 2025 | Q4 2024 |
|-------------------------------|------------------|------------------|------------------|
| Revenue | $480.7 million | $414.1 million | $287.1 million |
| Non-GAAP EPS | $0.88 | $0.75 | $0.45 |
| Non-GAAP Gross Margin | 37.8% | 35.2% | 27.8% |
| Non-GAAP Operating Margin | 15% | 10.8% | 5.0% |

[Risks and Concerns]
- Supply constraints in EML capacity and narrow linewidth lasers.
- Potential impacts from semiconductor tariffs, though currently minimal.
- Dependence on a few large customers for significant revenue contributions.

[Final Takeaway]
Lumentum's strong Q4 performance underscores its strategic positioning in the rapidly growing cloud and AI markets. With robust demand from hyperscale customers and significant investments in manufacturing capacity, the company is well-positioned for sustained growth. Management's confidence in achieving long-term financial targets, including surpassing $600 million in quarterly revenue by fiscal Q4 2026, reflects a positive outlook for investors. However, supply constraints and potential tariff impacts remain key risks to monitor.