Lumentum Holdings Inc (LITE) Faces Challenges Despite Revenue Uptick in Fiscal Q2 2024
Net Revenue: Increased to $366.8 million in Q2 FY 2024, up 15.5% from Q1 FY 2024 but down 27.5% Y/Y.
GAAP Gross Margin: Declined significantly to 17.4%, reflecting a decrease from both Q1 FY 2024 and Q2 FY 2023.
Non-GAAP Gross Margin: Stood at 32.6%, also showing a decrease from previous periods.
GAAP Operating Loss: Widened to 28.7%, with a substantial year-over-year increase in losses.
Non-GAAP Operating Margin: Remained positive at 3.5%, albeit lower than the same quarter last year.
GAAP Diluted Net Loss Per Share: Increased to $1.47, compared to a net loss of $0.46 per share in Q2 FY 2023.
Non-GAAP Diluted Net Income Per Share: Came in at $0.32, a decrease from $1.52 in the prior year's quarter.
Lumentum Holdings Inc (NASDAQ:LITE), a leading provider of optical and photonic products, released its 8-K filing on February 8, 2024, detailing the financial results for its fiscal second quarter ended December 30, 2023. The company, headquartered in San Jose, California, operates primarily in two segments: OpComms and Lasers, with the former generating the majority of its revenue. Lumentum's products are integral to a variety of applications, including telecommunications, networking equipment, and commercial lasers used in manufacturing and inspection.
The fiscal second quarter saw a mixed financial performance from Lumentum. While net revenue increased from the previous quarter, it marked a significant decline from the same quarter in the previous year. The company's GAAP gross margin and operating margin both experienced notable year-over-year decreases. Lumentum reported a GAAP diluted net loss per share of $1.47, which is a deeper loss compared to the net loss of $0.46 per share in the fiscal second quarter of 2023.
Despite these challenges, Lumentum's non-GAAP figures provided some positive news, with a diluted net income per share of $0.32. However, this still represents a decrease from the $1.52 per share reported in the same period last year. The company ended the quarter with $1,224.0 million in total cash, cash equivalents, and short-term investments, a decrease from the previous quarter, primarily due to the acquisition of Cloud Light Technology Limited.
President and CEO Alan Lowe commented on the company's strategic initiatives, stating:
"Lumentum stands at the leading edge of photonics innovation, partnering with customers to enable the future of data centers and the networks that connect them... We are strategically expanding our leading-edge transceiver manufacturing capacity... We will be ramping capacity this summer and expect to lead the first wave of 1.6T transceivers for multiple customers at this site."
However, Lowe also acknowledged the current market headwinds, including sluggish carrier capex spending and extended customer inventory digestion expected through the balance of fiscal 2024. Despite these challenges, he expressed confidence in the company's market position and the anticipated recovery and growth of the business.
For the fiscal third quarter of 2024, Lumentum anticipates net revenue in the range of $350 million to $380 million, with a non-GAAP operating margin of 2.0% to 5.0%, and non-GAAP diluted earnings per share of $0.20 to $0.35.
Lumentum's financial tables highlight the changes in net revenue by segment, with the Cloud & Networking segment contributing 78.2% of net revenue, despite a year-over-year decrease. The Industrial Tech segment also saw a decline in revenue compared to the previous year.
The company's balance sheet reflects the impact of the Cloud Light acquisition, with an increase in goodwill and other intangible assets. The condensed consolidated statements of operations and balance sheets provide a detailed view of Lumentum's financial position and performance over the quarter.
In conclusion, Lumentum Holdings Inc (NASDAQ:LITE) is navigating a challenging market environment with strategic investments and cost management. While the company faces headwinds such as decreased carrier spending and inventory adjustments, its focus on innovation and capacity expansion positions it for potential growth as market conditions improve.
Explore the complete 8-K earnings release (here) from Lumentum Holdings Inc for further details.
This article first appeared on GuruFocus.
