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Margin Improvements For Lumentum

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Q3 shows better year-on-year margins and reflects a diverse product portfolio, says CEO

Lumentum Holdings has reported results for its fiscal third quarter ended April 3, 2021, which was a 14-week period.

Net revenue for Q3 2021, which was reduced by $14.8 million that was deferred, was $419.5 million, with GAAP net income of $225.5 million, or $2.85 per diluted share. Net revenue for Q2 2021 was $478.8 million, with GAAP net income of $83.2 million, or $1.06 per diluted share. Net revenue for Q3 2020 was $402.8 million, with GAAP net income of $43.4 million, or $0.56 per diluted share.

Non-GAAP net income for Q3 2021 was $110.6 million, or $1.40 per diluted share. Non-GAAP net income for the fiscal second quarter of 2021 was $155.7 million, or $1.99 per diluted share. Non-GAAP net income for Q3 2020 was $98.0 million, or $1.26 per diluted share.


GAAP gross margin was 44.1 percent; Non-GAAP gross margin of 49.9 percent. GAAP operating margin was 63.6 percent; Non-GAAP operating margin of 27.9 percent.

The company held $2,054.6 million in total cash, cash equivalents, and short-term investments at the end of Q3 2021, up $354.3 million compared to the end of the Q2 of 2021.

"The strong year on year margin improvements in our third quarter results highlight a product portfolio increasingly rich in new and differentiated products that are aligned with multi-year favourable market trends and the impact of continuous improvement in our operations," said Alan Lowe, president and CEO.

"Out of an abundance of caution, we deferred $14.8 million of revenue due to delays in 5G deployments in China, which decreased our reported revenue accordingly. Despite the lower revenue, due to the strength of our financial model we achieved approximately 50 percent non-GAAP gross margin, and strong non-GAAP operating margin and EPS, both of which were within our guidance ranges.

"Between our product and technology portfolio, our design-wins with market leading customers, and the positive changes in our business model and the industry over the past several years, I believe the future continues to be very bright at Lumentum."

"Based on confidence in our long-term outlook, and our cash balance having increased by more than $600 million over the past 12 months through strong cash generation, the Lumentum board of directors has approved a share buyback program of up to $700 million over the next two years," said Wajid Ali, Executive Vice President and CFO. "Despite short-term headwinds in our industry, our guidance is consistent with our historical seasonality when normalising for the revenue we deferred and the recent 14-week quarter."

Business Outlook

Lumentum expects the following for the fiscal fourth quarter 2021: Net revenue in the range of $360 million to $400 million; non-GAAP operating margin of 22.5 percent to 25.0 percent; and non-GAAP diluted earnings per share of $0.92 to $1.14.



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