Lumentum Earnings Review | Being Sold Out is Now A Problem
American retail's favorite new word: bottleneck.
It’s LITE day (again)! Let’s go.
The headline is that AI Bottleneck Co. beats and guides up, but it’s not enough to satisfy the market after their 2,000% run.
Pre-Call
Let’s look at what the print actually was.
A little disappointing. Seems like they didn’t beat buyside bogeys. This also means no random hidden pricing power anywhere despite the fact that they’re ultra supply-constrained. Operating margin is quite good.
Comparison is the thief of joy, but Bloom did beat in their actuals by 36%. Lumentum is supply-constrained. Bloom is not. This shows us that supply constraints can be as much of a problem as they are a tailwind for these companies.
This guide, though, is REALLY GOOD. If you think back to when they gave us longer-term guidance during OFC, they said that they would get to $1.25b of quarterly revenue run rate in 9-12 months (so March 2027 quarter).
They just guided to nearly a billion in quarterly revenue this quarter.
Let’s do the math. In the March quarter, they added $135m in revenue. This quarter they’re adding $185m in revenue. Their sequential absolute growth is accelerating. Now they’re only around $270m off. This means they might be on track to hit their target up to two quarters early, possibly in the September quarter.
However, for Lumentum, the vast, vast majority of their valuation is based on OCS and CPO, which are heavily concentrated in the out years. Nothing on the near-term financials of the print is actually that material for the valuation. This means that the call is far more important. It is the commentary on the call on OCS and CPO that will actually move CY27 and CY28 EPS estimates, which in turn moves the stock.
Below we talk about each of their business lines:
EML
Transceivers
Scale-Across
OCS
Scale-Up CPO
They all oddly seem to be moving quite differently, which was interesting.
And then, of course, I give my take on whether this quarter was bullish or bearish and paste in my 200-line monster of a revenue build and income statement in Excel for people who are new subscribers and show what I updated.