Lumentum revenue jumps 109% as AI optical demand accelerates

Lumentum reported fiscal Q4 revenue of $1.006 billion, up 109% year over year and beating the $987.7 million consensus.

"We are positioned at the heart of a secular industry shift," CEO Michael Hurlston said, as rising AI computing speeds push data center operators toward optical connectivity.

Metric	Actual	Consensus	Beat/Miss
Revenue	$1.006B	$987.7M	+1.9%
EPS (non-GAAP)	$3.23	$2.97	+8.8%

Non-GAAP gross margin expanded 1,260 basis points to 50.4%, while operating margin more than doubled to 36.6%. Components revenue rose 103% to $649.4 million, and systems revenue climbed 123% to $356.9 million.

Shares initially fell 2% after the print even as management guided fiscal Q1 revenue to $1.225 billion to $1.275 billion. The $1.25 billion midpoint implies roughly 24% sequential growth and lets Lumentum reach its target operating model more than one quarter ahead of schedule. Adjusted EPS guidance of $4.05 to $4.35 and operating margin of 39.5% to 40.5% both exceed the company's target model for that revenue level.

Pump laser shipments rose more than 80% year over year, with Hurlston saying the company remains "effectively sold out for the foreseeable future" and expects to quadruple output over coming quarters. The company confirmed its first optical circuit switch quarter above $100 million in Q1 and booked its first external light source module order for delivery in the second half of 2027. Management also signed an indium phosphide substrate supply agreement with AXT to secure materials for high-power lasers.

Cloud transceiver shipments were led by record 800G volumes, with production of next-generation 1.6T modules starting on schedule. Hurlston said 1.6T adoption will accelerate from the first fiscal quarter through calendar 2027, giving Lumentum a share advantage over larger rivals. The company recorded a $7.2 billion GAAP net loss, reflecting a one-time, non-cash $7.8 billion debt-extinguishment charge tied to converting convertible notes into equity.

NVIDIA's $2.02 billion investment and additional Greensboro capacity expected in 2028 underpin the growth outlook. The guidance raise signals management expects AI optical demand to keep accelerating. Investors will watch the fiscal Q1 earnings call for updates on co-packaged optics and optical circuit switch ramps.

This article is for informational purposes only and does not constitute investment advice.