Lumentum Holdings Inc. Q2 FY2026 earnings call

Michael Hurlston stated Lumentum had a standout second quarter with over 65% year - over - year revenue growth and non - GAAP operating margin increase of over 1,700 basis points. Revenue hit $665.5 million, a company record. Key growth drivers include cloud transceivers, optical circuit switches (OCS), co - packaged optics (CPO), and optical scale - up. OCS business exceeded internal expectations with order backlog surging past $400 million. Cloud transceivers saw significant growth, and CPO secured an additional multi - $100 million purchase order. Components business was boosted by broad - based demand across various products, and systems revenue was driven by cloud transceivers and OCS.

Components revenue for the quarter reached $443.7 million, representing a 17% sequential increase and 68% year-over-year growth. Systems revenue of $221.8 million increased 43% sequentially in Q2 and 60% year-over-year.

Lumentum anticipates net revenue for Q3 2026 to be in the range of $780 to $830 million, with a midpoint of $805 million. Non - GAAP operating margin is projected to be in the range of 30% to 31%, and diluted net income per share is expected to be in the range of $2.15 to $2.35.

Supply - demand imbalance for indium phosphide capacity, potential manufacturing and supply chain disruptions, and competition in the optical technology market.

Q: Simon Leopold asked about the OCS market and price increases.

A: Michael Hurlston said the OCS backlog is well over $400 million with most to be shipped in the second half of the calendar year, and price increases are impacting the top line and gross margin.

Q: Samik Chatterjee inquired about the indium phosphide capacity ramp and new fabs.

A: Michael Hurlston stated they pulled forward some capacity increase, are considering new fabs, and transceiver demand is higher than expected.

Q: Ryan Koontz asked about the transceiver market transition to 1.6T and CPO laser opportunity.

A: Michael Hurlston and Wupen Yuen discussed EML demand, silicon photonics in the transceiver market, and CPO reliability.

Q: Vijay Rakesh asked about the CPO run rate and indium phosphide pricing.

A: Michael Hurlston and Wupen Yuen talked about CPO ramp and capacity and pricing tailwinds.

Q: Papa Sylla asked about visibility on EML and CPO opportunity.

A: Michael Hurlston and Wupen Yuen discussed supply - demand gap, long - term agreements (LTAs), and CPO scale - up opportunity.

Q: Ruben Roy asked about OCS momentum and 800 gig vs 1.6 terabit mix.

A: Michael Hurlston and Wupen Yuen said OCS is broad - based and 1.6T is accelerating.

Q: George Notter asked about supply and outsourcing.

A: Michael Hurlston said they are using contract manufacturing and optimizing factory space