Lumentum Holdings — 2026Q2 earnings
reported 2026-05-05
EPS $2.37 vs $2.27 est — beat
next session -5.1% (close 2026-05-05 → 2026-05-06)
Source
Press release ↗Summary
A blowout on both lines: revenue nearly doubled year over year to a record $808 million with non-GAAP gross margin at 47.9% and operating margin at 32.2%, swinging GAAP results from a year-ago loss to $1.50 in diluted EPS, while cash tripled to $3.17 billion — a build the CFO confirmed came primarily from NVIDIA's direct investment. Michael Hurlston laid out the two forward drivers: a multiyear, multibillion-dollar optical circuit switch purchase agreement whose ramp is explicitly gated by supply-chain tightness, and the ultra-high-power laser chip ramp for co-packaged optics, on schedule for meaningful December-quarter revenue and a multi-hundred-million-dollar purchase order in the first half of calendar 2027. The fiscal Q4 guide of $960 million to $1.01 billion implies another all-time record at the midpoint.
Earnings call
Earnings call webcast ↗Review
From the report
A blowout quarter on both lines: fiscal Q3 2026 (ended March 28, 2026) revenue nearly doubled year over year to a record $808.4 million while non-GAAP gross margin reached 47.9% and non-GAAP operating margin 32.2%, swinging GAAP results from a year-ago loss to $1.50 in diluted EPS. The balance sheet also transformed — cash tripled to $3.17 billion on the March Series A convertible preferred issuance — and guidance calls for another steep step-up to $960 million to $1.01 billion in fiscal Q4.
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Revenue grew 90% year over year to a record $808 million in fiscal Q3, which CEO Michael Hurlston called an exceptional quarter. show quote
“Lumentum delivered an exceptional third quarter, with revenue growing 90% year over year to a record $808 million.”
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Margin expansion outpaced the headline growth: gross margin improved 540 basis points and operating margin 700 basis points quarter over quarter. show quote
“While our top line growth continues to garner headlines, the more impressive part of our recent performance has been our margin expansion. In fiscal Q3, gross margin improved by 540 basis points on quarter and operating margin by 700 basis points”
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Mix was helped by laser chips and 'scale-across' components — pump lasers and narrow linewidth laser assemblies — with co-packaged optics and optical circuit switches framed as the next earnings-power drivers. show quote
“This quarter, mix was aided by strength in laser chips, but also by a less-heralded part of our portfolio, ‘scale-across’ components, which include our pump lasers and narrow linewidth laser assemblies. As our key growth drivers of co-packaged optics and optical circuit switches begin to kick in, we would expect further increases in earnings power.”
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Cash, equivalents and short-term investments jumped $2,017.0 million sequentially to $3,172.3 million, primarily from the March 2026 Series A Convertible Preferred Stock issuance. show quote
“The Company held $3,172.3 million in total cash, cash equivalents, and short-term investments at the end of the third quarter of fiscal year 2026, up $2,017.0 million from the end of the second quarter of fiscal year 2026 primarily due to the proceeds from the issuance of Series A Convertible Preferred Stock in March 2026.”
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Business outlook: fiscal Q4 2026 net revenue guided to $960 million to $1.01 billion, another large sequential step-up. show quote
“Net revenue in the range of $960 million to $1.01 billion”
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From the call
On the call, CFO Wajid Ali confirmed the quarter's $2.02 billion cash build came primarily from NVIDIA's direct investment, and CEO Michael Hurlston laid out the two big forward drivers: a recently announced multiyear, multibillion-dollar optical circuit switch purchase agreement (with the ramp explicitly gated by supply-chain tightness) and the ultra-high-power laser chip ramp for co-packaged optics, which is on schedule for meaningful December-quarter revenue and a multi-hundred-million-dollar purchase order in the first half of calendar 2027. Guidance of $960 million to $1.01 billion implies another all-time record at the $985 million midpoint.
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CFO Wajid Ali: cash and short-term investments rose $2.02 billion sequentially to $3.17 billion, driven primarily by NVIDIA's direct investment in Lumentum. show quote
“During the third quarter, our cash and short-term investments increased by $2.02 billion to $3.17 billion, with the increase primarily driven by NVIDIA's direct investment in Lumentum.”
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CEO Michael Hurlston: the recently announced multiyear, multibillion-dollar OCS purchase agreement underpins long-term growth, but the ramp's pace and slope are gated by the supply chain. show quote
“In OCS, the multiyear, multibillion-dollar purchase agreement we recently announced ensures sustained long-term growth. Our OCS ramp is largely on track, although our pace and slope are gated by the supply chain.”
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Hurlston said the ultra-high-power laser chip ramp for co-packaged optics is proceeding to plan — on schedule for meaningful December-quarter revenue and fulfillment of a multi-hundred million dollar purchase order slated for the first half of calendar 2027. show quote
“Our ultra-high-power laser chip manufacturing ramp for CPO applications is also proceeding according to plan. We achieved sequential growth this quarter and are on schedule to both deliver meaningful revenue in our December quarter and fulfill the multi-hundred million dollar purchase order slated for the first half of calendar year 2027.”
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CFO Wajid Ali guided fiscal Q4 2026 revenue to $960 million to $1.01 billion, with the $985 million midpoint marking another all-time quarterly record. show quote
“We anticipate net revenue for the fourth quarter of fiscal year '26 to be in the range of $960 million to $1.01 billion. The $985 million midpoint would represent another new all-time quarterly revenue record for Lumentum.”
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as of 2026-08-10