Summary
Lumentum Holdings Inc. reported robust financial performance for the second quarter and first half of fiscal year 2018, showcasing significant year-over-year revenue growth. Net revenue increased by 52.7% in the quarter and 23.8% for the six-month period, driven primarily by a surge in sales of 3D sensing products within the Optical Communications (OpComms) segment, alongside strong performance in the Commercial Lasers segment. This growth, particularly in 3D sensing, led to a substantial improvement in gross margins, which rose to 42.3% for the quarter and 37.0% year-to-date, a significant jump from the previous year's periods. The company's net income saw a dramatic increase, reaching $204.8 million for the quarter and $211.9 million for the six months, compared to $11.8 million and $8.4 million, respectively, in the prior year. This surge in profitability is largely attributable to the release of U.S. federal and state valuation allowances for deferred tax assets, resulting in a significant tax benefit. Lumentum also highlighted its strategic expansion in 3D sensing VCSEL capacity, shipping over $200 million of these arrays in the second quarter, though anticipating a decline in this revenue stream in the subsequent quarter. Despite strong operational performance, investors should note the concentration risk with major customers like Apple and Huawei, and the potential for future revenue volatility.
Financial Highlights
51 data points| Revenue | $404.60M |
| Cost of Revenue | $232.70M |
| Gross Profit | $171.10M |
| R&D Expenses | $43.80M |
| SG&A Expenses | $35.70M |
| Operating Expenses | $80.30M |
| Operating Income | $90.80M |
| Net Income | $204.80M |
| EPS (Basic) | $3.21 |
| EPS (Diluted) | $3.05 |
| Shares Outstanding (Basic) | 62.20M |
| Shares Outstanding (Diluted) | 64.60M |
Key Highlights
- 1Significant revenue growth: Net revenue increased by 52.7% year-over-year to $404.6 million for the three months ended December 30, 2017, and by 23.8% to $647.8 million for the six months ended December 30, 2017.
- 2Dramatic increase in net income: Net income surged to $204.8 million for the quarter and $211.9 million for the six months, largely due to a significant tax benefit from releasing deferred tax asset valuation allowances.
- 3Improved gross margins: Gross margin expanded by 9.5 percentage points to 42.3% for the quarter and by 4.7 percentage points to 37.0% for the six months, driven by higher sales of 3D sensing and laser products.
- 4Strong 3D sensing performance: The OpComms segment saw substantial growth, particularly from 3D sensing VCSEL arrays, with shipments exceeding $200 million in the second quarter.
- 5Increased operating expenses: Research and Development (R&D) and Selling, General & Administrative (SG&A) expenses increased, reflecting higher stock-based compensation and payroll-related costs.
- 6Significant tax benefit recognized: A major tax benefit of $109.3 million for the quarter and $112.9 million for the six months was recorded due to the release of valuation allowances on deferred tax assets, partially offset by the Tax Cuts and Jobs Act impact.
- 7Customer concentration noted: Key customers like Apple and Huawei represented significant portions of revenue, highlighting potential concentration risk.