01—Abstract
Summary
Summary of the 10-Q filed November 3, 2026. Cited figures are marked; the original filing is the authoritative source.
Lumentum Holdings Inc. reported a significant increase in revenue and profitability for the three months ended September 26, 2026, compared to the same period in the prior year.
Net revenue surged by 136.5% to $1.26 billiona, driven by robust demand across both Components and Systems product lines, particularly from AI and cloud customers. This revenue growth, coupled with improved manufacturing utilization and a favorable product mix, led to a substantial expansion in gross margin to 51.0%. The company's strategic focus on high-growth markets like AI/ML, cloud data centers, and telecommunications is clearly yielding results.
While Research and Development expenses saw a significant increase, largely due to stock-based compensation adjustments, operating expenses as a percentage of revenue decreased, contributing to a dramatic improvement in operating income. The strong financial performance reflects Lumentum's ability to capitalize on growing market demand and optimize its operations.
02—Key points
Key Highlights
- Net revenue increased by 136.5% to $1.26 billion for the quarter ended September 26, 2026, compared to $533.8 million in the prior year.
- Gross profit grew by 254.8% to $644.0 million, with gross margin expanding to 51.0% from 34.0% year-over-year.
- Net income increased substantially to $360.3 million, or $3.54 per diluted share, compared to $4.2 million, or $0.05 per diluted share, in the prior year.
- Both Components (up 98.9%) and Systems (up 228.8%) product lines saw significant revenue growth.
- Operating expenses as a percentage of net revenue decreased to 22.5% from 32.7% year-over-year, primarily due to lower SG&A and the absence of restructuring charges.
- The company ended the quarter with a strong cash and cash equivalents balance of $1.27 billion, although it decreased from the previous quarter due to investing and financing activities.
- The proposed merger with Marvell was announced, introducing significant forward-looking considerations and potential risks related to deal completion and integration.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q1 FY2027, Lumentum Holdings kept $0.29.
- Revenue$1.26B100.0%
- Cost of revenue−$618.6M49.0%
- Gross profit$644.0M51.0%
- Operating costs−$284.2M22.5%
- Operating income$359.8M28.5%
- Interest, other & tax$500,0000.0%
- Net income$360.3M28.5%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2027filed November 3, 2026Financial Statements
Q1 FY2027 against Q1 FY2026
| Line item | Q1 FY2027Q1 FY2026 | Change |
|---|---|---|
| Revenue | $1.26B$533.80M | +136.5% |
| Gross Profit | $644.00M$181.50M | +254.8% |
| R&D Expenses | $191.80M$81.40M | +135.6% |
| SG&A Expenses | $99.30M$85.10M | +16.7% |
| Operating Expenses | $284.20M$174.80M | +62.6% |
| Operating Income | $359.80M$6.70M | +5270.1% |
| Net Income | $360.30M$4.20M | +8478.6% |
| EPS (Basic) | $3.90$0.06 | +6400.0% |
| EPS (Diluted) | $3.54$0.05 | +6980.0% |
| Shares Outstanding (Basic) | 92.50M70.30M | +31.6% |
| Shares Outstanding (Diluted) | 101.70M78.30M | +29.9% |
05—Questions
Frequently Asked Questions
What drove the significant increase in Lumentum's revenue and profitability this quarter?
The substantial increase in revenue and profitability was driven by a surge in demand from AI and cloud customers, leading to strong growth in both Components and Systems product lines. This higher revenue, combined with improved manufacturing utilization, a favorable product mix, and a decrease in SG&A as a percentage of revenue, significantly boosted gross margins and net income.
How has the company's investment in R&D impacted its financial performance?
R&D expenses increased significantly, largely due to stock-based compensation adjustments related to an executive's retirement. While this impacted the R&D line item, the overall increase in revenue and gross profit led to a much stronger net income. The company views continued R&D investment as critical for its strategic objectives and market differentiation.
What is the current status and outlook regarding the proposed merger with Marvell?
Lumentum has entered into a merger agreement with Marvell, which is a significant event. The completion of this merger is subject to various conditions, including regulatory approvals and stockholder approvals. The fixed exchange ratio means the value of the consideration will fluctuate with Marvell's stock price. Failure to complete the merger could negatively impact Lumentum's business, and if completed, the integration process and realization of synergies will be critical for the combined company's success.
How is the company managing its debt and cash position?
The company has a substantial amount of convertible notes outstanding, with significant fair values often exceeding their carrying amounts. The company's cash and cash equivalents decreased during the quarter due to investing and financing activities, including payments for note conversions and taxes related to stock settlements. Despite the decrease, the company ended the quarter with over $1.27 billion in cash and cash equivalents and has access to a $400 million revolving credit facility, which it believes is sufficient for its liquidity needs for the next 12 months.
06—Continue