Fiscal Fourth Quarter Highlights:

• Net revenue of $370.8 million
• GAAP operating loss of 15.1%; Non-GAAP operating margin of 9.1%
• GAAP diluted net loss per share of $0.88; Non-GAAP diluted net income per share of $0.59

Fiscal Year 2023 Highlights:

• Net revenue of $1.77 billion
• GAAP operating loss of 6.5%; Non-GAAP operating margin of 19.2%
• GAAP diluted net loss per share of $1.93; Non-GAAP diluted net income per share of $4.56

Lumentum Holdings Inc. (“Lumentum” or the “Company”) today reported results for its fiscal fourth quarter and full year ended July 1, 2023.

“With generational upgrades in the backbone of the network and increased customer activity for AI in the data center, we expect year-over-year Telecom and Datacom growth in calendar 2024,” said Alan Lowe, President and CEO. “Fourth quarter revenue and EPS results were above the midpoints of our guidance. We believe that the current customer inventory correction cycle will continue through the balance of the calendar year, and therefore, our shipments will be below end-market demand. During this transition period, we are delivering as planned on our product roadmaps and are tracking ahead of our previously announced synergy plans.”

Fiscal Fourth Quarter Highlights:

Net revenue for the fiscal fourth quarter of 2023 was $370.8 million, with GAAP net loss of $60.2 million, or $0.88 per diluted share. Net revenue for the fiscal third quarter of 2023 was $383.4 million, with GAAP net loss of $39.3 million, or $0.57 per diluted share. Net revenue for the fiscal fourth quarter of 2022 was $422.1 million, with GAAP net income of $34.7 million, or $0.49 per diluted share.

Non-GAAP net income for fiscal fourth quarter of 2023 was $40.2 million, or $0.59 per diluted share. Non-GAAP net income for fiscal third quarter of 2023 was $51.8 million, or $0.75 per diluted share. Non-GAAP net income for the fiscal fourth quarter of 2022 was $105.0 million, or $1.47 per diluted share.

The Company held $2,013.6 million in total cash, cash equivalents, and short-term investments at the end of the fiscal fourth quarter of 2023, an increase of $346.4 million from the third quarter of 2023. In June 2023, we issued $603.7 million in aggregate principal amount of convertible notes due in 2029 (the “2029 Notes”). Net proceeds from the issuance of 2029 Notes were $599.4 million, after deducting $4.3 million of net issuance costs. Concurrent with the issuance of the 2029 Notes, we used $132.8 million of the net proceeds to repurchase $125.0 million aggregate principal amount of our convertible notes due in 2024 ( the “2024 Notes”) and $125.0 million of the net proceeds to repurchase our common stock.

Full Fiscal Year 2023 Highlights:

Net revenue for fiscal year 2023 was $1,767.0 million, with GAAP net loss of $131.6 million, or $1.93 per diluted share. Net revenue for fiscal year 2022 was $1,712.6 million, with GAAP net income of $198.9 million, or $2.68 per diluted share.

Non-GAAP net income for fiscal year 2023 was $315.3 million, or $4.56 per diluted share. Non-GAAP net income for fiscal year 2022 was $449.2 million, or $6.05 per diluted share.

Cash from operations for the fiscal year of 2023 was $179.8 million.

The tables above provide comparisons of quarterly and annual results to prior periods, including sequential quarterly and year-over-year changes. A reconciliation between GAAP and non-GAAP measures is contained in this release under the section titled “Use of Non-GAAP Financial Measures.”

Business Outlook

Lumentum expects the following for the fiscal first quarter of 2024:

• Net revenue in the range of $300 million to $325 million
• Non-GAAP operating margin of 1.0% to 4.0%
• Non-GAAP diluted earnings per share of $0.20 to $0.35

We have not provided reconciliations from GAAP to non-GAAP measures for our outlook. A large portion of non-GAAP adjustments, such as restructuring charges, stock-based compensation, non-GAAP income tax reconciling adjustments, acquisition related costs, and other costs and contingencies unrelated to current and future operations are by their nature highly volatile and we have low visibility as to the range that may be incurred in the future. The non-GAAP diluted earnings per share forecast is based on an estimated share count of 67.0 million.

Conference Call

Lumentum will host a conference call today, August 17, 2023, at 5:30 am PT/8:30 am ET. A live webcast of the call and the replay will be available on the Lumentum website at http://investor.lumentum.com through August 24, 2023, at 8:59 pm PT. To listen to the live conference call, dial (888) 575-5163 or (416) 764-8620 and reference the conference ID 45504989. To access the replay, dial (877) 674-7070 or (416) 764-8692 and reference the passcode 504989#. Supporting materials outlining the Company’s latest financial results will be posted on http://investor.lumentum.com under the “Events and Presentations” section concurrently with this earnings press release. Lumentum has used, and intends to continue to use, its Investor Relations website as means of disclosing material nonpublic information and for complying with its disclosure obligations under Regulation FD. This press release is being furnished as an exhibit to a Current Report on Form 8-K filed with the Securities and Exchange Commission and will be available at http://www.sec.gov/.

About Lumentum

Lumentum (NASDAQ: LITE) is a market-leading designer and manufacturer of innovative optical and photonic products enabling optical networking and laser applications worldwide. Lumentum optical components and subsystems are part of virtually every type of telecom, enterprise, and data center network. Lumentum lasers enable advanced manufacturing techniques and diverse applications including next-generation imaging and sensing capabilities. Lumentum is headquartered in San Jose, California with R&D, manufacturing, and sales offices worldwide. For more information, visit www.lumentum.com and follow Lumentum on LinkedIn, X (formerly known as Twitter), Facebook, Instagram and YouTube.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These include statements regarding our beliefs and expectations with respect to our markets, customers and industry, any anticipation or guidance as to demand for our products and technology from our customers and their end customers, including drivers of that demand, statements regarding acquisition synergies and our guidance with respect to future net revenue, non-GAAP diluted earnings per share, and non-GAAP operating margins. These forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those projected. Among the factors that could cause actual results to differ from those contemplated are: (a) uncertainty and volatility in the global markets, including uncertainty and volatility in the macroeconomic environment, volatility and uncertainty in banking and financial services sectors, inflationary pressures, changes in the political or economic environment, such as geopolitical conflicts, war, trade and export restrictions and the imposition of tariffs or other duties, and the effect of such market disruptions on demand for our products and our ability to obtain components for our products; (b) quarter-over-quarter product mix fluctuations, which can materially impact profitability measures due to the broad gross margin ranges across our portfolio; (c) decline of average selling prices across our businesses or increase in costs, either of which will also decrease our margins; (d) effects of seasonality; (e) the ability of our suppliers and contract manufacturers to meet production, quality, and delivery requirements for our forecasted demand and the effect of ongoing supply chain constraints, particularly in semiconductors; (f) changes in customer demand, including due to changes in inventory practices and end-customer demand; (g) our ability to attract and retain new customers, particularly in the imaging and sensing market; and (h) the risk that Lumentum’s financing or operating strategies will not be successful. For more information on these and other risks, please refer to the “Risk Factors” section included in the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended April 1, 2023 filed with the Securities and Exchange Commission, and in the Company’s other filings with the Securities and Exchange Commission, including the Company’s Annual Report on Form 10-K for the fiscal year ended July 1, 2023, which will be filed with the Securities and Exchange Commission. The forward-looking statements contained in this presentation are made as of the date hereof and the Company assumes no obligation to update such statements, except as required by applicable law.

Category: Financial

The following financial tables are presented in accordance with GAAP, unless otherwise specified.

Use of Non-GAAP Financial Measures

In this press release, Lumentum provides investors with certain non-GAAP financial measures: gross profit, gross margin, research and development expense, selling, general and administrative expense, operating margin, income from operations, interest and other income (expense), net, income before income taxes, provision for income taxes, net income, and net income per share on a non-GAAP basis, as well as the non-GAAP measures of EBITDA and Adjusted EBITDA. Lumentum believes this non-GAAP financial information provides additional insight into the Company’s on-going business operations and results, as well as cash generation, and has therefore chosen to provide this information to investors for a more consistent basis of comparison and to help them evaluate the results of the Company’s on-going operations and enable more meaningful period to period comparisons. In addition, the Company believes that providing certain of these measures allows investors to better understand the Company’s operating performance and cash flows and, importantly, to evaluate the methodology and information used by management to monitor, manage, evaluate and measure the Company’s business, results of operations, and cash flows. However, these measures may be different from non-GAAP measures used by other companies, limiting their usefulness for comparison purposes. The non-GAAP financial measures used in this press release should not be considered in isolation from measures of financial performance prepared in accordance with GAAP. Investors are cautioned that there are material limitations associated with the use of non-GAAP financial measures as an analytical tool. In particular, many of the adjustments to our GAAP financial measures reflect the exclusion of items that are recurring and will be reflected in our financial results for the foreseeable future. Further, these non-GAAP financial measures may not be comparable to similarly titled measurements reported by other companies.

Our non-GAAP measures used in this press release exclude (i) stock-based compensation, (ii) acquisition related stock-based compensation, (iii) acquisition related costs, (iv) amortization of acquired intangibles, (v) amortization of acquired inventory fair value adjustments, (vi) restructuring and related charges, (vii) foreign exchange (gains) losses, net, (viii) non-cash interest expense on convertible notes, (ix) non-recurring expenses related to litigation matters, (x) intangible assets write-off, (xi) integration related costs, (xii) non-GAAP income tax reconciling adjustments, and (xiii) other (gains) charges related to non-recurring activities.

A quantitative reconciliation between GAAP and non-GAAP financial data with respect to historical periods is included in the supplemental financial table attached to this press release.

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