Lumentum (LITE) Investor Briefing summary

Strategic Market Opportunity and Growth Outlook

• AI and data center scaling are driving a rapid transition to optical networking, with the addressable market expected to grow at over 25% CAGR and reach $30B+ by 2029.

• Lower power per bit architectures and photonics intensity are expanding the served cloud market at >25% CAGR.

• End-to-end solutions span subsea, long-haul, metro, and intra-data center, with a unique portfolio across all segments.

• Near-term revenue target is set above $3 billion annually with a 20%+ operating margin, primarily from cloud and AI customers.

• Cloud and datacom revenue mix is shifting, with datacom expected to reach 45% of revenue in future quarters, up from 8% in Q2FY23.

Technology Innovation and Product Roadmap

• Indium phosphide-based devices, GaAs, silicon photonics, and MEMS underpin product leadership, with 25 years of investment in high-speed optics.

• Demonstrations include world's first 400G EML, DSP-integrated 400G solutions, and 448G InP EML data transmission, paving the way for next-gen 3.2T optical interfaces.

• Differential EML technology reduces power consumption by up to 45% at 200G+ lane speeds and improves signal integrity, extendable to future 400G+ generations.

• Leadership in CPO and OCS, with over 25 years of expertise, 200+ patents, and proven reliability in MEMS optical switching.

• Manufacturing scale is expanding, with InP chip capacity doubling in 18 months and Thailand campus supporting 800G and 1.6T transceiver production.

Financial Model and Execution Plan

• Path to $500M quarterly run rate by end of calendar 2025, driven by EML capacity and OCS shipments.

• OCS and ultra-high-power lasers are expected to drive growth from $500M to $750M per quarter, both with above-average gross margins.

• Operating margins are projected to exceed 20% as volume production ramps, with gross margins rising from 33.8% to 39-42%.

• CapEx and capacity expansions are ongoing, with further investments planned into 2026 to support growth.

• Structural cost savings and operational scale are key levers for profitability expansion.