Q4 2024 Lumentum Holdings Inc Earnings Call

August 14, 2024

Speaker Change: Good day everyone and welcome to the Lumentum Holdings fourth quarter fiscal year 2024 earnings call. All participants will be in a listen only mode.

Operator: quarter fiscal year 2024 earnings call. All participants will be in a listen only mode.

Operator: Court of fiscal year 2024 earnings call. All participants will be in a list and only mode. Please also note today's event is being recorded for replay purposes.

Operator: If you'd like to queue for a question on today's call, you can do so by dialing Star One on your telephone keypad. We do ask that you limit yourself to one question and one follow-up.

Speaker Change: Please also note today's event is being recorded for replay purposes.

Speaker Change: If you'd like to queue for a question on today's call, you can do so by dialing star 1 on your telephone keypad. We do ask that you limit yourself to one question and one follow-up. At this time, I would like to turn the conference call over to Kathy Ta, Vice President of Investor Relations. Ms. Ta, please go ahead.

Kathy Tom: At this time, I'd like to turn the conference call over to Kathy Tom, Vice President of Investor Relations. Ms. Todd, please go ahead. Thank you and welcome to the Mentor's Fiscal Force quarter and full year 2024 earnings call. This is Kathy Tom, the Mentor's Vice President of Investor Relations. Joining me today are Alan Lowe, President and Chief Executive Officer, Wajid Ali, Executive Vice President and Chief Financial Officer, and Chris Kulgen, Senior Vice President and Chief Strategy and Corporate Development Officer. Today's call will include forward-looking statements, including statements regarding our strategies, trends, and expectations for our products and technologies, including demands.

Operator: Please also note today's event is being recorded for replay purposes. If you'd like to queue for a question on today's call, you can do so by dialing star one on your telephone keypad. We do ask that you limit yourself to one question and one follower. At this time, I would like to turn the conference call over to Kathy Ta, Vice President of Investor Relations. Ms. Ta, please go ahead.

Kathy Ta: Thank you and welcome to Lumentum's fiscal fourth quarter and full year 2024 earnings call. This is Kathy Ta, Lumentum's Vice President of Industrial Relations. Joining me today are Alan Lowe, President and Chief Executive Officer, Wajid Ali, Executive Vice President and Chief Financial Officer, and Chris Coldren, Senior Vice President and Chief Strategy and Corporate Development Officer. Today's call will include forward-looking statements, including statements regarding our strategies, trends, and expectations for our products and technologies, including demand.

Speaker Change: Thank you and welcome to Lumentum's fiscal fourth quarter and full year 2024 earnings call. This is Kathy Ta, Lumentum's Vice President of Industrial Relations.

Speaker Change: Joining me today are Alan Lowe, President and Chief Executive Officer, Wajid Ali, Executive Vice President and Chief Financial Officer, and Chris Koldren, Senior Vice President and Chief Strategy and Corporate Development Officer.

Kathy Ta: Our customers, our end markets and market opportunities, our expectations and beliefs regarding recent acquisitions, including Cloudlight. Macroeconomic Trends, and our expected financial and operating performance, including our guidance, as well as statements regarding our future revenues, financial model, and margin target. These statements are subject to risks and uncertainties that could cause actual results to differ materially from our current expectations. Particularly the risk factors described in our FCC filing.

Speaker Change: Today's call will include forward-looking statements, including statements regarding our strategies, trends, and expectations for our products and technologies, including demand,

Kathy Tom: Our customers, our end-market and market opportunities, our expectations and beliefs regarding recent acquisitions, including Cloud-Vite, macroeconomic trends, and our expected financial and operating performance, including our guidance, as well as statements regarding our future revenues, financial model, and margin targets. These statements are subject to risks and uncertainties that could cause actual results to differ materially from our current expectations, particularly the risk factors described in our FCC filings. We encourage you to review our most recent filings with the SEC, particularly the risk factors described in our most recent 10-Q and in our 10-K that will be filed soon.

Speaker Change: Our customers are in markets and market opportunities, our expectations and beliefs regarding recent acquisitions, including cloud-light

Speaker Change: Macroeconomic Trends, and our expected financial and operating performance, including our guidance, as well as statements regarding our future revenues, financial model, and margin targets.

Speaker Change: These statements are subject to risks and uncertainties that could cause actual results to differ materially from our current expectations, particularly the risk factors described in our SEC filings.

Kathy Ta: We encourage you to review our most recent filings with the SEC, particularly the risk factors described in our most recent 10-Q and in our 10-K that will be filed soon. The forward-looking statements provided during this call are based on Lumentum's reasonable beliefs and expectations as of today. Lumentum undertakes no obligation to update these statements except as required by applicable law. Please also note that unless otherwise stated, all financial results and projections discussed in this call are non-GAAP. Non-GAAP financials are not to be considered as a substitute for or superior to financials prepared in accordance with GAAP.

Speaker Change: We encourage you to review our most recent filings with the SEC, particularly the risk factors described in our most recent 10-Q and in our 10-K that will be filed soon.

Kathy Tom: The forward-looking statements provided during this call are based on the Mentor's reasonable beliefs and expectations as of today. The Mentor undertakes no obligation to update these statements except as required by applicable law. Please also note that, unless otherwise stated, all financial results and projections discussed in this call are non-GAAP. Non-GAAP financials are not to be considered as a substitute for or as to pay your two financials prepared in accordance with GAAP.

Mentum: The forward-looking statements provided during this call are based on the Mentum's reasonable beliefs and expectations as of today.

Lamentum: Lamentum undertakes no obligation to update these statements except as required by applicable law.

Lamentum: Please also note that unless otherwise stated, all financial results and projections discussed in this call are non-GAAP. Non-GAAP financials are not to be considered as a substitute for or superior to financials prepared in accordance with GAAP.

Kathy Ta: Lumentum's press release with the fiscal fourth quarter and fiscal 2024 results and accompanying supplemental slides are available on our website at www.lumentum.com under the investor section. With that, I'll turn the call over to Alan. Thank you, Kathy, and good afternoon, everyone.

Kathy Tom: The Mentor's press release with the fiscal fourth quarter and fiscal 2024 results in accompanying supplemental slides are available on our website at www.Lamentorum.com under the Investors section.

Speaker Change: Lumentum's press release with the fiscal fourth quarter and fiscal 2024 results and accompanying supplemental slides are available on our website at www.lumentum.com under the investors section.

Alan Lowe: With that, I'll turn the call over to Alan. Thank you, Kathy, and good afternoon, everyone. We exceeded the midpoint of our guidance for both revenue and EPS for the fourth quarter. We booked record orders for data-com chips used in data center applications and saw emerging positive trends in the broader networking market. We made significant progress in executing our strategy to grow our cloud business and broaden our customer base, including a new and substantial cloud and AI module opportunities. Lamentum is emerging as a leading provider of tonic solutions for cloud data center operators and AI infrastructure providers.

Speaker Change: With that, I'll turn the call over to Alan.

Alan Lowe: We see to the midpoint of our guidance for both revenue and EPS for the fourth quarter. We booked record orders for Datacom chips used in data center applications and saw emerging positive trends in the broader networking market. We made significant progress in executing our strategy to grow our cloud business and broaden our customer base, including a new and substantial cloud and AI module opportunity. Lumentum is emerging as a leading provider of photonic solutions for cloud data center operators and AI infrastructure providers.

Alan: Thank You Kathy and good afternoon everyone. We exceeded the midpoint of our guidance for both revenue and EPS for the fourth quarter.

Alan: We booked record orders for Datacom chips used in data center applications and saw emerging positive trends in the broader networking market.

Speaker Change: We made significant progress in executing our strategy to grow our cloud business and broaden our customer base, including in new and substantial cloud and AI module opportunities.

Lamentum: Lumentum is emerging as a leading provider of photonic solutions for cloud data center operators and AI infrastructure providers.

Alan Lowe: Partners. Our comprehensive photonics portfolio built on differentiated in-house technology and proven volume manufacturing delivers innovative solutions that address the critical challenges of connectivity, bottlenecks, and power consumption. To achieve our cloud and AI goals, we are implementing a three-pronged strategy. First, we are focused on expanding our customer base to include multiple data center operators and AI infrastructure providers as they migrate to higher speeds. Second, we are scaling up capacity for component and module production that established Lumentum facilities outside of China. And third, we are executing on our differentiated technology roadmaps to support data center compute scaling across future generations of optical interconnect technologies and data center architectures.

Alan Lowe: Our comprehensive photonics portfolio, built on differentiated in-house technology and proven volume manufacturing, delivers innovative solutions that address the critical challenges of connectivity, bottlenecks, and power consumption. To achieve our cloud and AI goals, we are implementing a three-pronged strategy. First, we are focused on expanding our customer base to include multiple data center operators and AI infrastructure providers as they migrate to higher speeds.

Lamentum: Our comprehensive photonics portfolio built on differentiated in-house technology and proven volume manufacturing delivers innovative solutions that address the critical challenges of connectivity, bottlenecks, and power consumption.

Operator: Court of Fiscal Year 2024 earnings call. All participants will be in a list and only mode. Please also note today's event is being recorded for replay purposes. If you'd like to queue for a question on today's call, you can do so by dialing star one on your telephone keypad. We do ask that you limit yourself to one question and one follow-up.

Lamentum: To achieve our cloud and AI goals, we are implementing a three-pronged strategy.

Lamentum: First, we are focused on expanding our customer base to include multiple data center operators and AI infrastructure providers as they migrate to higher speeds.

Lamentum: Second, we are scaling up capacity for component and module production that established Lumentum facilities outside of China.

Kathy Tom: At this time, I'd like to turn the conference call over to Kathy Tom, Vice President of Investor Relations. Ms. Todd, please go ahead. Thank you and welcome to the Mentor's Fiscal Force Quarter and Full Year 2024 earnings call. This is Kathy Tom, the Mentor's Vice President of Investor Relations. Joining me today are Alan Lowe, President and Chief Executive Officer, Wajid Ali, Executive Vice President and Chief Financial Officer, and Chris Kulgen, Senior Vice President and Chief Strategy and Corporate Development Officer.

Alan Lowe: And third, we are executing on our differentiated technology roadmaps to support data center compute scaling across future generations of optical interconnect technologies and data center architecture. I would like to elaborate on our progress in each of these areas.

Lamentum: And third, we are executing on our differentiated technology roadmaps to support data center compute scaling across future generations of optical interconnect technologies and data center architectures.

Alan Lowe: I would like to elaborate on our progress in each of these areas. Our first priority is to expand our customer base within the data center market by leveraging our advanced high-speed optical transceiver capabilities and proven volume. This is one of the most advanced laser transmitter components. As the industry transitions to higher speeds, differentiated technology becomes increasingly valuable to these customers. Within data centers, the shift to 200 G-lane speeds, particularly in 1.6 T optical transceivers, plays to our strengths. The growing importance of single-mode optics and Indian-phosphide lasers, driven by the limitations in multi-mode optics, aligns well with our market and technology leadership positions.

Lamentum: I would like to elaborate on our progress in each of these areas.

Alan Lowe: Our first priority is to expand our customer base within the data center market by leveraging our advanced high-speed optical transceiver capabilities and proven laser transmitter components. As the industry transitions to higher speeds, our differentiated technology becomes increasingly valuable to these customers. Within data centers, the shift to 200G lane speeds, particularly in 1.6T optical transceivers, plays to our strength. The growing importance of single-mode optics and indium phosphide lasers, driven by the limitations in multi-mode optics, aligns well with our market and technology leadership position.

Lamentum: Our first priority is to expand our customer base within the data center market by leveraging our advanced high-speed optical transceiver capabilities and proven laser transmitter components.

Kathy Tom: Today's call will include forward-looking statements, including statements regarding our strategies, trends and expectations for our products and technologies, including demands. Our customers, our end-market and market opportunities, our expectations and beliefs regarding recent acquisitions, including cloud-vite, macroeconomic trends, and our expected financial and operating performance, including our guidance, as well as statements regarding our future revenues, financial model, and margin targets. These statements are subject to risks and uncertainties that could cause actual results to differ materially from our current expectations, particularly the risk factors described in our FCC filings.

Lamentum: As the industry transitions to higher speeds, our differentiated technology becomes increasingly valuable to these customers.

Lamentum: Within data centers, the shift to 200G lane speeds, particularly in 1.6T optical transceivers, plays to our strengths.

Lamentum: The growing importance of single-mode optics and indium-phosphide lasers, driven by the limitations in multi-mode optics, aligns well with our market and technology leadership positions.

Alan Lowe: Our industry-leading 100 G-EML transmitter components have established a strong reputation for performance, quality, and reliability and are currently shipping in record volumes. Our proven capabilities position us favorably as the industry adopts 200 G-Prolane technologies. Our 200 G-EMLs are being qualified by multiple customers for integration into their transceivers in subsequent deployment in a wide range of cloud and AI infrastructures. We anticipate being a key laser supplier in initial 1.6 T transceiver deployments as we ramp up 200 G-EMLs later this fiscal year. In Q4, we achieved record volume shipments of EMLs and secured substantial bookings, which we will be working to fulfill throughout fiscal 2025.

Alan Lowe: Our industry-leading 100G EML transmitter components have established a strong reputation for performance, quality, and reliability, and are currently shipping in record volume. Our proven capabilities position us favorably as the industry adopts 200G per lane technology. Our 200 GEMOs are being qualified by multiple customers for integration into their transceivers and subsequent deployment in a wide range of cloud and AI infrastructure. We anticipate being a key laser supplier in initial 1.6T transceiver deployment, as we ramp up 200 G emails later this fiscal year. In Q4, we achieved record volume shipments of EMLs and secured substantial bookings, which we will be working to fulfill throughout fiscal 2025. This includes initial orders for 200G EMLs from Leading AI Cuts.

Lamentum: Our industry-leading 100G EML transmitter components have established a strong reputation for performance, quality, and reliability, and are currently shipping in record volumes.

Kathy Tom: We encourage you to review our most recent filings with the SEC, particularly the risk factors described in our most recent 10Q, and in our 10K that will be filed soon. The forward-looking statements provided during this call are based on the Mentor's reasonable beliefs and expectations as of today. The Mentor undertakes no obligation to update these statements except as required by applicable law. Please also note that unless otherwise stated, all financial results and projections discussed in this call are non-GAP. Non-GAP financials are not to be considered as a substitute for or as to pay your two financials prepared in accordance with GAP.

Lamentum: Our proven capabilities position us favorably as the industry adopts 200G per lane technologies.

Lamentum: Our 200 GE MLs are being qualified by multiple customers for integration into their transceivers and subsequent deployment in a wide range of cloud and AI infrastructures.

Lamentum: We anticipate being a key laser supplier in initial 1.6T transceiver deployments as we ramp up 200G EMLs later this fiscal year.

Lamentum: In Q4, we achieved record volume shipments of EMLs and secured substantial bookings, which we will be working to fulfill throughout fiscal 2025.

Alan Lowe: This includes initial orders for 200 G-EMLs from leading AI customers. Based on this momentum, we foresee continued strong EML shipments throughout fiscal 2025 and into fiscal 2026. Additionally, we are supplying differentiated laser sources for silicon metonic space transceivers, further broadening our content opportunity within the data center market. We have also made significant progress on our newest 800 G-EMLs and initial 1.6 T transceiver product developed. We are deeply engaged with multiple customers, and we have received favorable feedback after providing product samples to these customers. We have secured a major award with one new customer and are actively working to finalize additional awards with multiple customers.

Lamentum: This includes initial orders for 200G EMLs from leading AI customers.

Alan Lowe: Based on this momentum, we foresee continued strong EML shipments throughout fiscal 2025 and into fiscal 2026. Additionally, we are supplying differentiated laser sources for silicon-methonics-based transceivers, further broadening our content opportunity within the data center market. We've also made significant progress on our newest 800G and initial 1.6T transceiver product development. We are deeply engaged with multiple customers and we have received favorable feedback after providing product samples to these customers.

Lamentum: Based on this momentum, we foresee continued strong EML shipments throughout fiscal 2025 and into fiscal 2026.

Lamentum: Additionally, we are supplying differentiated laser sources for silicon-methonics-based transceivers, further broadening our content opportunity within the data center market.

Lamentum: We have also made significant progress on our newest 800G and initial 1.6T transceiver product development.

Lamentum: We are deeply engaged with multiple customers and we have received favorable feedback after providing product samples to these customers.

Alan Lowe: We have secured a major award with one new customer and are actively working to finalize additional awards with multiple customers. The second prong of our cloud strategy involves expanding manufacturing capacity for both optical transceivers and optical components at established Lumentum facilities outside of, This expansion is critical to supporting our cloud customers growing AI and cloud workloads while ensuring supply chain security. As mentioned earlier, Indian classified lasers are essential for scaling data center infrastructure.

Alan Lowe: Lamentum is emerging as a leading provider of tonic solutions for cloud data center operators and AI infrastructure providers. Partners. Our comprehensive photonics portfolio built on differentiated in-house technology and proven volume manufacturing delivers innovative solutions that address the critical challenges of connectivity, bottlenecks, and power consumption.

Lamentum: We have secured a major award with one new customer and are actively working to finalize additional awards with multiple customers.

Alan Lowe: The second prong of our cloud strategy involves expanding manufacturing capacity for both optical transceivers and optical components at established Lumentum facilities outside of China. This expansion is critical to supporting our cloud customers' growing AI and cloud workloads while ensuring supply chain security. As mentioned earlier, Indian classified lasers are essential for scaling data center infrastructure. Due to overwhelming demand for our critical technology, our Indian classified capacity is fully subscribed to at least the end of calendar 2025, and therefore we can only meet this demand by growing capacity. In the current fiscal first quarter, we have already invested $43 million in our Indian classified way from fab facilities, and we expect to continue to invest in our Indian classified capacity over the next several quarters to keep up with the growing demand of these enabling laser technologies.

Lamentum: The second prong of our cloud strategy involves expanding manufacturing capacity for both optical transceivers and optical components at established momentum facilities outside of China.

Alan Lowe: To achieve our cloud and AI goals, we are implementing a three-pronged strategy. First, we are focused on expanding our customer base to include multiple data center operators and AI infrastructure providers as they migrate to higher speeds. Second, we are scaling up capacity for component and module production that established Lumentum facilities outside of China. And third, we are executing on our differentiated technology roadmaps to support data center compute scaling across future generations of optical interconnect technologies and data center architectures.

Lamentum: This expansion is critical to supporting our cloud customers' growing AI and cloud workloads while ensuring supply chain security.

Lamentum: As mentioned earlier, Indian classified lasers are essential for scaling data center infrastructure.

Alan Lowe: Due to overwhelming demand for our critical technology, our Indian classified capacity is fully subscribed to at least the end of calendar 2025, and therefore, we can only meet this demand by growing to pass... In the current fiscal first quarter, we have already invested $43 million in our indium phosphide wafer fab facilities, and we expect to continue to invest in our indium phosphide capacity over the next several quarters to keep up with the growing demand of these enabling laser technologies. Although the industry faces a broad shortage of indium phosphide lasers, over time, our capacity additions will help mitigate these concerns.

Lamentum: Due to overwhelming demand for our critical technology our Indian classified capacity is fully subscribed to at least the end of calendar 2025 and therefore we can only meet this demand by growing capacity.

Lamentum: In the current fiscal first quarter, we have already invested $43 million in our indium phosphide wafer fab facilities, and we expect to continue to invest in our indium phosphide capacity over the next several quarters to keep up with the growing demand of these enabling laser technologies.

Alan Lowe: I would like to elaborate on our progress in each of these areas. Our first priority is to expand our customer base within the data center market by leveraging our advanced high-speed optical transceiver capabilities and proven volume. This is one of the most advanced laser transmitter components. As the industry transitions to higher speeds are differentiated technology becomes increasingly valuable to these customers. Within data centers, the shift to 200 G-lane speeds, particularly in 1.6 T optical transceivers, plays to our strengths.

Alan Lowe: Although the industry faces a broad shortage of Indian classified lasers, over time, our capacity additions will help mitigate these constraints. However, we anticipate that our production output will remain on allocation through at least the end of calendar 2025. Our significant capacity expansion for optical transceivers in our facility in Thailand is progressing as planned, with the first production line scheduled to start operations this quarter. Based on current engagements with multiple hyperscale cloud operators and AI infrastructure customers, we expect to complete additional phases of our manufacturing capacity expansion over the next 18 months to keep up with the expected strong demand.

Lamentum: Although the industry faces a broad shortage of indium phosphide lasers, over time our capacity additions will help mitigate these constraints.

Alan Lowe: However, we anticipate that our production output will remain on allocation through at least the end of calendar 2025. Our significant capacity expansion for optical transceivers in our facility in Thailand is progressing as planned, with the first production line scheduled to start operations this quarter, based on current engagements with multiple hyperscale cloud operators and AI infrastructure customers. We expect to complete additional phases of our manufacturing capacity expansion over the next 18 months to keep up with the expected strong demand.

Lamentum: However, we anticipate that our production output will remain on allocation through at least the end of calendar 2025.

Lamentum: Our significant capacity expansion for optical transceivers in our facility in Thailand is progressing as planned, with the first production line scheduled to start operations this quarter.

Alan Lowe: The growing importance of single-mode optics and Indian-phosphide lasers, driven by the limitations in multi-mode optics, aligns well with our market and technology leadership positions. Our industry leading 100 G-EML transmitter components have established a strong reputation for performance, quality, and reliability and are currently shipping in record volumes. Our proven capabilities position us favorably as the industry adopts 200 G-Prolane technologies. Our 200 G-EMLs are being qualified by multiple customers for integration into their transceivers in subsequent deployment in a wide range of cloud and AI infrastructures.

Lamentum: Based on current engagements with multiple hyperscale cloud operators and AI infrastructure customers, we expect to complete additional phases of our manufacturing capacity expansion over the next 18 months to keep up with the expected strong demand.

Alan Lowe: Finally, the third prong of our cloud strategy focuses on delivering differentiated technologies to address the evolving challenges of data center scaling, encompassing both increased data link capacity and enhanced energy efficiency. We are actively collaborating with leading edge customers to deliver breakthrough technologies that will support multi-year cloud and AI infrastructure road maps. Optical switching, a critical component of future cloud and AI networking architectures, presents a significant opportunity for us at Lamentum. Our optical switch products in development offer advantages in power efficiency, increased bandwidth, reduced latency, flexibility, and agility. We have shipped evaluation units to multiple customers, and the initial feedback has been overwhelmingly positive.

Alan Lowe: Finally, the third prong of our cloud strategy focuses on delivering differentiated technologies to address the evolving challenges of data center scaling encompassing both increased data link capacity and enhanced energy efficiency. We are actively collaborating with leading edge customers to deliver breakthrough technologies that will support multi-year cloud and AI infrastructure roadmaps, optical switching, a critical component of future cloud and AI networking architectures presents a significant opportunity for us at Lumen. Our optical switch products in development offer advantages in power efficiency, increased bandwidth, reduced latent, Flexibility and Agility.

Lamentum: Finally, the third prong of our cloud strategy focuses on delivering differentiated technologies to address the evolving challenges of data center scaling, encompassing both increased data link capacity and enhanced energy efficiency.

Lamentum: We are actively collaborating with leading-edge customers to deliver breakthrough technologies that will support multi-year cloud and AI infrastructure roadmaps.

Alan Lowe: We anticipate being a key laser supplier in initial 1.6 T transceiver deployments as we ramp up 200 G-EMLs later this fiscal year. In Q4, we achieved record volume shipments of EMLs and secured substantial bookings, which we will be working to fulfill throughout fiscal 2025. This includes initial orders for 200 G-EMLs from leading AI customers. Based on this momentum, we foresee continued strong EML shipments throughout fiscal 2025 and into fiscal 2026. Additionally, we are supplying differentiated laser sources for silicon metonic space transceivers further broadening our content opportunity within the data center market.

Lamentum: Optical switching, a critical component of future cloud and AI networking architectures, presents a significant opportunity for us at Lumentum.

Lamentum: Our optical switch products in development offer advantages in power efficiency, increased bandwidth, reduced latency, flexibility, and agility.

Alan Lowe: We have shipped evaluation units to multiple customers and the initial feedback has been overwhelmingly positive. Another key technology area is enabling the transition to high-density, low-power optical links for future generations. Our ultra-high-power laser technologies have attracted considerable interest from cloud and AI infrastructure customers developing high-density optical inter- Our heritage of delivering high performance, high reliability lasers in high volume production environment position us favorably for this emerging market. Lastly, we are focused on enabling the shift to speeds beyond 200g per lane, such as the 400g per lane generation. Our advanced indium phosphate and photonic integrated circuit capabilities honed through years of experience in data center and high performance telecom applications are essential to meeting future demands.

Lamentum: We have shipped evaluation units to multiple customers and the initial feedback has been overwhelmingly positive.

Alan Lowe: Another key technology area is enabling the transition to high density low power optical links for future generations. Our ultra high power laser technologies have attracted considerable interest from cloud and AI infrastructure customers developing high density optical energy. Architects, our heritage of delivering high performance, high reliability, lasers, and high volume production environment position us favorably for this emerging market. Lastly, we are focused on enabling the shift to speeds beyond 200G per lane, such as the 400G per lane generation. Our Advanced Indian Fossilite and Platonic Integrated Certificate capabilities, honed through years of experience in data center and high performance telecom applications, are essential to meeting future demands.

Lamentum: Another key technology area is enabling the transition to high-density, low-power optical links for future generations.

Lamentum: Our ultra-high-power laser technologies have attracted considerable interest from cloud and AI infrastructure customers developing high-density optical interconnects.

Alan Lowe: We have also made significant progress on our newest 800 G-EMLs and initial 1.6 T transceiver product developed. We are deeply engaged with multiple customers and we have received favorable feedback after providing product samples to these customers. We have secured a major award with one new customer and are actively working to finalize additional awards with multiple customers.

Lamentum: Our heritage of delivering high-performance, high-reliability lasers in high-volume production environments positions us favorably for this emerging market.

Lamentum: Lastly, we are focused on enabling the shift to speeds beyond 200G per lane, such as the 400G per lane generation.

Lamentum: Our advanced indium phosphide and platonic integrated circuit capabilities honed through years of experience in data center and high performance telecom applications are essential to meeting future demands.

Alan Lowe: While the deployment of these products and technologies is a few years away, these are long-term developments requiring early investment and close customer collaboration. We are actively engaged with customers and their R&D teams, and together we are shaping the future of optical technology. Now let me move to additional fiscal fourth quarter revenue and product highlights. As expected, our cloud networking segment had a challenging quarter, with revenue declining 19% sequentially and 11% year over year. Well, overall demand for telecom products was soft in the quarter as expected.

Lamentum: While the deployment of these products and technologies is a few years away, these are long-term developments requiring early investment and close customer collaboration.

Lamentum: We are actively engaged with customers and their R&D teams, and together, we are shaping the future of optical technology.

Alan Lowe: Now let me move to additional fiscal fourth quarter revenue and product highlights. As expected, our cloud networking segment had a challenging quarter with revenue declining 19% sequentially and 11% year over year. While overall demand for telecom products was soft in the quarter as expected, we are encouraged by several positive trends emerging within this part of our business. We saw an increase in shipments for narrow line with single lasers used in 400 ZR modules for data center interconnect applications. With our design winds, we anticipate maintaining a leading market share position in laser components for ZR and ZR Plus applications this fiscal year and in the coming years.

Lamentum: Now let me move to additional Disco 4th quarter revenue and product highlights Let's move to additional Disco 4th quarter revenue and product highlights and product highlights and product highlights and product highlights

Lamentum: As expected, our cloud networking segment had a challenging quarter, with revenue declining 19% sequentially and 11% year-over-year.

Alan Lowe: In the current fiscal first quarter, we have already invested $43 million in our Indian classified way from fab facilities and we expect to continue to invest in our Indian classified capacity over the next several quarters to keep up with the growing demand of these enabling laser technologies. Although the industry faces a broad shortage of Indian classified lasers, over time, our capacity additions will help mitigate these constraints. However, we anticipate that our production output will remain on allocation through at least the end of calendar 2025.

Lamentum: While overall demand for telecom products was soft in the quarter, as expected, we are encouraged by several positive trends emerging within this part of our business.

Alan Lowe: We are encouraged by several positive trends emerging within this part of our business. We saw an increase in shipments for narrow-line width-sensible lasers used in 400 ZR modules for data center interconnect applications. With our design wins, we anticipate maintaining a leading market share position in laser components for ZR and ZR Plus applications this fiscal year and in the coming years. While there are still lingering industry inventory challenges, we are encouraged by recent indications of improvement in the traditional networking model.

Lamentum: We saw an increase in shipments for narrow-line wiptunable lasers used in 400 ZR modules for data center interconnect applications.

Lamentum: With our design wins, we anticipate maintaining a leading market share position in laser components for ZR and ZR Plus applications this fiscal year and in the coming years.

Alan Lowe: While there is still lingering industry inventory challenges, we are encouraged by recent indications of improvement in the traditional networking market. Recent weeks have brought increased customer demand to our newest leading edge coherent transmission and next generation transport products, along with continued signs of customer inventory normalization. Consistent with this advanced road demand is showing promise with growing demand for integrated C plus L band solutions and high port count road and products. In leading edge coherent transmission, we are seeing excellent demand trends for 130 gigabod coherent products and encouraging early traction with our 200 gigabod products. This is driven by customer demand for increased capacity and spectral efficiency fueled by continued bandwidth demand growth.

Lamentum: While there are still lingering industry inventory challenges, we are encouraged by recent indications of improvement in the traditional networking market.

Alan Lowe: Our significant capacity expansion for optical transceivers in our facility in Thailand is progressing as planned with the first production line scheduled to start operations this quarter. Based on current engagements with multiple hyper scale cloud operators and AI infrastructure customers, we expect to complete additional phases of our manufacturing capacity expansion over the next 18 months to keep up with the expected strong demand.

Alan Lowe: Recent weeks have brought increased customer demand to our newest leading edge coherent transmission and next generation transport products, along with continued signs of customer inventory normalization. Consistent with this, Advanced Rotum Demand is showing promise with growing demand for integrated C++ L band solutions and high port count rotum products.

Lamentum: Recent weeks have brought increased customer demand to our newest leading-edge coherent transmission and next-generation transport products, along with continued signs of customer inventory normalization.

Lamentum: Consistent with this, Advanced Rotum Demand is showing promise with growing demand for integrated C++ L band solutions and high port count rotum products.

Alan Lowe: In leading edge coherent transmission, we are seeing excellent demand trends for 130 gigabod coherent products and encouraging early traction with our 200 gigabod products. This is driven by customer demand for increased capacity and spectral efficiency. Fueled by continued bandwidth demand growth. Our broad set of design wins and differentiated technology and manufacturing capabilities position us for continued leadership in these important products in the coming years. We expect our cloud and networking business to show sequential improvement in fiscal Q1. Now let me move to our industrial tech section. Our industrial tech segment revenue increased 2% sequentially, but declined 36% year over year as expected.

Alan Lowe: Finally, the third prong of our cloud strategy focuses on delivering differentiated technologies to address the evolving challenges of data center scaling encompassing both increased data link capacity and enhanced energy efficiency. We are actively collaborating with leading edge customers to deliver breakthrough technologies that will support multi-year cloud and AI infrastructure road maps. Optical switching, a critical component of future cloud and AI networking architectures presents a significant opportunity for us at Lamentum. Our optical switch products in development offer advantages in power efficiency, increased bandwidth, reduced latency, flexibility and agility.

Lamentum: In leading-edge coherent transmission, we are seeing excellent demand trends for 130-gigabaud coherent products and encouraging early traction with our 200-gigabaud products.

Lamentum: This is driven by customer demand for increased capacity and spectral efficiency, fueled by continued bandwidth demand growth.

Alan Lowe: Our broad set of design winds and differentiated technology and manufacturing capabilities position us for continued leadership in these important products in the coming years. We expect our cloud and networking business to show sequential improvement in fiscal Q1.

Lamentum: Our broad set of design wins and differentiated technology and manufacturing capabilities position us for continued leadership in these important products in the coming years.

Lamentum: We expect our cloud and networking business to show sequential improvement in fiscal Q1.

Alan Lowe: Now, let me move to our industrial tech segment. Our industrial tech segment revenue increased to present sequentially but declined 36% year over year, as expected. Like others in this space, we continue to face challenges due to the weak end market demand and high levels of customer inventory. In Industrial Tech, we continue to focus on developing innovative industrial laser products that address rapidly growing applications. The growing demand for higher precision is driving a transition from picosecond to femtosecond lasers. These lasers, with their extremely short pulses, offer more precise material processing without significant heat damage, opening new possibilities in sensitive applications such as semiconductors, displays, and advanced chip packaging.

Lamentum: Now let me move to our industrial tech segment. Our industrial tech segment revenue increased 2% sequentially, but declined 36% year-over-year as expected.

Alan Lowe: Like others in this space, we continue to face challenges due to weak end market demand and high levels of customer inventory. At Industrial Tech, we continue to focus on developing innovative industrial laser products that address rapidly growing applications. The growing demand for higher precision is driving a transition from picosecond to femtosecond lasers.

Lamentum: Like others in this space, we continue to face challenges due to the weak end market demand and high levels of customer inventory.

Lamentum: In industrial tech, we continue to focus on developing innovative industrial laser products that address rapidly growing applications.

Lamentum: The growing demand for higher precision is driving a transition from picosecond to femtosecond lasers.

Alan Lowe: These lasers, with their extremely short pulses, offer more precise material processing without significant heat damage, opening new possibilities in sensitive applications, such as semiconductors, displays, and advanced chip package, These market areas are in turn driven by the growth of AI. The immense computational demands of AI require significant advancements in semiconductors and innovative packaging technologies to support high performance computing. We are actively collaborating with leading semiconductor equipment manufacturers to develop ultra-fast lasers for inter-poser and advanced semiconductor packs.

Lamentum: These lasers, with their extremely short pulses, offer more precise material processing without significant heat damage, opening new possibilities in sensitive applications such as semiconductors, displays, and advanced chip packaging.

Alan Lowe: Lastly, we are focused on enabling the shift to speeds beyond 200G per lane, such as the 400G per lane generation. Our Advanced Indian Fossilite and Platonic Integrated Certificate capabilities, honed through years of experience in data center and high performance telecom applications are essential to meeting future demands. While the deployment of these products and technologies is a few years away, these are long-term developments requiring early investment and close customer collaboration. We are actively engaged with customers and there are indeed teams and together we are shaping the future of optical technology.

Alan Lowe: These market areas are in turn driven by the growth of AI. The immense computational demands of AI require significant advancements in semiconductors and innovative packaging technologies to support high performance computing. We are actively collaborating with leading semiconductor equipment manufacturers to develop ultra-fast lasers for inter-poser and advanced semiconductor packaging. In the fourth quarter, we also successfully delivered both high and low-power symptom blade demo units for advanced display applications. Looking to fiscal Q1, we expect industrial tech to be down sequentially due to continued weak end market demand and ongoing customer inventory adjustments, with a modest seasonal increase in 3D sensing revenue.

Lamentum: These market areas are in turn driven by the growth of AI.

Lamentum: The immense computational demands of AI require significant advancements in semiconductors and innovative packaging technologies to support high-performance computing.

Lamentum: We are actively collaborating with leading semiconductor equipment manufacturers to develop ultrafast lasers for interposer and advanced semiconductor packaging.

Alan Lowe: In the fourth quarter, we also successfully delivered both high- and low-power Simta Blade demo units for advanced display applications. Looking to fiscal Q1, we expect industrial tech to be down sequentially due to continued weak end market demand and ongoing customer inventory adjustments, with a modest seasonal increase in 3D sensing revenue. To summarize, we have made significant progress in executing our strategy to grow our cloud business. We book record orders for Datacom chips and are investing in additional production capacity to help us meet customer demand. We have made excellent progress with multiple new high-speed optical transceiver customer engagements, including securing a major transceiver award with one new customer. We are actively working to secure additional awards from other new cuts.

Lamentum: In the fourth quarter, we also successfully delivered both high- and low-power Simta Blade demo units for advanced display applications.

Lamentum: Looking to fiscal Q1, we expect industrial tech to be down sequentially due to continued weak end market demand and ongoing customer inventory adjustments, with a modest seasonal increase in 3D sensing revenue.

Alan Lowe: To summarize, we have made significant progress in executing our strategy to grow our cloud business. We booked record orders for data conchips and are investing in additional production capacity to help us meet customer demand. We have made excellent progress with multiple new high-speed optical transceiver customer engagements, including securing a major transceiver award with one new customer. We are actively working to secure additional awards from other new customers. Our robust pipeline of cloud customer engagements and improving trends in the traditional networking market reinforce our confidence in the target we highlighted on our last earnings call. This is to grow quarterly revenue to $500 million by the end of calendar 2025.

Speaker Change: To summarize, we have made significant progress in executing our strategy to grow our cloud business.

Speaker Change: We've booked record orders for Datacom chips and are investing in additional production capacity to help us meet customer demand.

Speaker Change: We have made excellent progress with multiple new high-speed optical transceiver customer engagements, including securing a major transceiver award with one new customer.

Alan Lowe: With our design winds, we anticipate maintaining a leading market share position in laser components for ZR and ZR plus applications this fiscal year and in the coming years. While there is still lingering industry inventory challenges, we are encouraged by recent indications of improvement in the traditional networking market. Recent weeks have brought increased customer demand to our newest leading edge coherent transmission and next generation transport products along with continued signs of customer inventory normalization.

Speaker Change: We are actively working to secure additional awards from other new customers.

Alan Lowe: A robust pipeline of cloud customer engagements and improving trends in the traditional networking market reinforce our confidence in the target we highlighted on our last earnings call. This is to grow quarterly revenue to $500 million by the end of calendar 2025. We foresee continued significant growth into 2026 and 2027. We are executing on new cloud and AI opportunities that we expect will elevate our cloud business to a multi-billion dollar annual run rate in the coming year. Before turning the call over to Wajid, I want to express my sincere gratitude to all our employees and customers worldwide for their unwavering focus, dedication, and collaborative spirit. With that, Wajid.

Speaker Change: A robust pipeline of cloud customer engagements and improving trends in the traditional networking market reinforced our confidence in the target we highlighted on our last earnings call.

Speaker Change: This is to grow quarterly revenue to $500 million by the end of calendar 2025.

Alan Lowe: We foresee continued significant growth into 2026 and 2027. We are executing on new cloud and AI opportunities that we expect will elevate our cloud business to a multi-billion dollar annual run rate in the coming years.

Speaker Change: We foresee continued significant growth into 2026 and 2027.

Alan Lowe: Consistent with this advanced road demand is showing promise with growing demand for integrated C plus L band solutions and high port count road and products. In leading edge coherent transmission, we are seeing excellent demand trends for 130 gigabod coherent products and encouraging early traction with our 200 gigabod products. This is driven by customer demand for increased capacity and spectral efficiency fueled by continued bandwidth demand growth. Our broad set of design winds and differentiated technology and manufacturing capabilities position us for continued leadership in these important products in the coming years. We expect our cloud and networking business to show sequential improvement in fiscal Q1.

Speaker Change: We are executing on new cloud and AI opportunities that we expect will elevate our cloud business to a multi-billion dollar annual run rate in the coming years.

Alan Lowe: Before turning the call over to Watchit, I want to express my sincere gratitude to all our employees and customers worldwide for their unwavering focused dedication and collaborative spirit.

Speaker Change: Before turning the call over to Wajid, I want to express my sincere gratitude to all our employees and customers worldwide for their unwavering focus, dedication, and collaborative spirit.

Wajid Ali: Thank you, Alan. Fourth quarter revenue of $308.3 million and non-GAAP EPS of six cents were above the midpoint of our guidance ranges. Gap gross margin for the fourth quarter was 16.6%. Gap operating loss was 43.3%.

Wajid Ali: Thank you, Alan. Fourth quarter revenue of $308.3 million and non-gap EPS of six cents were above the midpoint of our guidance range. Gap gross margin for the fourth quarter was 16.6%, Gap operating loss was 43.3%, and Gap diluted net loss per share with $3.72 with a large portion of the Gap net loss primarily driven by restructuring charges, amortization of acquired intangibles, and evaluation allowance related to certain tax assets.

Wajid: With that, Wajid.

Wajid: Thank you, Alan. Fourth quarter revenue of $308.3 million and non-GAP EPS of $0.06 were above the midpoint of our guidance ranges.

Wajid: Gap gross margin for the fourth quarter was 16.6 percent.

Wajid Ali: Gap diluted net loss per share was $3.72, with a large portion of the gap net loss primarily driven by restructuring charges, amortization of acquired intangibles, and evaluation allowance related to certain tax assets. due to the historical gap losses of the company and a backward-looking calculation to determine the requirement for valuation allowances on deferred tax assets. The company determined the need to record a valuation allowance of $139.8 million to its US deferred tax assets on the company's balance sheet as of the most recent fiscal period.

Speaker Change: Gap operating loss was 43.3%.

Speaker Change: and GAP diluted net loss per share was $3.72 with a large portion of the GAP net loss primarily driven by restructuring charges, amortization of acquired intangibles, and a valuation allowance related to certain tax assets.

Alan Lowe: Now, let me move to our industrial tech segment. Our industrial tech segment revenue increased to present sequentially but declined 36% year over year as expected. Like others in this space, we continue to face challenges due to the weak end market demand and high levels of customer inventory. In Industrial Tech, we continue to focus on developing innovative industrial laser products that address rapidly growing applications. The growing demand for higher precision is driving a transition from picosecond to femtosecond lasers.

Wajid Ali: Due to the historical gap losses of the company and a backward-looking calculation to determine the requirement for valuation allowances on deferred tax assets, The company determined the need to record a valuation allowance of $139.8 million to its U.S. deferred tax assets on the company's balance sheet as of the most recent fiscal period. Given the business opportunities ahead and the growth expectations Alan highlighted, we believe in the future we will be in a position to release this allowance and use the related to the future we will be in a position to release this allowance and use the related to the future, To increase investments in programs that accelerate our exposure to significant new AI opportunities, we decided to stop our in-house development of certain communications ASICs, including coherent DSPs and RFICs.

Speaker Change: Due to the historical gap losses of the company and a backward-looking calculation to determine the requirement for valuation allowances on deferred tax assets,

Speaker Change: The company determined the need to record a valuation allowance of $139.8 million to its U.S. Deferred Tax Assets on the company's balance sheet as of the most recent fiscal period.

Alan Lowe: These lasers, with their extremely short pulses, offer more precise material processing without significant heat damage, opening new possibilities in sensitive applications such as semiconductors, displays, and advanced chip packaging. These market areas are in turn driven by the growth of AI. The immense computational demands of AI require significant advancements in semiconductors and innovative packaging technologies to support high performance computing. We are actively collaborating with leading semiconductor equipment manufacturers to develop ultra-fast lasers for inter-poser and advanced semiconductor packaging. In the fourth quarter, we also successfully delivered both high and low-power symptom blade demo units for advanced display applications.

Wajid Ali: Given the business opportunities ahead and the growth expectations Alan highlighted, we believe that in the future, we will be in a position to release this allowance and use the related asset.

Speaker Change: Given the business opportunities ahead and the growth expectations Alan highlighted, we believe in the future we will be in a position to release this allowance and use the related asset.

Wajid Ali: To increase investments in programs that accelerate our exposure to significant new AI opportunities, we decided to stop our in-house development of certain communications A6, including coherent DSPs and RFICs. We believe we can meet customer needs using A6 from third-party partners while reallocating significant R&D spending towards new cloud and AI customer programs. As a result of this decision in Q4, we recorded $35.8 million of restructuring and related charges, including a $29.1 million write-off of in-process research and development intangible assets. Turning to our non-GAAP results, fourth quarter non-GAAP gross margin was 32.2%, which was down sequentially and year on year on lower revenue.

Alan: to increase investments in programs that accelerate our exposure to significant new AI opportunities.

Speaker Change: We decided to stop our in-house development of certain communications A6, including coherent DSPs and RFICs.

Wajid Ali: We believe we can meet customer needs using ASICs from third party partners while reallocating significant R&D spending towards new cloud and AI customer programs. As a result of this decision, in Q4 we recorded $35.80 million of restructuring and related charges, including a $29.1 million right off of in-process research and development intangible assets. Turning to our non-gap results, fourth quarter non-gap gross margin was 32.2%, which was down sequentially and year-on-year on lower revenue.

Speaker Change: We believe we can meet customer needs using ASICs from third-party partners while reallocating significant R&D spending towards new cloud and AI customer programs.

Alan Lowe: Looking to fiscal Q1, we expect industrial tech to be down sequentially due to continued weak end market demand and ongoing customer inventory adjustments, with a modest seasonal increase in 3D sensing revenue.

Speaker Change: As a result of this decision,

Speaker Change: In Q4, we recorded $35.8 million of restructuring and related charges, including a $29.1 million dollar write-off of in-process research and development intangible assets.

Alan Lowe: To summarize, we have made significant progress in executing our strategy to grow our cloud business. We booked record orders for data conchips and are investing in additional production capacity to help us meet customer demand. We have made excellent progress with multiple new high speed optical transceiver customer engagements, including securing a major transceiver award with one new customer. We are actively working to secure additional awards from other new customers. Our robust pipeline of cloud customer engagements and improving trends in the traditional networking market reinforce our confidence in the target we highlighted on our last earnings call.

Speaker Change: Turning to our non-GAAP results, fourth quarter non-GAAP gross margin was 32.2%, which was down sequentially and year-on-year on lower revenue.

Wajid Ali: In future quarters, we anticipate company gross margin will sequentially increase as manufacturing utilization improves due to an improved telecom outlook, as well as an increase in data-com laser shipments. Fourth quarter non-GAAP operating loss was 0.3%, which was down sequentially and year on year on lower revenue. Fourth quarter non-GAAP operating loss was $0.8 million and adjusted EBITDA was $25.9 million. Fourth quarter non-GAAP operating expenses totaled $100 million or 32.4% of revenue, a decrease of $4.3 million from the third quarter and down $2.4 million from the year-ago quarter. The lower operating expense in Q4 was achieved despite increased R&D spending on our data-com transceivers, given the strong customer traction that Alan spoke of earlier.

Wajid Ali: In future quarters, we anticipate company gross margin will sequentially increase as manufacturing utilization improves due to an improved telecom out, as well as an increase in data comm laser shifts, fourth quarter non gap operating loss was 0.3%, which was down sequentially and year on year on lower revenue. Fourth quarter non-GAAP operating loss was $0.8 million and adjusted EBITDA was $25.9 million.

Speaker Change: In future quarters, we anticipate company gross margin will sequentially increase as manufacturing utilization improves due to an improved telecom outlook, as well as an increase in datacom laser shipments.

Speaker Change: Fourth quarter non-GAAP operating loss was 0.3%.

Speaker Change: which was down sequentially and year-on-year on lower revenue. Fourth quarter non-GAAP operating loss was $0.8 million and adjusted EBITDA was $25.9 million.

Alan Lowe: This is to grow quarterly revenue to $500 million by the end of calendar 2025. We foresee continued significant growth into 2026 and 2027. We are executing on new cloud and AI opportunities that we expect will elevate our cloud business to a multi-billion dollar annual run rate in the coming years.

Wajid Ali: Fourth quarter non-GAAP operating expenses totaled $100 million, or 32.4% of revenue, a decrease of $4.3 million from the third quarter and down $2.4 million from the year-ago quarter. The lower operating expense in Q4 was achieved despite increased R&D spending on our Datacom transceivers given the strong customer traction that Alan spoke of earlier. Q4 non-GAAP SG&A expense was $35.1 million, non-GAAP R&D expense was $64.9 million. Interest and other income was $5.4 million on a non-GAAP basis, driven by interest earned on our cash and investment. Fourth quarter non-GAAP net income was $4 million and non-GAAP diluted net income per share was $0.06.

Speaker Change: Fourth quarter non-GAAP operating expenses totaled $100 million or 32.4% of revenue, a decrease of $4.3 million from the third quarter and down $2.4 million from the year-ago quarter.

Wajid Ali: Before turning the call over to Watchit, I want to express my sincere gratitude to all our employees and customers worldwide for their unwavering focused dedication and collaborative spirit. Thank you, Alan. Fourth quarter revenue of $308.3 million and non-gap EPS of six cents were above the midpoint of our guidance ranges. Gap gross margin for the fourth quarter was 16.6%. Gap operating loss was 43.3%. Gap diluted net loss per share was $3.72 with a large portion of the gap net loss primarily driven by restructuring charges, amortization of acquired intangibles and evaluation allowance related to certain tax assets, due to the historical gap losses of the company and a backward looking calculation to determine the requirement for valuation allowances on deferred tax assets.

Speaker Change: The lower operating expense in Q4 was achieved despite increased R&D spending on our Datacom transceivers given the strong customer traction that Alan spoke of earlier.

Wajid Ali: Q4 non-GAAP SG&A expense was $35.1 million. Non-GAAP R&D expense was $64.9 million. Interest and other income was $5.4 million on a non-GAAP basis driven by interest earned on our cash and investments. 4th quarter non-GAAP net income was 4 million dollars and non-GAAP diluted net income per share was 6 cents. Our fully diluted share account for the 4th quarter was 68.3 million shares on a non-GAAP basis.

Speaker Change: Q4 non-GAAP SG&A expense was $35.1 million. non-GAAP R&D expense was $64.9 million.

Speaker Change: Interest and other income was $5.4 million on a non-GAAP basis driven by interest earned on our cash and investments.

Speaker Change: Fourth quarter non-GAAP net income was $4 million and non-GAAP diluted net income per share was $0.06. Our fully diluted share count for the fourth quarter was 68.3 million shares on a non-GAAP basis.

Wajid Ali: Our fully diluted share count for the fourth quarter was 68.3 million shares on a non-GAAP based, Turning to the full-year result. Fiscal 24 net revenue was $1.36 billion, which was down 23.1% from fiscal 23, gap gross margin for fiscal 24 was 18.5%. Gap operating loss was 31.9% and gap diluted net loss per share was $8.12, Full year fiscal 24 non gap gross margin was 33%, which was down relative to fiscal 23 due to lower overall demand and factory utilization, fiscal year 24 non gap operating margin was 2.8% down from fiscal 23 due to lower gross margin.

Wajid Ali: Turning to the full-year results, fiscal 24 net revenue was 1.36 billion dollars, which was down 23.1% from fiscal 23. Gap gross margin for fiscal 24 was 18.5%. Gap operating loss was 31.9%, and Gap diluted net loss per share was 8 dollars and 12 cents. Full-year fiscal 24 non-GAAP gross margin was 33%, which was down relative to fiscal 23 due to lower overall demand and factory utilization. Fiscal year 24 non-GAAP operating margin was 2.8%, down from fiscal 23 due to lower gross margin. Fiscal 24 non-GAAP operating income was 37.8 million dollars and adjusted EBITDA was 140.5 million dollars.

Speaker Change: Turning to the full year results, Fiscal 24 net revenue was $1.36 billion, which was down 23.1% from Fiscal 23. Gap gross margin for Fiscal 24 was 18.5%.

Wajid Ali: The company determined the need to record a valuation allowance of $139.8 million to its US deferred tax assets on the company's balance sheet as of the most recent fiscal period. Given the business opportunities ahead and the growth expectations Alan highlighted, we believe in the future, we will be in a position to release this allowance and use the related asset. To increase investments in programs that accelerate our exposure to significant new AI opportunities, we decided to stop our in-house development of certain communications A6 including coherent DSPs and RFICs.

Speaker Change: GAAP operating loss was 31.9% and GAAP diluted net loss per share was $8.12.

Speaker Change: Full year fiscal 24 non-GAAP gross margin was 33%, which was down relative to fiscal 23 due to lower overall demand and factory utilization.

Speaker Change: Fiscal Year 24 non-GAAP operating margin was 2.8%, down from Fiscal 23 due to lower gross margin.

Chris Cole: Fiscal 24 non-GAAP operating income was $37.8 million and adjusted EBITDA was $140.5 million.

Wajid Ali: We believe we can meet customer needs using A6 from third party partners while reallocating significant R&D spending towards new cloud and AI customer programs. As a result of this decision in Q4, we recorded $35.8 million of restructuring and related charges, including a $29.1 million right off of in-process research and development intangible assets. Turning to our non-GAP results, fourth quarter non-GAP gross margin was 32.2%, which was down sequentially and year on year on lower revenue.

Wajid Ali: For fiscal 24, our fully diluted share account on a non-GAAP basis was 67.7 million shares. Non-GAAP net income was 68.7 million dollars and non-GAAP diluted net income per share was 1.1.

Chris Cole: For fiscal 24, our fully diluted share count on a non-GAAP basis was 67.7 million shares.

Chris Cole: non-GAAP net income was $68.7 million and non-GAAP diluted net income per share was $1.01.

Wajid Ali: Turning to the balance sheet, during the fourth quarter, our cash and short-term investments increased by $16 million to $887 million. This increase was primarily due to improved working capital performance as we achieved a $22 million sequential reduction and momentum's overall inventory levels. In Q4, we invested $24 million in CAPEX, primarily driven by high-speed transceiver capacity additions at our Thailand manufacturing site. As we move through fiscal 25 and beyond, we're focused on expanding our high-speed transceiver capabilities and capacity in Thailand to support 800 GE, 1.60, and eventually 3.2T transceivers. We anticipate an elevated level of capital expenditures in fiscal 25 to proactively meet the anticipated surge in demand for high-speed transceivers and data-com components.

Wajid Ali: Fiscal 24 non-gap operating income was $37.8 million, and adjusted EBITDA was $140.5 million. For fiscal 24, our fully diluted share count on a non-gap basis was 67.7 million shares, non-GAAP net income was $68.7 million, and non-GAAP diluted net income per share was $1.01. Turning to the balance, During the fourth quarter, our cash and short-term investments increased by $16 million to $887 million. This increase was primarily due to improved working capital performance as we achieved a $22 million sequential reduction in Lumentum's overall inventory level.

Speaker Change: Turning to the balance sheet. During the fourth quarter, our cash and short-term investments increased by $16 million to $887 million.

Speaker Change: This increase was primarily due to improved working capital performance as we achieved a $22 million sequential reduction in Lomentum's overall inventory levels.

Wajid Ali: In future quarters, we anticipate company gross margin will sequentially increase as manufacturing utilization improves due to an improved telecom outlook as well as an increase in data-com laser shipments. Fourth quarter non-GAP operating loss was 0.3%, which was down sequentially and year on year on lower revenue. Fourth quarter non-GAP operating loss was $0.8 million and adjusted EBITDA was $25.9 million. Fourth quarter non-GAP operating expenses totaled $100 million or 32.4% of revenue, a decrease of $4.3 million from the third quarter and down $2.4 million from the year ago quarter.

Wajid Ali: In Q4, we invested $24 million in CAPEX, primarily driven by high-speed transceiver capacity additions at our Thailand manufacturing site. As we move through fiscal 25 and beyond, we're focused on expanding our high-speed transceiver capabilities and capacity in Thailand to support 800G, 1.6T, and eventually 3.2T transceivers. We anticipate an elevated level of capital expenditures in fiscal 25 to proactively meet the anticipated surge in demand for high-speed transceivers and data-com components. Turning to segment details, fourth quarter cloud and networking segment revenue at $254.7 million decreased 18.8% sequentially and decreased 11.1% year on year. Cloud in Networking Segment Profit at 10.1% decreased sequentially and decreased year-on-year.

Speaker Change: In Q4, we invested $24 million in CapEx, primarily driven by high-speed transceiver capacity additions at our Thailand manufacturing site.

Speaker Change: As we move through Fiscal 25 and beyond.

Speaker Change: We're focused on expanding our high-speed transceiver capabilities and capacity in Thailand.

Speaker Change: to support 800G, 1.6T, and eventually 3.2T transceivers.

Speaker Change: We anticipate an elevated level of capital expenditures in Fiscal 25 to proactively meet the anticipated surge in demand for high-speed transceivers and Datacom components.

Wajid Ali: Turning to segment details, fourth quarter cloud and networking segment revenue at $254.7 million decreased 18.8% sequentially and decreased 11.1% year-on-year. Cloud and networking segment profit at 10.1% decreased sequentially and decreased year-on-year. Our fourth quarter industrial tech segment revenue at $53.6 million was up 1.7 percent sequentially and down 36.4 percent year on year. Fourth quarter industrial tech segment loss of 0.4 percent improved sequentially. Year-on-year segment profit declined.

Wajid Ali: The lower operating expense in Q4 was achieved despite increased R&D spending on our data-com transceivers given the strong customer traction that Alan spoke of earlier. Q4 non-GAP SG&A expense was $35.1 million. Non-GAP R&D expense was $64.9 million. Interest and other income was $5.4 million on a non-GAP basis driven by interest earned on our cash and investments. 4th quarter non-gap net income was 4 million dollars and non-gap diluted net income per share was 6 cents. Our fully diluted share account for the 4th quarter was 68.3 million shares on a non-gap basis.

Speaker Change: Turning to segment details.

Speaker Change: Fourth quarter cloud and networking segment revenue at $254.7 million decreased 18.8% sequentially and decreased 11.1% year-on-year.

Speaker Change: Cloud and networking segment profit at 10.1% decreased sequentially and decreased year-on-year.

Wajid Ali: Our fourth quarter industrial tech segment revenue at $53.6 million was up 1.7% sequentially and down 36.4% year on year. 4th quarter industrial tech segment loss of 0.4% improved sequentially. Year-on-Year Segment Profit Declaration, Now let me move to our guidance for the first quarter of fiscal 25, which is on a non-gap basis and is based on our assumptions as of today. We expect net revenue for the first quarter of fiscal 25 to be in the range of $315 to $335 million.

Speaker Change: Our fourth quarter industrial tech segment revenue at $53.6 million was up 1.7% sequentially and down 36.4% year-on-year.

Speaker Change: Fourth-order industrial tech segment loss of 0.4% improved sequentially.

Wajid Ali: Now let me move to our guidance for the first quarter of fiscal 25, which is on a non-GAAP basis and is based on our assumptions as of today. We expect that revenue for the first quarter of fiscal 25 to be in the range of $315 to $335 million. At the midpoint, we expect to show year-over-year revenue growth when compared to Q1 of fiscal 2024.

Speaker Change: Year-on-year, segment profit declined.

Speaker Change: Now let me move to our guidance for the first quarter of Fiscal 25, which is on a non-GAAP basis and is based on our assumptions as of today.

Wajid Ali: Turning to the full-year results, fiscal 24 net revenue was 1.36 billion dollars, which was down 23.1% from fiscal 23. Gap gross margin for fiscal 24 was 18.5%. Gap operating loss was 31.9% and gap diluted net loss per share was 8 dollars and 12 cents. Full-year fiscal 24 non-gap gross margin was 33%, which was down relative to fiscal 23 due to lower overall demand and factory utilization. Fiscal year 24 non-gap operating margin was 2.8% down from fiscal 23 due to lower gross margin.

Speaker Change: We expect net revenue for the first quarter of fiscal 25 to be in the range of $315 to $335 million.

Wajid Ali: At the midpoint, we expect to show year-over-year revenue growth when compared to Q1 of fiscal 2024. This Q1 revenue forecast includes the following assumptions. This Q1 revenue forecast includes the following assumptions. Cloud and networking to be up sequentially, primarily driven by an improvement in telecom networking demand and industrial tech to be approximately flat sequentially with decreased industrial laser shipments offset by a modest uptick in 3D sensors, due to typical seasonality. Based on this, we project first quarter non gap operating margin to be in the range of zero to 3%, and diluted net income per share to be in the range of $0.07, to $0.17. Our non-GAAP EPS guidance for the first quarter is based on a non-GAAP annual effective tax rate of 16.5%.

Speaker Change: At the midpoint, we expect to show year-over-year revenue growth when compared to Q1 of fiscal 2024. This Q1 revenue forecast includes the following assumptions.

Wajid Ali: This Q1 revenue forecast includes the following assumptions. Cloud and networking to be up sequentially, primarily driven by an improvement in telecom networking demand and industrial tech to be approximately flat sequentially with decreased industrial laser shipments offset by a modest uptick in 3D sensing due to typical seasonality. Based on this, we project first quarter non-GAAP operating margin to be in the range of 0 to 3 percent and diluted net income per share to be in the range of $0.07 to $0.17. Our non-GAAP EPS guidance for the first quarter is based on a non-GAAP annual effective tax rate of 16.5 percent.

Speaker Change: cloud and networking to be up sequentially.

Speaker Change: Primarily driven by an improvement in telecom networking demand.

Speaker Change: and industrial tech to be approximately flat sequentially with decreased industrial laser shipments offset by a modest uptick in 3D sensing due to typical seasonality.

Wajid Ali: Fiscal 24 non-gap operating income was 37.8 million dollars and adjusted EBITDA was 140.5 million dollars. For fiscal 24, our fully diluted share account on a non-gap basis was 67.7 million shares. Non-gap net income was 68.7 million dollars and non-gap diluted net income per share was 1.1.

Speaker Change: Based on this, we project first quarter non-GAAP operating margin to be in the range of 0 to 3 percent, and diluted net income per share to be in the range of 7 cents to 17 cents.

Speaker Change: Our non-GAAP EPS guidance for the first quarter is based on a non-GAAP annual effective tax rate of 16.5%.

Wajid Ali: These projections also assume an approximate share count of 68.8 million shares.

Wajid Ali: These projections also assume an approximate share count of 68.8 million shares. Please note this guidance includes certain expenses that were previously excluded from our non-GAAP presentation. Mainly those related to abnormal excess capacity that in Q4 and prior periods were excluded from our non-GAAP results. This change in presentation reduces our Q1 EPS guidance by approximately $0.05 compared with our prior presentation methodology.

Speaker Change: These projections also assume an approximate share count of 68.8 million shares.

Wajid Ali: Please note, this guidance includes certain expenses that were previously excluded from our non-GAAP presentation, mainly those related to abnormal excess capacity that in Q4 and prior periods were excluded from our non-GAAP results. This change in presentation reduces our Q1 EPS guidance by approximately 5 cents compared with our prior presentation methodology. For clarity, our Q1 non-GAAP EPS guidance of $0.7 to $0.17 includes the impact of the new presentation.

Speaker Change: Please note this guidance includes certain expenses that were previously excluded from our non-GAAP presentation.

Speaker Change: Mainly those related to abnormal excess capacity that in Q4 and prior periods were excluded from our non-GAAP results.

Speaker Change: This change in presentation reduces our Q1 EPS guidance by approximately $0.05 compared with our prior presentation methodology.

Wajid Ali: For clarity, our Q1 non-GAP EPS guidance of $0.7 to $0.17 includes the impact of the new presentation. With that, I'll turn the call back to Kathy to start the Q&A. Thank you, Wajid.

Speaker Change: For clarity, our Q1 non-GAAP EPS guidance of $0.07 to $0.17 includes the impact of the new presentation.

Kathy Tom: With that, I'll turn the call back to Kathy to start the Q&A session. Thank you, Wajin. To allow everyone an opportunity to ask questions, please keep to one question and one follow-up. Now, let's begin the Q&A session. We will now begin the Q&A session. As a reminder, if you'd like to ask a question, please dial star one on your telephone keypad.

Speaker Change: With that, I'll turn the call back to Kathy to start the Q&A session.

Kathy Ta: Thank you, Wajid. To allow everyone an

Wajid Ali: We anticipate an elevated level of capital expenditures in fiscal 25 to proactively meet the anticipated surge in demand for high-speed transceivers and data-com components. Turning to segment details, fourth quarter cloud and networking segment revenue at $254.7 million decreased 18.8% sequentially and decreased 11.1% year-on-year. Cloud and networking segment profit at 10.1% decreased sequentially and decreased year-on-year. Our fourth quarter industrial tech segment revenue at $53.6 million was up 1.7 percent sequentially and down 36.4 percent year on year. Fourth quarter industrial tech segment loss of 0.4 percent improved sequentially. Year on year segment profit declined.

Kathy Ta: To allow everyone an opportunity to ask questions, please keep to one question and one follow-up. Now let's begin the Q&A. We will now begin the Q&A session. As a reminder, if you'd like to ask a question, please dial star one on your telephone keypad. The first question is from the line of Samik Chatterjee with JP Morgan. Your line is no good.

Kathy Ta: Now, let's begin the Q&A session.

Speaker Change: We will now begin the Q&A session. As a reminder, if you'd like to ask a question, please dial star one on your telephone keypad.

Unknown Attendee: The first question is from the line of Islamic Tatter G with JP Morgan. Your line is no-o.

Speaker Change: The first question is from the line of Samik Chatterjee with J.P. Morgan. Your line is now open.

Samik Chatterjee: Thanks for taking my questions. And I'll ask both of my questions at the same goal. So I guess the first one was in relation to the new customer announcement that you highlighted in a prepared remarks. Can you give us a bit more color in relation to sort of the type of customer, whether it's a web scaler, or how should we think about the type of the customer? And how are you thinking about the magnitude of the opportunity rate, , and Michael H.. .. .. .. .. .. ...

Unknown Attendee: Thanks for taking my questions, and I'll ask both of my questions at the same go. So I guess the first one was in relation to the new customer announcement that you highlight in a prepared box. Can you give us a bit more color in relation to sort of the type of customer whether it's a web scalar or how should you think about the type of the customer and how are you thinking about the magnitude of the opportunity related to the run rate of your module business at this time. And for my follow-up, just in terms of the Q4 to Q1, I think you mentioned sequential growth in telecom.

Samik Chatterjee: Thanks for taking my questions and I'll ask both of my questions at the same goal. So I guess the first one was in relation to the new customer announcement that you highlighted in your prepared remarks.

Speaker Change: Can you give us a bit more color in relation to sort of the type of customer, whether it's a web scaler or how should we think about the type of the customer and how are you thinking about the magnitude of the opportunity relative to the run rate of your module business at this time?

Speaker Change: And for my follow up, just in terms of the Q4 to Q1, I think you mentioned sequential growth in telecom, didn't really hear you talk about any

Unknown Attendee: Don't really hear you talk about any sort of guidance on the data come side. So if you can just help us how to think about data come between Q4 and Q1, because and also if it's not going sequentially than what is driving the sequential decline in revenue in the data comb business between Q4 and Q1.

Wajid Ali: Now let me move to our guidance for the first quarter of fiscal 25 which is on a non-gap basis and is based on our assumptions as of today. We expect that revenue for the first quarter of fiscal 25 to be in the range of $315 to $335 million. At the midpoint we expect to show year-over-year revenue growth when compared to Q1 of fiscal 2024. This Q1 revenue forecast includes the following assumptions.

Speaker Change: sort of guidance on the Datacom side. So if you can just help us how to think about Datacom between Q4 and Q1 because and also if it's not going sequentially, then what is driving the sequential decline in revenue in the Datacom business between Q4 and Q1? Thank you.

Unknown Attendee: Thank you.

Unknown Attendee: Yeah, thanks, Dominic. I say we don't want to comment too much on what type of customer, but you can imagine, you know, we use the word major and big, so it's big. I would say that, run rate wise, I think it comes down to how well we execute. And so we will earn as much businesses we earn from our customer given our execution. And so, so far we're off to a good start. And, as I said in the prepared remarks, our operation in Thailand, first production line is ready this quarter. And so we'll be shipping first units out of Thailand this quarter, with qualifications happening and ramp beginning early part of calendar 2025.

Alan Lowe: Yeah, thanks, Samik. I'd say, we don't want to comment too much on what type of customer, but you can imagine, you know, we use the word major and big, so it's big. I would say that run rate wise, I think it comes down to how well we execute.

Speaker Change: Yeah, thanks so much. I'd say we don't want to comment too much on what type of customer, but you can imagine, you know, we use the word major and big, so it's big.

Speaker Change: I would say that run rate wise, I think it comes down to how well we execute and so we will

Wajid Ali: Cloud and networking to be up sequentially, primarily driven by an improvement in telecom networking demand and industrial tech to be approximately flat sequentially with decreased industrial laser shipments offset by a modest uptick in 3D sensing due to typical seasonality. Based on this we project first quarter non-gap operating margin to be in the range of 0 to 3 percent and diluted net income per share to be in the range of $0.7 to $0.17.

Speaker Change: earn as much business as we earn from our customer, given our execution. And so, so far, we're off to a good start. And as I said in the prepared remarks,

Alan Lowe: And so we will earn as much business as we earn from our customer, given our execution. And so, so far, we're off to a good start. And as I said, in the prepared remarks, our operation in Thailand, first production line is ready this quarter. And so we'll be shipping first units out of Thailand this quarter, with qualifications happening and ramp beginning early part of calendar 2025. So consistent with what we've said in the past.

Speaker Change: Our operation in Thailand, first production line is ready this quarter and so we'll be shipping first units out of Thailand this quarter with qualifications happening and ramp beginning early part of calendar 2025. So consistent with what we've said in the past.

Alan Lowe: So consistent with what we've said in the past. So, as far as comparison to run rate stuff, you know, that's really going to be very variable given. You know, we have to earn it, and we have to execute well with good quality, performance, and delivery. So I hesitate to comment more on that, but certainly that the customer that we have, we have said we've gotten the award on certainly consumes a lot and certainly could be as big as not bigger.

Speaker Change: As far as comparison to run rate stuff, you know, that's really going to be very variable given

Speaker Change: You know, we have to earn it, and we have to execute well with good quality and performance and delivery, so I hesitate to comment more on that, but certainly the customer that we have said we've gotten the award on certainly consumes a lot and certainly could be as big if not bigger.

Wajid Ali: Our non-gap EPS guidance for the first quarter is based on a non-gap annual effective tax rate of 16.5 percent. These projections also assume an approximate share count of 68.8 million shares. Please note, this guidance includes certain expenses that were previously excluded from our non-gap presentation, mainly those related to abnormal excess capacity that in Q4 and prior periods were excluded from our non-gap results. This change in presentation reduces our Q1 EPS guidance by approximately 5 cents compared with our prior presentation methodology. For clarity, our Q1 non-gap EPS guidance of $0.7 to $0.17 includes the impact of the new presentation.

Alan Lowe: On the second question. Sorry. It was on the peak ditch. Yeah, we're not going to break out data con versus telecom. What we did say was that we've seen some improvements in telecom, so you can expect that that's going to grow quarter on quarter. And, as we said in the last earnings call, we're in a product transition. And so the Q4, Q1 numbers are depressed. And so that's coming to fruition. We expect that then pick up in our fiscal second quarter.

Alan Lowe: So as far as comparison to run rate stuff, you know, that's really going to be very variable, given, you know, we have to earn it, and we have to execute well with good quality and performance and delivery. So I hesitate to comment more on that. But certainly that the customer that we have, we have said we've gotten the award on certainly consumes a lot and certainly could be as big if not bigger. On the second question. Um, Sir, good. It was on the secret, just a random deal.

Speaker Change: On the second question...

Speaker Change: Sir, go ahead. He was on the sequence. Yes, I have a comment. Okay.

Alan Lowe: .. Yeah, we're not going to break out data comm versus telecom. What we did say was that we we've seen some improvements in telecom. So you can expect that that's going to grow quarter on quarter. And as we said, in the last earnings call, we're in a product transition. And so the Q4 Q1 numbers are, are depressed. And so that's coming to fruition, we expect that to then pick up in our fiscal second quarter. Thank you for all my, Thank you.

Speaker Change: Yeah, we're not going to break out Datacom versus Telecom. What we did say was that we've seen some improvements in Telecom, so you can expect that that's going to grow quarter on quarter. And as we said in the last earnings call, we're in a product transition, and so the Q4, Q1 numbers are depressed, and so that's coming to fruition. We expect that to then pick up in our fiscal second quarter.

Unknown Attendee: Okay. Thank you. Thank you so much. Thank you.

Speaker Change: Okay, good. Thank you. Thank you so much.

Alex Henderson: The next question is from Alex Henderson with Needham and Company. Your line is now open. Thanks. So, I was hoping you could talk, about the capacity. Ramp timing.

Alex Henderson: The next question is from Alex Henderson with Needham and Company. Your line is now open. Thanks.

Speaker Change: Thank you. The next question is from Alex Henderson with Needham & Company, Your Linus Not Open.

Kathy Tom: With that, I'll turn the call back to Kathy to start the Q&A session. Thank you, Wajin.

Unknown Attendee: So I was hoping you could talk about the capacity ramp timing on both the chips business as well as the transceiver business at Cloud. My understanding is that coming out of the June quarter, you should be fairly flatish in that business in terms of available capacity and that new capacity should be coming on stream in the December quarter and ramping starting kind of in the first half of a calendar year 25. Can you give us any sense of that cadence and what those plans might look like now versus what they look like three months ago?

Operator: To allow everyone an opportunity to ask questions, please keep to one question and one follow-up. Now, let's begin the Q&A session. We will now begin the Q&A session. As a reminder, if you'd like to ask a question, please dial star one on your telephone keypad.

Alex Henderson: Thanks, so I was hoping you could talk about the capacity ramp timing on both the

Alex Henderson: Chip's Business, as well as the Transiever Business at Club. My understanding is that coming out [inaudible] I'm sorry, I'm sorry, I'm sorry, You should be fairly flatish in that business in terms of available capacity. [inaudible] capacity should be coming on. December quarter and ramping starting kind of in the first half of calendar year 25. Can you give us any sense of that case? and what those plans might look like now.

Alex Henderson: the chips business as well as the transceiver business.

Speaker Change: at Cloud Light. My understanding is that coming out of the June Quarter, you should be fairly flattish in that.

Speaker Change: Business in terms of available capacity and that new capacity should be coming on stream.

Unknown Attendee: The first question is from the line of Islamic Tatter G with JP Morgan. Your line is no-o.

Speaker Change: In the December quarter and ramping starting kind of in the first half of calendar year 25, can you give us any sense of that cadence and what those plans might look like now versus what they looked like say three months ago?

Dominic: Thanks for taking my questions, and I'll ask both of my questions at the same go. So I guess the first one was in relation to the new customer announcement that you highlight in a prepared box. Can you give us a bit more color in relation to sort of the type of customer whether it's a web scalar or how should you think about the type of the customer and how are you thinking about the magnitude of the opportunity related to the run rate of your module business at this time.

Alan Lowe: Yeah, as we said, again, in the prepared remarks, we had record bookings for our chip business, and we invested $43 million already this quarter in our capacity to address that. So you're right, it takes time for that to come online, but we should see incremental capacity in the first half of calendar 25. But in the short term, it's relatively fixed given the cycle time with the FAB, et cetera. So I'd say on the chip business, we're, in fact, in all CAPEX. We meet monthly and evaluate if we need to order more or less or hold off.

Alan Lowe: [inaudible] Yeah, as we said, again, in the prepared remarks, we had record bookings for our chip business, and we invested $43 million already this quarter in our FAB capacity to address that. And so you're right, it takes time for that to come online, but we should see incremental capacity in the first half of calendar 25. But in the short term, it's relatively fixed, given the cycle time of the FAB, et cetera.

Speaker Change: Yeah, as we said, again, in the prepared remarks, we had record bookings for our chip business and we invested $43 million already this quarter in our fab capacity to address that. So you're right, it takes time for that to come online, but we should see...

Dominic: And for my follow-up just in terms of the Q4 to Q1, I think you mentioned sequential growth in telecom. Don't really hear you talk about any sort of guidance on the data come side. So if you can just help us how to think about data come between Q4 and Q1, because and also if it's not going sequentially than what is driving the sequential decline in revenue in the data comb business between Q4 and Q1.

Speaker Change: You know, incremental capacity in the first half of calendar 25.

Speaker Change: where but in the short term it's it's relatively fixed given you know the cycle time of the fab etc so

Alan Lowe: So I'd say on the chip business, we're, in fact in all CAPEX, we meet monthly and evaluate if we need to order more or less or hold off. And so that's the discipline we're trying to put into the process to make sure that we have the capacity when our customers need it. And that we don't have too much idle capacity that are increasing our fixed costs without this. On the transceiver side, as I said before, the initial line is up in Thailand, this quarter, so we'll be shipping samples.

Speaker Change: I'd say on the chip business, we're, you know, in fact, in all CapEx, we meet monthly and evaluate if we need to

Alan Lowe: And so that's the discipline we're trying to put into the process to make sure that we have the capacity when our customers need it and that we don't have too much idle capacity that is increasing our fixed cost with that business.

Speaker Change: order more or less or hold off and so that's the discipline we're trying to put into the process to make sure that we have the capacity when our customers need it and that we don't have too much idle capacity that are increasing our fixed costs without the business.

Alan Lowe: Thank you. Yeah, thanks, Dominic. I say we don't want to comment too much on what type of customer, but you can imagine, you know, we use the word major and big so it's big. I would say that run rate wise, I think it comes down to how well we execute. And so we will earn as much businesses we earn from our customer given our execution. And so so far we're off to a good start.

Alan Lowe: On the transceiver side, as I said before, the initial line is up in Thailand this quarter, so we'll be shipping samples, but we won't really get any volume shipments out of Thailand until the first calendar quarter of 25. When the qualifications that our customers have been done and the ramp up starts there, but we'll have growing capacity through calendar 25. And that's why we said about our confidence in that, achieving the $500 million per quarter by the end of 2025 calendar was.

Speaker Change: On the transceiver side, as I said before, the...

Speaker Change: The initial line is up in Thailand this quarter, so we'll be shipping samples. But we won't really get any volume shipments out of Thailand until the first calendar quarter of 2025, when the qualifications that our customers have been done.

Alan Lowe: But we won't really get any volume shipments out of Thailand until the first calendar quarter of 25, when the qualifications that our customers have been done, and the ramp up starts there. But we'll have growing capacity through calendar 25. And that's why we said about our confidence in that she's achieving the $500 million per quarter by the end of 2025. Thanks, Alex.

Alan Lowe: And as I said in the prepared remarks, our operation in Thailand, first production line is ready this quarter. And so we'll be shipping first units out of Thailand this quarter with qualifications happening and ramp beginning early part of calendar 2025. So consistent with what we've said in the past. So as far as comparison to run rate stuff, you know, that's really going to be very variable given. You know, we have to earn it and we have to execute well with good quality and performance and delivery. So I hesitate to comment more on that, but certainly that the customer that we have, we have said we've gotten the award on certainly consumes a lot and certainly could be as big as not bigger.

Speaker Change: and the ramp up starts there, but we'll have, you know, growing capacity through calendar 25, and that's why, you know, we said about our confidence in that achieving the $500 million per quarter by the end of 2025 calendar-wise.

Alex Henderson: Thanks, Alex. Did you have a follow-up question?

Alex Henderson: Did you have a follow up question? Yeah, just to follow up on the telecom side, I'm a little surprised that the telecom... The proponent's space is recovering in the September quarter.

Alex Henderson: Yeah, just to follow up on the telecom side, I'm a little surprised that the telecom component space is recovering in the September quarter given the high level of capacity that is or the inventories that are out at the customers, the OEMs. Can you talk a little bit about what product areas that you're seeing that in and how fast do you think that the inventories are going to come down based on the demand you're seeing? Yeah, you're right, Alex. There is still inventory in our customers and beyond. It said we've seen strength in products that we weren't shipping a year ago or two years ago during the pandemic.

Speaker Change: Thanks Alex, did you have a follow-up question?

Alex Henderson: Yeah, just to follow up on the telecom side, I'm a little surprised that the telecom...

Alex Henderson: Components, Spaces,

Alex Henderson: High Level of Capacity, Documentaries that are out. Talk a little bit about, What product areas that you're seeing that in and, you know, how fast... Yeah, you're right, Alex, there is still inventory in our customers and, and beyond. I'd say we've seen strength in products that we weren't shipping a year ago or two years ago during the pandemic. And so therefore, there's no inventory built up of these products.

Speaker Change: You know, recovering in the September quarter, given

Speaker Change: the high level of capacities that is, or inventories that are out at the customers, the OEMs.

Speaker Change: Can you talk a little bit about, you know, what product areas that you're seeing that in and, you know, how fast do you think that the inventories are going to come down based on the demand you're seeing?

Alan Lowe: On the second question. Sorry. It was on the peak ditch. Yeah, we're not going to break out data con versus telecom of what we did say was that we we've seen some improvements in telecom so you can expect that that's going to grow quarter on quarter. And as we said in the last earnings call, we're in a product transition. And so the Q4, Q1 numbers are depressed. And so that's coming to fruition. We expect that that then pick up in our fiscal second quarter.

Unknown Attendee: Okay. Thank you. Thank you so much.

Unknown Attendee: Thank you.

Speaker Change: Yeah, you're right, Alex. There is still inventory in our customers and beyond. I'd say we've seen strength in products that we weren't shipping a year ago or two years ago during the pandemic.

Alan Lowe: And so therefore, there's no inventory built up of these products. So the 130 gigabod coherent components, the 200 gigabod coherent components, you know, are just starting today. And then our new Rotom products that we weren't shipping a year ago are seeing strong demand in our integrated C++L as well as new and differentiated high port count WSS. So that's kind of what we're seeing. We are seeing strength in the narrow line with tunable lasers. Is that has, you know, I think the data center interconnect business is burned off a lot of the inventory given, you know, people are having to place data centers further apart.

Alan Lowe: So the 130 gigabyte coherent components, the 200 gigabyte coherent components, you know, are just starting today. And then our new Rotem products that we weren't shipping a year ago are seeing strong demand in our integrated C plus L, as well as new and differentiated high port count WSS. So that's kind of what we're seeing.

Speaker Change: and so therefore there's no inventory built up of these products so the 130 gigabod.

Speaker Change: Coherent Components, the 200 gigabyte Coherent Components, you know, are just starting today. And then there's our new ROADM products that we weren't shipping a year ago are seeing strong demand in our integrated C++ as well as new and differentiated high port count.

Alan Lowe: We are seeing, you know, strength in the narrow line with tunable lasers is that has, you know, I think the data center interconnect business is burned off a lot of the inventory given, you know, people are having to place data centers further apart and no longer can connect them within a campus because of the power requirements. So I see that's in general, what we're seeing the strength in telecom. Thank you, Alan. No product.

Alex Henderson: The next question is from Alex Henderson with Needham and company. Your line is now open. Thanks.

Speaker Change: WSS. So that's kind of what we're seeing. We are seeing, you know, strength in the narrow line with tunable lasers as that has, you know, I think the data center interconnect business is

Alan Lowe: So I was hoping you could talk about the capacity ramp timing on both the chips business as well as the transceiver business at cloud. My understanding is that coming out of the June quarter, you should be fairly flatish in that business in terms of available capacity and that new capacity should be coming on stream in the December quarter and ramping starting kind of in the first half of a calendar year 25.

Speaker Change: Burned off a lot of the inventory given, you know, people are having to place data centers further apart and No longer can connect them within a campus because of the power requirement So I'd say that's in general what we're seeing the strengths in in telecom

Alan Lowe: And no longer can connect them within a campus because of the power requirements. So I say that's in general what we're seeing: the strength in telecom.

Unknown Attendee: Thank you.

Simon Leopold: Thanks, I appreciate the explanation. Thank you. Thank you. The next question is from Simon Leopold with Raymond James, Your Linus, No.

Speaker Change: New products as opposed to older products. Thanks. I appreciate the clarity.

Simon Leopold: The next question is from Simon Leopold with Raymond James. Your line is now open. Great. Thanks for taking the question. First one I wanted to ask is maybe if you could give us a little bit more color on the product associated with the new DataCom award. Specifically, I think these would be 800 gig, and I'm getting single mode products, but wondering whether or not there's more to it than a single product line. Any color there? And as a follow-up, I also want to understand on your telecom business in the June quarter, you had originally talked about a 30 million sequential decline.

Speaker Change: Thank you all.

Speaker Change: Thank you. The next question is from Simon Leopold with Raymond James. Your line is now open.

Simon Leopold: The next question is from Simon Leopold with Raymond James, No. Great, thanks. Thanks for taking the question. First one I wanted to ask is maybe if you could give us a little bit more color on the products associated with the new Data.com award. Specifically, I think these would be 800 gig, and I'm guessing single mode products, but wondering whether or not there's more to it than a typical product line. Any color there?

Alan Lowe: Can you give us any sense of that cadence and what those plans might look like now versus what they look like three months ago? Yeah, as we said, again, in the prepared remarks, we had record bookings for our chip business and we invested $43 million already this quarter in our capacity to address that so you're right, it takes time for that to come online, but we should see incremental capacity in the first half of calendar 25.

Simon Leopold: Great, thanks for taking the question. First one I wanted to ask is maybe if you could give us a little bit more color on the products associated with the new Data.com award.

Speaker Change: Specifically, I think these would be 800 gig and I'm guessing single mode products.

Speaker Change: but wondering whether or not there's more to it than a typical product line, any color there and

Alan Lowe: And as a follow up, I also want to understand on your, your telecom business in the June quarter, you had originally talked about a 30 million sequential decline. And so I'm trying to get a better understanding of did that occur? And when we think about the recovery sequential growth in September, are we, how close are we getting back to sort of the prior run rates before the June quarter? Thank you. Yeah, thanks, Simon. You know, as I said, I don't want to comment too much about specific customers, but I would say that you're right. It's, you know, people aren't designing new products to deal with old technology.

Speaker Change: as a follow-up.

Speaker Change: I also want to understand, on your telecom business in the June quarter, you had originally talked about a $30 million sequential decline.

Alan Lowe: But in the short term, it's relatively fixed given the cycle time with the FAB, et cetera. So I'd say on the chip business, we're, in fact in all CAPEX, we meet monthly and evaluate if we need to order more or less or hold off. And so that's the discipline we're trying to put into the process to make sure that we have the capacity when our customers need it and that we don't have too much idle capacity that are increasing our fixed cost with that business.

Simon Leopold: And so I'm trying to get a better understanding of, did that occur? And when we think about the recovery, sequential growth in September, are we how close are we getting back to sort of the prior run rates before the June quarter? Thank you.

Speaker Change: And so I'm trying to get a better understanding of did that occur, and when we think about the recovery, sequential growth in September , are we, how close are we getting back to sort of the prior run rates before the June quarter? Thank you.

Alan Lowe: Yeah, thanks, Simon. You know, as I said, I don't want to comment too much about specific customers, but I would say that you're right; it's, you know, people aren't designing new products to deal with old technology. So this is the leading edge 800 gig single mode transceiver that we feel very, very confident in our ability to develop and to shift to in qualified for this customer.

Alan Lowe: So this is the leading edge 800 gig single mode transceiver that we feel very, very confident in our ability to develop and to ship to and qualify for this customer. On the telecom question, Chris, you want to take that one? The revenue coming down June quarter that happened in the June quarter for telecom? Your question was telecom, right, Simon? Yeah, yeah, yeah, I wanted to understand sort of. You know, if you drop 30 and you go up five, well, that's still a big distance from where you used, Yeah, I don't know the specifics.

Speaker Change: Thanks, Simon. As I said, I don't want to comment too much about specific customers, but I would say that you're right. People aren't designing new products to deal with old technology.

Speaker Change: This is the leading-edge 800-gig single-mode transceiver that we feel very confident in our ability to develop and to ship and qualify for this customer.

Unknown Attendee: On the telecom question, Chris, do you want to take that one? The revenue coming down June quarter, that happened in the June quarter for telecom. You're questioning with telecom, right?

Speaker Change: On the telecom question, Chris, do you want to take that one? The revenue coming down, June quarter, that happened in the June quarter for telecom. Your question was telecom, right, Simon?

Alan Lowe: Simon? Yeah, yeah, I wanted to understand sort of, you know, if you grow up 30 and you go up five, well, that's still a big distance from where you used to be. Yeah, I don't know the specifics. I would say that, as we said, the telecom and data-com business is up mostly from the telecom strength. And so, as we said before, the transition period for our data-com transceiver business is happening Q4 and Q1, and we expect that to grow in Q4. So most of the growth in data-com and telecom is coming from telecom bounce back from really a low point in the June quarter.

Alex Henderson: Thanks Alex, did you have a follow-up question?

Chris Cole: Yeah, yeah, yeah. I wanted to understand sort of, you know, if you drop 30 and you go up five, well, that's still a big distance from where you used to be.

Alan Lowe: Yeah, just to follow up on the telecom side, I'm a little surprised that the telecom component space is recovering in the September quarter given the high level of capacity that is or the inventories that are out at the customers, the OEMs. Can you talk a little bit about what product areas that you're seeing that in and how fast do you think that the inventories are going to come down based on the demand you're seeing?

Alan Lowe: I would say that, as we said, the telecom and datacom business is up, mostly from the telecom strength. And so as we said before, the transition period for our datacom transceiver business is happening Q4 and Q1, and we expect that to grow in Q4. So most of the growth in datacom and telecom is coming from telecom bounce back from a really a low point in the June quarter. Thank you. Thank you, Simon.

Speaker Change: Yeah, I don't know the specifics. I would say that, as we said, the telecom and datacom business is up.

Speaker Change: mostly from

Speaker Change: the telecom strength. And so, as we said before, the transition period for our Datacom transceiver business

Speaker Change: is happening Q4 and Q1 and we expect that to grow in Q4.

Speaker Change: So most of the growth in Datacom and Telecom is coming from Telecom bounce back from really a low point in the June quarter.

Alan Lowe: Yeah, you're right, Alex. There is still inventory in our customers and beyond. It said we've seen strength in products that we weren't shipping a year ago or two years ago during the pandemic. And so therefore, there's no inventory built up of these products. So the 130 gigabod coherent components, the 200 gigabod coherent components, you know, are just starting today. And then our new Rotom products that we weren't shipping a year ago are seeing strong demand in our integrated C++L as well as new and differentiated high port count WSS.

Unknown Attendee: Thank you. Thank you, Simon. Thank you.

Speaker Change: Thank you.

George Notter: Thank you. The next question is from George Notter with Jeffreys. Your line is now open. Hi, thanks very much. I'm just curious if you guys have an NVIDIA qualification on this 800 gig single mode transceiver.

Simon Leopold: Thank you, Simon.

George Notter: The next question is from George Nauder with Jeffries. Your line is now open. Hi, thanks very much. I'm just curious if you guys have an Nvidia qualification on this 800 gig single mode transceiver? Yeah, we're not going to comment on who the customer is, George. I would say that, as I said before, most customers are working with us on products they don't already have. And so, for instance, we are designing 1.6 terabit transceivers, and the performance is quite good. We plan on sampling customers this quarter and 1.6 T. So there's a few leaders that would be consuming that until you can imply what you want from that, but we're not going to speak specifically about any individual customer.

Speaker Change: Thank you. The next question is from George Notter with Jeffreys. Your line is now open.

George Nader: Hi, thanks very much. I'm just curious if you guys have an NVIDIA qualification on this 800-gig single-mode transceiver?

Alan Lowe: Yeah, we're not going to comment on who the customer is, George. I would say that, that, as I said before, most customers are working with us on products they don't already have. And so, for instance, we are designing 1.6 terabit transceivers and the performance is quite good. We plan on sampling customers this quarter on 1.6T. So, you know, there's a few leaders that would be consuming that.

Speaker Change: Yeah, we're not going to comment on who the customer is, George. I would say that, as I said before, most customers are working with us on products they don't already have.

Alan Lowe: So that's kind of what we're seeing. We are seeing strength in the narrow line with tunable lasers is that has, you know, I think the data center interconnect business is burned off a lot of the inventory given, you know, people are having to place data centers further apart. And no longer can connect them within a campus because of the power requirements. So I say that's in general what we're seeing the strength in telecom. Thank you.

Speaker Change: And so, for instance, we are...

Speaker Change: Designing 1.6 terabit transceivers and the performance is quite good. We plan on sampling customers.

Speaker Change: this quarter on 1.6T. So, you know, there's a few leaders that would be consuming that, and so you can imply what you want from that, but we're not going to...

George Notter: And so, you can imply what you want from that, but we're not going to, speak specifically about any individual customer. Got it. Okay. And then, You know, this the trans fever customer, I guess I'm Based on something you said I was curious about whether or not this contractor relationship is just a framework arrangement or are there certain minimum volumes or minimum market share that you're being given by this customer, Anything you can say in terms of first source, second source, third source. I'd love any more details you can provide.

Speaker Change: Speaks specifically about any individual customer.

Unknown Attendee: Got it. Okay.

George Notter: And then, you know, this, this transceiver customer, I guess I'm based on something you said I was curious about whether or not this contractor relationship is just a framework or arrangement, or, you know, are there certain minimum volumes or minimum market share that you're being given by this customer? Anything you can say in terms of, you know, first source, second source, third source, I'd love any more details you can provide. Thanks.

Speaker Change: Got it. OK. And then.

Simon Leopold: The next question is from Simon Leopold with Raymond James. Your line is now open. Great. Thanks for taking the question. First one I wanted to ask is maybe if you could give us a little bit more color on the product associated with the new DataCom award. Specifically, I think these would be 800 gig and I'm getting single mode products, but wondering whether or not there's more to it than a single product line, any color there.

Speaker Change: You know, this is the transiever customer, I guess I'm

Speaker Change: Based on something you said, I was curious about whether or not this contractual relationship is just a framework arrangement, or are there certain minimum volumes or minimum market share that you're being given by this customer?

Speaker Change: Anything you can say in terms of, you know, first source, second source, third source. I'd love any more details you can provide. Thanks.

Alan Lowe: Well, this is a new product, right? And so it comes down to our ability to execute. And so we will earn share, or earn more share, I should say, as we execute. And I think, you know, the combination of US headquartered company, manufacturing and Thailand, you know, there's certainly fear of what happens in the next election and the tariffs impact the ability to be competitive when shipping out of China. So I think we've got a lot of good things going in our favor. And then it'll come down to, you know, how well we execute the ramp.

Alan Lowe: Thanks. Well, this is a new product, right? And so it comes down to our ability to execute. And so we will earn share or earn more share, I should say, as we execute. And I think, you know, the combination of US headquartered company manufacturing in Thailand, you know, there's certainly fear of what happens in the next election and the tariffs impact the ability to be competitive when shipping out of China.

Speaker Change: Well, this is a new product, right? And so it comes down to our ability to execute. And so we will earn share or earn more share, I should say, as we execute. And I think, you know, the combination of...

Simon Leopold: And as a follow up, I also want to understand on your telecom business in the June quarter, you had originally talked about a 30 million sequential decline. And so I'm trying to get a better understanding of did that occur? And when we think about the recovery, sequential growth in September, are we how close are we getting back to sort of the prior run rates before the June quarter? Thank you.

Speaker Change: U.S. headquartered company, manufacturing in Thailand, you know, there's certainly fear of what happens in the next election and the tariffs impact the ability to

Alan Lowe: So I think we've got a lot of good things going in our favor. And then it'll come down to, you know, how well we execute the ramp. And I think we're very well positioned to capture a significant amount of share there. Okay, super. Thank you very much. Thank you, George.

Speaker Change: be competitive when shipping out of China. So I think we've got a lot of good things going in our favor, and then it'll come down to how well we execute the ramp, and I think we're very well positioned to capture a significant amount of share there.

Unknown Attendee: And I think we're very well positioned to capture a significant amount of share there. Great. Okay. Super. Thank you very much. Thank you, George. Thank you.

Alan Lowe: Yeah, thanks, Simon. You know, as I said, the I don't want to comment too much about specific customers, but I would say that you're right, it's, you know, people aren't designing new products to deal with old technology. So this is the leading edge 800 gig single mode transceiver that we feel very, very confident in our ability to develop and to shift to in qualified for this customer.

Speaker Change: Okay, super. Thank you very much.

Meta Marshall: Thank you. The next question is from the line of Meta Marshall with Morgan Stanley, your line of snob. Don't know if I'll get an answer here, but it's worth an ask.

George Nader: Thank you, George.

Meta Marshall: The next question is from the line of Meta Marshall with Morgan Stanley.

Speaker Change: Thank you. The next question is from the line of Meta Marshall with Morgan Stanley. Your line is now open.

Unknown Attendee: Your line is now open. Great. Thanks. I don't know if I'll get an answer here, but worth an ask. You know, you've mentioned kind of the $500 million quarterly run rate exiting calendar 25. But just how should we think about kind of the data come capacity between chips and trans viewers, you would have ex-name for school 25. And then maybe just a second question there. Has anything changed with kind of the ramp pattern of kind of your lead customer today on trying to untransevers. And their design shift as we exit kind of calendar 24. Thanks.

Meta Marshall: Great, thanks.

Meta Marshall: Don't know if I'll get an answer here, but it's worth an ask. You know, you've mentioned kind of the 500 million dollar

Chris Kulgen: On the telecom question, Chris, you want to take that one? The revenue coming down June quarter, that happened in the June quarter for telecom. You're questioning with telecom, right? Simon? Yeah, yeah, I wanted to understand sort of, you know, if you grow up 30 and you go up five, well, that's still a big distance from where you used to be. Yeah, I don't know the specifics. I would say that as we said, the telecom and data-com business is up mostly from the telecom strength.

Meta Marshall: You know, you've mentioned kind of the $500 million quarterly run rate exiting. But just how should we think about kind of the data-com capacity between chips and transversi- and then maybe just a second question. Has anything changed with kind of the ramp patterns of.., and there to the... Yeah, let me start with the chip adding capacity. We are adding capacity. We should see, you know, significant growth above market growth in our chip output over the next 12 months. And I think that's why we are, and we have more orders than that.

Meta Marshall: quarterly run rate exiting calendar 25, but just how should we think about kind of the data com capacity between chips and transceivers you would have exiting fiscal 25? And then maybe just a second question there.

Speaker Change: Has anything changed with kind of the ramp patterns of kind of your lead customer today on transceivers and their design shift as we exit kind of calendar 24? Thanks.

Alan Lowe: Yeah. I'd say, as you start with the chip, adding capacity. We are adding capacity. We should see, you know, significant growth above market growth in our chip output over the next 12 months. And I think that's why we are, and we have more orders than that. So it's really constrained by our ability to add capacity, improve yields, and then transition to 200 gig per lane chips. And so I would say that, you know, as the ship from 100 gig to 200 gig kicks in, there's, you know, a pickup in revenue per ship per chip that we should experience as well on the transceivers.

Alan Lowe: So it's really constrained by our ability to add capacity, improve yields, and then transition to 200 gig per lane chips. And so I would say that, that, you know, as the shift from 100 gig to 200 gig kicks in, there's a pickup in revenue per chip that we should experience as well. On the transceivers, you know, as I said before, the monthly capital meetings where we determine how much capacity to put in place is what we're going through. And it's, you know, based on traction with customers and qualifications and awards and things like that.

Speaker Change: Yeah, I'd say, let me start with the chip adding capacity.

Chris Kulgen: And so as we said before, the transition period for our data-com transceiver business is happening Q4 and Q1 and we expect that to grow in Q4. So most of the growth in data-com and telecom is coming from telecom bounce back from really a low point in the June quarter.

Speaker Change: We are adding capacity. We should see, you know, significant growth above market growth in our chip output over the next 12 months.

Speaker Change: And I think that's why.

Speaker Change: We are, and we have more orders than that, so it's really constrained by our ability to add capacity, improve yields, and then transition to 200 gig per lane.

Unknown Attendee: Thank you. Thank you, Simon.

Speaker Change: ships and so I would say that you know as the ship from 100 gig to 200 gig kicks in there's

Unknown Attendee: Thank you.

George Nauder: The next question is from George Nauder with Jeffries. Your line is now open. Hi, thanks very much.

Speaker Change: pick up in revenue per chip that we should experience as well.

Alan Lowe: You know, as I said before, the monthly capital meetings where we determine how much capacity to put in place is what we're going through. And it's, you know, based on traction with customers and qualifications and awards and things like that. So we're certainly making sure we put the infrastructure in place, the facilities in place to support, you know, well over what I'm talking about for the $500 million per quarter in overall revenue. So I think it comes down to execution and our ability to win the mind share and market share for each customer we're working with.

Alan Lowe: I'm just curious if you guys have an Nvidia qualification on this 800 gig single mode transceiver? Yeah, we're not going to comment on who the customer is, George. I would say that as I said before, most customers are working with us on products they don't already have. And so for instance, we are designing 1.6 terabit transceivers and the performance is quite good. We plan on sampling customers this quarter and 1.6 T. So there's a few leaders that would be consuming that until you can imply what you want from that, but we're not going to speaks specifically about any individual customer. Got it. Okay.

Speaker Change: on the transceivers, you know, as I said before the monthly capital meetings where we determine how much capacity to put in place is What we're going through and it's you know based on traction with customers and qualifications and awards and things like that So we're certainly making sure we put the

Alan Lowe: So we're certainly making sure we put the infrastructure in place, the facilities in place to support, you know, well over what I'm talking about for the $500 million per quarter in overall revenue. So I think it comes down to execution and our ability to win the mind share and market share for each customer we're working with. As far as the lead customer, I really don't want to talk specifics about customers, but I'd just reiterate what I'd said before which was product transitions happening in Q4 and Q1, and then we expect to pick up in revenue and data commons in the December court. Thanks, Meta.

Speaker Change: The infrastructure in place, the facilities in place.

Speaker Change: to support, you know, well over what I'm talking about for the $500 million per quarter in overall revenue. So I think it comes down to execution and our ability to win the mind share and market share for each customer we're working with.

Meta Marshall: As far as the lead customer, I really don't want to talk specifics about customers, but I just reiterate what I had said before, which was product transitions happening in Q4 and Q1, and then we expect a pickup in revenue and data commons in the December quarter. Great, thanks. Thanks, Mita. Thank you.

Speaker Change: As far as the lead customer, I really don't want to talk specifics about customers but I just reiterate what I said before which was product transitions happening in Q4 and Q1 and then we expect a pickup in

Alan Lowe: And then, you know, this, this transceiver customer, I guess I'm based on something you said I was curious about whether or not this contractor relationship is just a framework or arrangement or, you know, are there certain minimum volumes or minimum market share that you're being given by this customer? Anything you can say in terms of, you know, first source, second source, third source, I'd love any more details you can provide. Thanks.

Speaker Change: and Revenue and Datacom in the December quarter.

Speaker Change: Great, thank you.

Meta Marshall: Thank you. The next question is from Tom O'Malley with Barclays. Your line is up.

Tom O'malley: The next question is from Tom O'Malley with Barclays; your line is open. Hey, Alan, thanks for taking my question. I just wanted to get a clarification on the new major transfer award. Hey, with the new customer.

Meera: Thanks, Meta.

Speaker Change: Thank you. The next question is from Tom O'Malley with Barclays. Your line is open.

Tom O'malley: Hey, Alan, thanks for taking my question. I just wanted to get a clarification on the new major transceiver award. Hey, with the new customer. So can you just explain to me the difference with what you kind of define as an award versus a win versus a qualification?

Tom O'malley: Hey Alan, thanks for taking my question. I just wanted to get a clarification on the new major transceiver award with the new customer. So, can you just explain to me the difference with what you kind of define as an award versus a win versus a qualification? Because I just, and correct me if I'm wrong, I think you said that qualification would happen in Q1 and it would be out of the Thailand facility. And I believe you said that also the Thailand facility wouldn't be ready until calendar Q1. So,

Tom O'malley: So can you just explain to me the difference with what you kind of define as an award versus a win versus a qualification? Because I just incorrect me from among. I think you said that qualification would happen in Q1, and it'd be out of the Thailand facility. And I believe you said that also the Thailand facility wouldn't be ready until Calendar Q1. So if the product is getting qualified in Q1, can you talk about the timeframe that that will launch? And what isn't award versus, you know, what is a qualified product just because. You would imagine that it's hard to have revenue from something until it's actually qualified.

George Nauder: Well, this is a new product, right? And so it comes down to our ability to execute. And so we will earn share or earn more share, I should say, as we execute. And I think, you know, the combination of US Headquartered Company, Manufacturing and Thailand, you know, there's certainly fear of what happens in the next election and the tariffs impact the ability to be competitive when shipping out of China. So I think we've got a lot of good things going in our favor.

Speaker Change: If the product is getting qualified in Q1, can you talk about the time frame that that would launch and what is an award versus what is a qualified product just because you would imagine that it's hard to have revenue from something until it's actually qualified. Am I making a mistake here in the time frame that I'm laying out?

Alan Lowe: So am I making a mistake here, and the timeframe that I'm laying out?

George Nauder: And then it'll come down to, you know, how well we execute the ramp. And I think we're very well positioned to capture significant amount of share there. Great. Okay. Super. Thank you very much. Thank you, George. Thank you.

Tom O'malley: Because I just, and correct me if I'm wrong, I think you said that qualification would happen in Q1, and it'd be out of the Thailand facility. And I, I believe you said that also the Thailand facility wouldn't be ready until calendar Q1. So if the product is getting qualified in Q1, can you talk about the timeframe? That that will launch and what is an award versus, you know, what is a qualified product, just because you would imagine that it's hard to have revenue for something until it's actually qualified. So am I making a mistake here in the timeframe that I'm laying out? Well, you're generally accurate. I'd say just a correction.

Alan Lowe: Well, you're generally accurate. I'd say it's just the correction.

Speaker Change: Well, you're generally accurate. I'd say, just a correction, our first production line in Thailand is operational this quarter, and we plan to build and ship product

Alan Lowe: Our first production line in Thailand is operational this quarter. And we plan to build and ship product this quarter for the qualification. Now it takes them months to get the qualification work done. And so it's not done until it's done, to your point. Absolutely. Now we're staging material because we're confident in our ability to perform. We're staging capital to be able to support the volumes they're talking about. So I'd say from that perspective, it really gets down to us performing. Now, if the product doesn't work, they're not going to buy a product that doesn't work.

Speaker Change: This quarter for the qualification now it takes them.

Meta Marshall: The next question is from the line of Meta Marshall with Morgan Stanley. Your line is now open. Great. Thanks. I don't know if I'll get an answer here, but worth an ask. You know, you've mentioned kind of the $500 million quarterly run rate exiting calendar 25. But just how should we think about kind of the data come capacity between chips and trans viewers, you would have ex-name for school 25. And then maybe just a second question there. Has anything changed with kind of the ramp pattern of kind of your lead customer today on trying to untransevers. And their design shift as we exit kind of calendar 24. Thanks. Yeah.

Speaker Change: Months to get the qualification work done. And so it's not done until it's done to your point Absolutely. Now we're we're staging material because we're confident in our ability to perform

Alan Lowe: Our first production line in Thailand is operational this quarter, and we plan to build and ship products this quarter for qualification. Now, it takes them months to get the qualification work done.

Speaker Change: We're staging capital to be able to support the volumes they're talking about.

Speaker Change: I'd say from that perspective, it really gets down to us performing. Now, if the product doesn't work, they're not going to buy a product that doesn't work. And so you're right, we have to be qualified, we have to have quality, and we have to have the ability to ramp. And we're making sure that we are controlling what we can control, which is the product quality, the design, the capacity, and the materials to support this customer who is critically important for us.

Alan Lowe: So you're right. We have to be qualified. We have to have quality, and we have to have the ability to ramp. We're making sure that we are controlling what we can control, which is the product quality, the design, the capacity, and the materials to support this customer who's critically important for us.

Alan Lowe: So I guess the follow up is what would be different from an award versus the. Yeah, thank you, Kathy. What would be the difference between an award and what you're doing with other hyperscale or potential customers? Are you committing more capital to them? It sounds like if you're not qualified, isn't this just kind of R&D work on a potential future customer? Which all other kind of development would kind of fall under? Not really. I mean, each of these customers doesn't want to work with eight suppliers, right? So they have to down select to the ones that they're going to spend their engineering time with.

Alan Lowe: I'd say as you start with the chip adding capacity. We are adding capacity. We should see, you know, significant growth above market growth in our chip output over the next 12 months. And I think that's why we are, and we have more orders than that. So it's really constrained by our ability to add capacity, improve yields, and then transition to 200 gig per lane chips. And so I would say that, you know, as the ship from 100 gig to 200 gig kicks in, there's, you know, a pickup and revenue per ship per chip that we should experience as well on the transceivers.

Kathy Ta: So I guess the follow-up is, what would be different from an award versus the, yeah, thank you, Kathy, yeah, what would be the difference between an award and what you're doing with other hyperscale or, you know, potential customers? Like, are you committing more capital to them? Because it sounds like, if you're not qualified, isn't this just kind of, you know, R&D work on a potential future customer, which all other kind of...

Alan Lowe: And so it's not done until it's done, to your point. Absolutely. Now, we're staging material because we're confident in our ability to perform. We're staging capital to be able to support the volumes they're talking about. So I'd say from that perspective, it really gets down to us performing. Now, if the product doesn't work, they're not going to buy a product that doesn't work.

Kathy Ta: you know, development would kind of fall under.

Speaker Change: Not really. I mean, each of these customers don't want to work with eight suppliers, right? So they have to down select to the ones that they're going to spend their engineering time with.

Alan Lowe: And they have chosen us. And so we're not the only person, for sure. But, you know, it's the choice that they've made, and they've given us something that says we're award at the business. That we have to earn it, and we have to perform as with anything that we develop for customers. So I'd say it's different than just, you know, working with a customer. I've chosen you out of the suppliers that I can choose. And again, for multiple reasons, proven technology, proven vertical integration, US headquarters outside of China manufacturing. So there's a lot of reasons that this customer chose us.

Speaker Change: and they have chosen us and so we're not the only person for sure but you know it's the choice that that they've made and they've given us

Speaker Change: something that says we're a ward of the business that we have to earn it and we have to perform as With anything that we we develop for customers, so I'd say it's it's different than Just you know working with the customers. It's I've chosen you out of the

Speaker Change: The suppliers that I can choose and again for multiple reasons proven technology proven vertical integration

Speaker Change: U.S. headquartered, outside of China, manufacturing, so there's a lot of reasons that this customer chose us and now we just have to perform out of Thailand, which is new to us, but I have confidence in the team to be able to execute.

Unknown Attendee: And now we just have to perform out of Thailand, which, you know, is new to us. But I have confidence in the team to be able to act. Thank you. Thank you, Tom. Thank you.

Speaker Change: i

Tom: Thank you, Tom.

Ruben Roy: The next question is from Ruben Roy with Steve Fulton. Your line is open. Thank you.

Tom: yeah

Speaker Change: Thank you. The next question is from Ruben Roy with Stiefel. Your line is open.

Ruben Roy: Alan, I was wondering if you could comment a little bit on sort of the higher thing about 1.6 terrorist timing 90 days ago. You know, we talked about, you know, back half of this year, perhaps into next year, but any changes on sort of, you know, timing of ramps. I think there's some dependence on switch availability and limited number of customers potentially ramping in 2025. So, any detail on how you're thinking about that would be helpful. Thank you.

Speaker Change: Thank you. Alan, I was wondering if you could comment a little bit on sort of the

Speaker Change: you know how you're thinking about 1.6 terabit timing uh 90 days ago you know we talked about um you know back half of this year perhaps into next year but any any changes on sort of

Tom O'malley: The next question is from Tom O'Malley with Barclays, your line is open. Hey, Alan, thanks for taking my question. I just wanted to get a clarification on the new major transfer award. Hey, with the new customer.

Alan Lowe: So can you just explain to me the difference with what you kind of define as an award versus a win versus a qualification? Because I just incorrect me from among. I think you said that qualification would happen in Q1, and it'd be out of the Thailand facility. And I believe you said that also the Thailand facility wouldn't be ready until calendar Q1. So if the product is getting qualified in Q1, can you talk about the timeframe that that will launch?

Speaker Change: timing of ramps. I think there's some dependence on switch availability and a limited number of customers potentially ramping in 2025. So any detail on how you're thinking about that would be helpful. Thank you.

Alan Lowe: And what isn't award versus, you know, what is a qualified product just because. You would imagine that it's hard to have revenue from something until it's actually qualified. So am I making a mistake here and the timeframe that I'm laying out? Well, you're generally accurate. I'd say it's just the correction. Our first production line in Thailand is operational this quarter. And we plan to build and ship product this quarter for the qualification.

Alan Lowe: Yeah, I think our focus is really controlling what we can control, which is providing customer samples, you know, this quarter with high quality, high reliability, high performing 1.6 T transceivers. And so we have multiple designs in the works that look very promising. And you know, we're working hand in hand with, as you say, the few customers that would be interested in this today, because most are, you know, still working to get to 800 gigs. So that's our focus. You know, when the customers need it, we will have it. And you know, whether there's a switch, silicon issue, or other issues, we're not going to be shipping transceivers unless everything is ready to go.

Alan Lowe: And so you're right, we have to be qualified, we have to have quality, and we have to have the ability to ramp. And we're making sure that we are controlling what we can control, which is the product quality, the design, the capacity, and the material. To support this customer who is critically important for us. So I guess the follow up is what would be different from an award versus the, yeah, thank you, Kathy.

Speaker Change: Yeah, I think our focus is really controlling what we can control, which is providing customer samples.

Speaker Change: This quarter, with high quality, high reliability, high performing 1.6T transceivers, and so we have multiple designs in the works that look very promising.

Speaker Change: And, you know, we're working hand-in-hand with, as you say, the few customers that would be interested in this today.

Tom O'malley: Yeah, what would be the difference between an award and what you're doing with other hyper-scale or potential customers? Like, are you committing more capital to them? Because it sounds like if you're not qualified, isn't this just kind of, you know, R&D work on a potential future customer, which all other kinds of development would kind of fall under? [inaudible] Not really.

Speaker Change: Um...

Speaker Change: because most are still working to get to 800 gigs.

Speaker Change: That's our focus, you know, when the customers need it, we will have it and and you know whether there's a

Speaker Change: Switch, silicon issue, or other issues, we're not going to be shipping transceivers unless everything is ready to go. But that said, we want to be ready when they say go, and so that's why we're working on it now, and have multiple designs, working with multiple customers to get that done.

Wajid Ali: But that said, we want to be ready when they say go. And so that's why we're working on it now and have multiple designs working with multiple customers to get that done. Got it. Thank you.

Alan Lowe: Now it takes them months to get the qualification work done. And so it's not done until it's done to your point. Absolutely. Now we're staging material because we're confident in our ability to perform. We're staging capital to be able to support the volumes they're talking about. So I'd say from that perspective, it really gets down to us performing. Now if the product doesn't work, they're not going to buy a product that doesn't work.

Alan Lowe: I mean, each of these customers don't want to work with eight suppliers, right? So they have to down select to the ones that they're going to spend their engineering time with. And they have chosen us. And so we're not the only person for sure.

Ruben Roy: And then quick follow-up for watch it. Yeah, just a quick follow up for watch it on the gross margin comment is just around anything through record shipments of the mlagers and the sort of expectations for that ran to continue into your end. If you can give us any more detail on how you think about the gross margin progression as you get into fiscal 25. Yeah, thanks, Ruben. Yeah, so as we mentioned in our prepare remarks, you know, both the benefit of an improved telecom outlook, giving us better manufacturing utilization across our multiple factories, is certainly giving us a tailwind on gross margins moving into the new fiscal year.

Alan Lowe: But, you know, it's the choice that they've made. And they've given us something that says we're awarded the business that we have to earn it and we have to perform as with anything that we we develop for customers. So I'd say it's different than just, you know, working with the customer. It's I've chosen you out of the, The suppliers that I can choose. And again, for multiple reasons, proven technology, proven vertical integration, US headquartered, outside of China manufacturing.

Speaker Change: Got it. Thank you. Do you have a follow-up, Ruben? Quick follow-up for Wajid.

Ruben: Yeah, just a quick follow up for Wajid on the gross margin comment, just around thinking through.

Alan Lowe: So you're right. We have to be qualified. We have to have quality and we have to have the ability to ramp. We're making sure that we are controlling what we can control, which is the product quality, the design, the capacity and the materials to support this customer who's critically important for us.

Ruben: record shipments of ML lasers and you know sort of expectations for that ramp to continue into year-end if you can give us any more detail on how you're thinking about the gross margin progression as you get into fiscal 25

Alan Lowe: So there are a lot of reasons that this customer chose us. And now we just have to perform out of Thailand, which, you know, is new to us, but I have confidence in the team to be able to execute.

Speaker Change: Yeah, thanks, Ruben. Yeah, so as we mentioned in our prepared remarks, you know, both the benefit of an improved telecom outlook

Speaker Change: Giving us better manufacturing utilization across

Speaker Change: are multiple factories.

Speaker Change: is certainly giving us a tailwind on gross margins moving into...

Wajid Ali: Along with that, the record data on shipments that Alan talked about, you know, fulfilling that backlog is going to also give us a tailwind given that it's chip business. As you know, and then the transition over into 200 gmls being a larger part of that mix will also provide a tailwind for us. So that'll progress through the quarters as those shipments happen. Thank you.

Speaker Change: The New Fiscal Year, along with that.

Speaker Change: the record Datacom shipments that Alan talked about, you know, fulfilling that backlog.

Tom O'malley: Thank you, Tom. Thank you. The next question is from Ruben Roy with Stiefel.

Alan Lowe: Not really. I mean, each of these customers don't want to work with eight suppliers, right? So they have to down select to the ones that they're going to spend their engineering time with. And they have chosen us. And so we're not the only person, for sure. But, you know, it's the choice that they've made and they've given us something that says we're award at the business. That we have to earn it and we have to perform as with anything that we develop for customers.

Alan: is going to also give us a tailwind given that it's chip business.

Speaker Change: As you know,

Speaker Change: Thank you. Thank you.

Ruben Roy: Your line is open. Thank you, Alan. I was wondering if you could comment a little bit on sort of the, you know, how you're thinking about 1.6 terabit timing. 90 days ago, you know, we talked about, you know, back half of this year, perhaps into next year, but any, any changes on sort of, you know, timing of ramps? Dependence on switch availability and a limited number of customers, in 2025. So any any detail on how you're thinking about, Yeah, I think our focus is really controlling what we can control, which is providing customer samples, you know, this quarter, with high quality, high reliability, high performing 1.6 T transceivers.

Unknown Attendee: The next question is from the back area with Bank of America. Your plan is now open. Thanks for that. My question. Alan, in the path towards getting to 500 million dollars, what does your telco business need to be as part of that 500 million? What assumptions are you making for the recovery in telco to get to? at Landmark by the end of next calendar year. We don't need much growth in telecom. It doesn't. We're not counting on that; we're covering back to pandemic levels because I think that was overstated shipments. So, you know, certainly higher than we were in the June quarter because that I think is probably the low point for us for telecom shipments.

Speaker Change: Thank you. The next question is from Vivek Arya with Bank of America. Your line is now open.

Ruben Roy: And so we have multiple designs in the works that look very promising. And, you know, we're working hand in hand with, as you say, the few customers that would be interested in this today. Because most are, you know, still working to get to 800 gigs.

Alan Lowe: So I'd say it's different than just, you know, working with a customer. I've chosen you out of the suppliers that I can choose. And again, for multiple reasons, proven technology, proven vertical integration, US headquarters outside of China manufacturing. So there's a lot of reasons that this customer chose us. And now we just have to perform out of Thailand, which, you know, is new to us. But I have confidence in the team to be able to act.

Alan Lowe: Anderson.

Vivek Arya: Thanks for taking my question. So, Alan, in this path towards getting to $500 million, what does your telco business need to be as part of that $500 million, i.e., what assumptions are you making for the recovery in telco to get to that $500 million?

Unknown Attendee: Thank you. Thank you, Tom.

Ruben Roy: Thank you. The next question is from Ruben Roy with Steve Fulton. Your line is open.

Speaker Change: Landmark by the end of next calendar year.

Speaker Change: just

Alan Lowe: We don't need much growth in telecoms. It doesn't, we're not counting on that recovering back to

Speaker Change: pandemic levels because I think that was overstated shipments and so you know certainly higher than we were in the June quarter because that I think is probably the low point for us for telecom shipments so we expect some improvement throughout calendar 2025 but not

Alan Lowe: So we expect some improvement throughout calendar 2025, but not huge growth in telecom. Most of it's coming from, you know, EML chips, transition to 200 gig, optical data comm, optical switching that should kick in by calendar 2025, as well as, you know, one or two transceiver wins. And that's really all we need to be able to get to 500 million.

Alan Lowe: Thank you. Alan, I was wondering if you could comment a little bit on sort of the higher thing about 1.6 terrorist timing 90 days ago. You know, we talked about, you know, back half of this year, perhaps into next year, but any changes on sort of, you know, timing of ramps. I think there's some dependence on switch availability and limited number of customers potentially ramping in 2025. So any detail on how you're thinking about that would be helpful.

Speaker Change: Not huge, not huge growth in telecom.

Speaker Change: Most of it's coming from, you know, EML chips, transition to 200 gig, optical data comm, optical switching that should kick in by calendar 2025, as well as, you know, one or two transceiver wins, and that's really all we need to be able to get to 500 million.

Alan Lowe: Follow up on the transceiver side. How substitutable do you think are products from the different suppliers? Like, how do you think the customer will allocate share, right? What's going to be the level of visibility that are you, you know, are your products better suited for some specific accelerator or switch, you know, combination? How would you know what your share could be potentially next year? Yeah, I think it comes down to the performance and security supply. And so, again, back to having manufacturing outside of China. And I know a lot of our partners who buy our chips are moving outside of China, but we have established footprint with thousands of employees.

Alan Lowe: Thank you. Yeah, I think our focus is really controlling what we can control, which is providing customer samples, you know, this quarter with high quality, high reliability, high performing 1.6 T transceivers. And so we have multiple designs in the works that look very promising. And you know, we're working in hand in hand with, as you say, the few customers that would be interested in this today, because most are, you know, still working to get to 800 gigs.

Speaker Change: Bye.

Speaker Change: For my follow-up on the transceiver side...

Speaker Change: How substitutable do you think our products from the different suppliers, like how do you think the customer will allocate share, right? What's going to be the level of visibility that are you, you know, are your products better suited for some specific accelerator or switch?

Speaker Change: combination, how would you know what your share could be potentially next year?

Alan Lowe: So that's our focus. You know, when the customers need it, we will have it. And you know, whether there's a switch, silicon issue or other issues, we're not going to be shipping transceivers unless everything is ready to go. But that said, we want to be ready when they say go. And so that's why we're working on it now and have multiple designs working with multiple customers to get that done.

Wajid Ali: Got it.

Speaker Change: Yeah, I think it comes down to the performance and security of supply.

Unknown Attendee: Thank you.

Speaker Change: Again, back to having manufacturing outside of China and I know a lot of our partners who buy our chips are moving outside of China, but we have an established footprint with thousands of employees there and good engineers, so we have credibility in our site in Thailand to be able to ramp up.

Alan Lowe: They're in good engineers. So we have credibility in our site in Thailand to be able to ramp up high quality product and earn share. And I think that you get back to, I think where a lot of these questions are going: how much are we going to get? We're going to get what we earn. And we plan to earn a lot. So I think it comes down to being able to provide what they need when they need it and make sure we have the capacity and the materials and the people and the engineers to be able to drive high quality product and earn their business.

Alan Lowe: So that's our focus, you know, when the customers need it, we will have it. And, you know, whether there's a switch, silicon issue or other issues, we're not going to be shipping transceivers unless everything is ready to go. But that said, we want to be ready when they say go. And so that's why we're working on it now and have multiple designs working with multiple customers to get that done. Got it.

Ruben Roy: And then quick follow up for watch it. Yeah, just a quick follow up for watch it on the gross margin comment is just around anything through record shipments of the mlagers and the sort of expectations for that ran to continue into your end.

Speaker Change #100: High quality product and an earned share and I think that it gets back to I think where a lot of these questions are going. How much are we going to get? We're going to get what we earn and we plan to earn a lot so.

Speaker Change #100: I think it comes down to being able to provide what they need when they need it and make sure we have the capacity and the materials and the people and the engineers to be able to drive high quality product and earn their business. Now, there is interoperability and we have to work with the various...

Wajid Ali: If you can give us any more detail on how you think about the gross margin progression as you get into fiscal 25. Yeah, thanks, Ruben. Yeah, so as we mentioned in our prepare remarks, you know, both the benefit of an improved telecom outlook, giving us better manufacturing utilization across our multiple factories is certainly giving us a tailwind on gross margins moving into the new fiscal year. Along with that, the record data con shipments that Alan talked about, you know, fulfilling that backlog is going to also give us a tailwind given that it's chip business. As you know, and then the transition over into 200 gmls being a larger part of that mix will also provide a tailwind for us. So that'll progress through the quarters as those as those shipments happen.

Alan Lowe: Now, there is interoperability, and we have to work with the various switch providers to make sure there is. But the specs are pretty consistent and clear. So we know what we need to do to be able to interop as needed.

Unknown Attendee: Thank you.

Speaker Change #100: Switch Providers to make sure there is, but the specs are pretty consistent and clear so we know what we need to do to be able to interop as needed.

Unknown Attendee: Thanks for that. Thank you.

Speaker Change #101: Thanks for that.

Ruben Roy: Thank you. Do you have a follow up, Ruben? A quick follow up for Wajid.

Karl Ackerman: The next question is from Carl Ackerman with BNP Paribas. You may proceed. Yes, thank you.

Speaker Change #101: Thank you [inaudible]

Speaker Change #101: Thank you. The next question is from Karl Ackerman with BNP Paribas. You may proceed.

Ruben Roy: Yeah, just a quick follow up for Wajid on the gross margin comment. It's just around thinking through record shipments of Yama lasers and you know, sort of, Thank you so much for that round to get to you and to your end, if you can give us any more. © The Bulletproof Executive 2013, Yeah, thanks, Ruben.

Wajid Ali: First off, I guess could you discuss why you are stopping in-house development of coherent DSPs? Is that related to limited uptake for 100 gig coherent in the access market, or are there other factors to consider? And as you address that question, are you seeing any pause in coherent optics demand broadly, at least for DCI applications? Thank you.

Carl Akerman: Yes, thank you.

Carl Akerman: First off, I guess, could you discuss why you are stopping in-house development of coherent DSPs?

Carl Akerman: Is that related to limited uptake for 100 gig coherent in the access market, or are there other factors to consider? And if you address that question, are you seeing any pause in coherent optics demand broadly, at least for DCI applications? Thank you.

Wajid Ali: Yeah, I'd say that we have a fixed amount of R&D we can spend, and we're shifting to where we can make a big difference and to markets that are growing faster. And so the combination of that, so we're adding more to the data comm transceiver business. The combination of that and the partnering with third parties, both from our customers as well as from third party independent chip manufacturers, allows us that ability to get what we think we need to get at an overall cost of ownership that's less than developing a three nanometer DSP. So from that perspective, I have confidence in our ability to secure DSPs at competitive prices to be able to address the data center interconnect market.

Speaker Change #103: Yeah, I'd say that we have a fixed amount of R&D we can spend.

Unknown Attendee: The next question is from the back area with Bank of America. Your plan is now open. Thanks for that.

Speaker Change #104: and we're shifting to where we can make a big difference and to markets that are growing faster.

Carl Ackerman: My question. Alan, in the path towards getting to 500 million dollars, what does your telco business need to be as part of that 500 million? What assumptions are you making for the recovery in telco to get to? at Landmark by the end of next calendar year. We don't need much growth in telecom. It doesn't, we're not counting on that, we're covering back to a pandemic levels because I think that was overstated shipments.

Speaker Change #105: The combination of that, so we're adding more to the Datacom transceiver business, a combination of that and the partnering with third parties, both...

Speaker Change #105: from our customers as well as from third-party independent chip manufacturers allows us that ability to get what we think we need to get.

Speaker Change #105: At a overall cost of ownership that's less than developing a three nanometer DSP. So, from that perspective, I have confidence in our ability to secure DSPs at competitive prices.

Carl Ackerman: So, you know, certainly higher than we were in the June quarter because that I think is probably the low point for us for telecom shipments. So we expect some improvement throughout calendar 2025, but not huge growth in telecom. Most of it's coming from, you know, EML chips, transition to 200 gig, optical data comm, optical switching that should kick in by calendar 2025, as well as, you know, one or two transceiver wins. And that's really all we need to be able to get to 500 million.

Wajid Ali: But that said, we believe I believe that pivoting from spending on DSPs to spending on higher growth markets like inside the data center will pay off to pay dividends.

Speaker Change #105: To be able to address the data center interconnect market, but that said, we believe I believe the pivoting from spending on DSPs, to spending on higher growth markets like inside the data center, it will pay off and pay dividends.

Unknown Attendee: Jim, a follow-up call?

Speaker Change #105: Did you have a follow-up, Carl?

Ananda Baruah: Okay, Alberta, can we take our next question, please? Absolutely, the next question is from Ananda Baruah with Loop Capital; your line is now open. Yeah, thanks, guys. Congrats on the progress. Thanks for taking the questions. I just found just one here.

Wajid Ali: Yeah, so as we mentioned in our prepared remarks, you know, both the benefit of an improved telecom outlook, giving us better manufacturing utilization across our multiple factories is certainly giving us a tailwind on gross margins moving into the new fiscal year. Along with that, the record datacom shipments that Alan talked about, you know, fulfilling that backlog is going to also give us a tailwind given that it's chip business, as you know, and then the transition over into 200 GEMLs being a larger part of that mix will also provide a tailwind for us. So that'll progress through the quarters as those as those shipments happen. Thank you. Thank you. Thank you. The next question is from Vivek Arya with Bank of America. Your line is now open.

Speaker Change #106: Operator, can we take our next question, please?

Vivek Arya: Thanks for taking my question. So Alan, in this path towards getting to $500 million, what does your telco business, Unknown Attendee, Wupen Yuen, Alexander Henderson, Ku Kang, Simon Leopold, Michael Genovese, Landmark by the end of next calendar. We don't need much growth in telecom. It doesn't we're not counting on that recovering back to pandemic levels, because I think that was overstated shipment.

Speaker Change #107: Absolutely. The next question is from Ananda Barua with Loop Capital. Your line is now open.

Alan Lowe: And so, you know, certainly higher than we were in the June quarter, because that I think is probably the low point for us for telecom shipments. So we expect some improvement throughout calendar 2025, but not, Not huge growth in telecom. Most of it is coming from EML chips, transition to 200 gig, optical data comm, optical switching that should kick in by counter 2025, as well as one or two transceiver wins. And that's really all we need to be able to get to $500 million. From the follower on the transceiver side.

Ananda Barua: Yeah, thanks guys. Congrats on the progress. Thanks for taking the questions. I just have just one here, and maybe it falls into the clarification category. But, you know, Alan, with the new wind and the way that you're talking about

Ananda Baruah: And they may be a fault of the clarification category, but you know, Alan, with the new wind and the way that you're talking about doing some shipping this quarter, are you guys tracking ahead on the data center call sort of dynamics that you begin to talk about? I think that could have seen. I just as I recall it, it was mostly calls are going to take place kind of around the beginning of the year, and I know it's time talks about some language here, but so just let me just ask it that way. He tracked me ahead of some of the call activity that he helped.

Ananda Barua: doing some shipping this quarter. Are you guys tracking ahead?

Speaker Change #109: on the data center call.

Speaker Change #110: sort of dynamics that you began to talk about, I think, back at OFC. I, like, I guess just as I recall it, it was mostly calls that were going to take place kind of around the beginning of the year. And I know, you know, as Tom talked about, there's some...

Alan Lowe: And so, again, back to having manufacturing outside of China. And I know a lot of our partners who buy our chips are moving outside of China, but we have established footprint with thousands of employees. They're in good engineers. So we have credibility in our site in Thailand to be able to ramp up high quality product and earn share. And I think that you get back to, I think where a lot of these questions are going, how much are we going to get?

Speaker Change #111: There's some language here, but so just let me just ask it that way, are you tracking ahead of some of the call activity? That'd be helpful. Thanks a lot, guys.

Alan Lowe: Well, thanks a lot, guys. Yeah, thanks, Ananda. I'd say we're tracking right on schedule. We had, you know, had to finish out a clean room. We've done that in our time and facility. We've now equipped it. We're ready to start building qualification units. And so that's right on track. And as you say, the quality of the case, you won't be done until late this calendar year will allow us to ramp production into the January timeframe. So that's right on track for what at least our internal plan has been and what I thought we had discussed at OFC earlier this year.

Vivek Arya: How substitutable do you think our products from the different suppliers like how do how do you think the customer will allocate share right what's going to be the level of visibility that are you you know are your products better suited for some specific accelerator or switch you know combination how would you know what your share could be potentially, Yeah, I think it comes down to the performance and security of supply. And so, again, back to having manufacturing outside of China, and I know a lot of our, our partners who buy our chips are moving outside of China, but we have an established footprint with 1000s of employees there and good engineers. So we have credibility in our site in Thailand to be able to ramp up high quality product and earn share.

Speaker Change #111: Yeah, thanks Ananda. I'd say we're tracking right on schedule.

Speaker Change #112: You know, had to finish out a clean room. We've done that in our Thailand facility. We've now equipped it. We're ready to start building.

Speaker Change #112: Qualification Units, and so that's right on track.

Alan Lowe: We're going to get what we earn. And we plan to earn a lot. So I think it comes down to being able to provide what they need when they need it and make sure we have the capacity and the materials and the people and the engineers to be able to drive high quality product and earn their business. Now, there is interoperability and we have to work with the various switch providers to make sure there is. But the specs are pretty consistent and clear. So we know what we need to do to be able to interop as needed.

Speaker Change #112: And as you say, the qualitative education won't be done until late this calendar year. It will allow us to ramp...

Speaker Change #112: Productions into the January timeframe, so that's right on track with what at least our internal plan is then and what I thought we had discussed at OOTC earlier this year.

Speaker Change #112: Okay, great. That's super helpful. I appreciate it. Thanks.

Unknown Attendee: Thank you.

Kathryn Ta: Thank you.

Tim Saboga: The next question is from Tim Saboga with Northland Capital Markets. Your line is now open. Hey, good afternoon. Point of focus back on capacity from a couple of different perspectives. Maybe relative to what you've got now, you mentioned you're at capacity and in Indian fast fire or EMLs. I mean, can quantifiers be extended to plan capacity addition there over, I don't know, the next year, you know, or you doubling, tripling capacity, what have you. And really same question relative to your current run rate on the module side. I think that was expected to come down this quarter with the product transition.

Kathryn Ta: Joel, could we have our next question please?

Unknown Attendee: Thanks for that. Thank you.

Speaker Change #114: The next question is from Tim Savageaux with Northland Capital Markets. Your line is now open.

Unknown Attendee: The next question is from Carl Ackerman with BNP Paraba. You may proceed. Yes, thank you.

Tim Sabaga: Hey, good afternoon. I want to focus back on capacity from a couple of different perspectives.

Carl Ackerman: First off, I guess could you discuss why you are stopping in house development of coherent DSPs? Is that related to limited uptake for 100 gig coherent in the access market or are there other factors to consider? And as you address that question, are you seeing any pause in coherent optics demand broadly, at least for DCI applications? Thank you.

Speaker Change #116: Maybe relative to what you've got now, you mentioned you're at capacity in Indium Phosphide or EML.

Speaker Change #117: Can you quantify the extent of the planned capacity addition there over, I don't know, the next year? You know, are you doubling, tripling capacity, what have you?

Speaker Change #117: And really same question relative to your current run rate on the module side.

Alan Lowe: Yeah, I'd say that we have a fixed amount of R&D we can spend and we're shifting to where we can make a big difference and to markets that are growing faster. And so the combination of that, so we're adding more to the data comm transceiver business. The combination of that and the partnering with third parties both from our customers as well as from third party independent chip manufacturers allows us that ability to get what we think we need to get at a overall cost of ownership that's less than developing a three nanometer DSP.

Speaker Change #119: I think that was expected to come down this quarter with the product transition.

Tim Saboga: What sort of capacity are you looking to add in Thailand, their relatives to that and sounds like it's a fluid situation, but over what timeframe, I guess.

Speaker Change #120: What sort of capacity are you looking to add in Thailand there relative to that? And it sounds like it's a fluid situation, but over what time frame, I guess?

Alan Lowe: Sure, I'd say the chip one is easy because equipment has to be there today for it to make much of a difference this calendar year or this fiscal year. But as I said earlier, we're planning on growing capacity faster than the market is growing, and the market is expected to grow 30 to 40% this year. So it's not doubling; is that that that would take a lot of effort and a lot of capital and probably would distract the team if we tried to double in 12 months. It's just not not feasible. I'd say that on the chip side, you can think of something north of 40% from the June quarter to next June quarter.

Speaker Change #121: Sure, I'd say the chip one is easy because, you know, equipment has to be there today for it to make much of a difference this calendar year, or this fiscal year.

Speaker Change #122: But as I said earlier, we're planning on growing capacity faster than the market is growing and the market is expected to grow 30% to 40% this year. So it's not doubling. That would take a lot of effort and a lot of capital.

Alan Lowe: So from that perspective, I have confidence in our ability to secure DSPs at competitive prices to be able to address the data center interconnect market. But that said, we believe I believe that pivoting from spending on DSPs to spending on higher growth markets like inside the data center will pay off to pay dividends.

Speaker Change #122: Probably would distract the team if we tried to double in 12 months. It's just not feasible. I'd say that on the chip side, you can think of something north of 40% from the June quarter to next June quarter.

Alan Lowe: And then on the run rate for transceivers, you know, we are, as you say, we're down from where we were in the March quarter. We're putting capacity in as the opportunities come to fruition. And, as I said before, we made sure we have the shell construction of clean rooms ready. And that's kind of the cheaper thing that needs to happen, and then we can put equipment in much more rapidly, like we talked about with this first win. We're putting capacity in place that will be ready to go and, you know, at the end of this year to grant production into the early part of next year.

Speaker Change #123: And then on the run rate for transceivers, you know, we are, as you say, we're down from where we were in the March quarter. We're putting capacity in as the opportunities come to fruition. And as I said before, we've...

Unknown Attendee: Jim, a follow-up call?

Ananda Baruah: Okay, Alberta, can we take our next question please? Absolutely, the next question is from Ananda Baruah with Loop Capital, your line is now open. Yeah, thanks guys, congrats on the progress. Thanks for taking the questions. I just found just one here.

Speaker Change #123: We made sure we have the

Speaker Change #123: The shell construction of clean rooms ready, and that's kind of the cheaper thing that needs to happen. And then we can put equipment in much more rapidly. Like we talked about with this first win, we're putting capacity in place that will be ready to go at the end of this year to ramp production into the early part of next year.

Alan Lowe: And they may be a fault of the clarification category, but you know, Alan with the new wind and the way that you're talking about doing some shipping this quarter, are you guys tracking ahead on the data center call sort of dynamics that you begin to talk about? I think that could have seen. I just as I recall it, it was mostly calls are going to take place kind of around the beginning of the year, and I know it's time talks about some language here, but so just let me just ask it that way.

Alan Lowe: So, I hesitate to say, you know, we're going to go from $X to $2X, but on the transceivers, it's certainly, you know, certainly, we're able to do more than two to three X of what we've done in the past.

Speaker Change #123: So, I hesitate to say we're going to go from X dollars to 2X dollars, but on the transceivers it's certainly, we're able to do more than 2 to 3X of what we've done in the past.

Speaker Change #124: In the next 12 months. Got it. Yep.

Speaker Change #124: Understood.

Speaker Change #125: and Fred, a quick follow-up

Alan Lowe: Are you entirely incremental, or are you moving capacity over from China effectively, or you know, shutting that down at all? Are you maintaining that as a base, and I'll leave it there. I want to get greedy here. Yeah, that's a good question. I'd say that initially it's incremental, because, you know, customers don't want us to move existing products. But as we bring on new products, we'll be ramping them more up outside of China than adding more capacity inside of China. So that over time, you know, over the next couple of years, there will be a transition to mainly in Thailand, or I should say outside of China, because that's what our customers want.

Alan Lowe: He tracked me ahead of some of the call activity that he helped. Well, thanks a lot guys. Yeah, thanks Ananda. I'd say we're tracking right on schedule. We had, you know, had to finish out a clean room. We've done that in our time and facility. We've now equipped it. We're ready to start building qualification units. And so that's right on track. And as you say, the quality of the case, you won't be done until late this calendar year will allow us to ramp production into the January timeframe. So that's right on track for what what at least our internal plan has been and what I thought we had discussed at OFC earlier this year. Thank you.

Speaker Change #126: Would that capacity in Thailand be entirely incremental, or are you moving capacity over from China effectively, or shutting that down at all, or are you maintaining that as a base? And I'll leave it there, I don't want to get greedy here.

Speaker Change #127: Yeah, that's a good question. Um, I'd say that initially it's incremental because

Speaker Change #128: You know customers don't want us to move existing products, but as we bring on new products We'll be ramping them more up outside of China than adding more capacity inside of China

Speaker Change #128: So that over time...

Speaker Change #128: You know, over the next...

Speaker Change #128: couple of years, there will be a transition to mainly in Thailand, or I should say outside of China.

Alan Lowe: And I think, you know, having a center of excellence in Thailand gives us that capability to move capacity and add capacity in Thailand with our workforce that we've got there. Thanks, Tim.

Speaker Change #128: because that's what our customers want. And I think having a center of excellence in Thailand gives us that capability to move capacity and add capacity in Thailand with our workforce that we've got there.

Alan Lowe: The next question is from Tim saboga with Northland capital markets. Your line is now open. Hey, good afternoon. Point of focus back on capacity from a couple of different perspectives. Maybe relative to what you've got now, you mentioned you're at capacity and in Indian fast fire or EMLs. I mean, can quantifiers be extended to plan capacity addition there over, I don't know, the next year, you know, or you doubling, tripling capacity, what have you.

Richard Shannon: Joel, I'd like to be able to squeeze in one more question if we could. Absolutely. The next question is from Richard Janet with Craig Hallum. Your lines now open. Great, guys. I think you're taking my question.

Speaker Change #128: Thanks Tim. Joel, I'd like to be able to squeeze in one more question if we could.

Speaker Change #129: Absolutely. The next question is from Richard Shannon with Craig Hallam. Your line is now open.

Richard Shannon: I think I'm going to spend both of my questions on one multi-parter here. On the topic I was asked earlier about how to think about your path from current guidance revenues to the $500 billion plus level ending next calendar year. Your response to that question is pretty interesting in a number of ways, Alan. Maybe I'll approach two or three of them here. We said you didn't need much telecom to get there. Expecting most of it from email chips, also transition 200 ggmls data com optical switching and some transceiver stuff here. I'm not sure if that last part was intended to be in like a sending or sending order of contribution, but maybe a comment on that would be great.

Richard Janet: Well great guys, thanks for taking my question. I think I'm going to spend both of my questions on one multi-parter here.

Richard Janet: It's on the topic that was asked earlier here about how to think about your path from current guidance revenues to the $500 million plus level ending next calendar year. And your response to that question was pretty interesting in a number of ways, Alan. Maybe I'll broach two or three of them here, where you said you didn't need much telecom to get there.

Alan Lowe: And really same question relative to your current run rate on the module side. I think that was expected to come down this quarter with the product transition. What sort of capacity are you looking to add in Thailand, their relatives to that and sounds like it's a fluid situation, but over what timeframe, I guess.

Speaker Change #131: I'm expecting most of it from email chips, also transition 200 gig emails, data com optical switching and some transceiver stuff here. I'm not sure if that that last part was intended to be in, like, ascending or descending order of contribution but

Alan Lowe: And I guess specifically, I'm quite interested in two aspects of this, one of which is the optical switching. Is that expected to be a meaningful contributor to this growth to get the $500 billion? And then also, are you not expecting much from telecom orders that just upside if you get it. Thank you.

Alan Lowe: Sure, I'd say the chip one is easy because equipment has to be there today for it to make much of a difference this calendar year or this fiscal year. But as I said earlier, we're planning on growing capacity faster than the market growing is growing and the market is expected to grow 30 to 40% this year. So it's not doubling is that that that would take a lot of effort and a lot of capital and probably would distract the team if we tried to double in 12 months.

Speaker Change #132: If you could comment on that, that would be great, and I guess specifically...

Speaker Change #133: I'm quite interested in two aspects of this. One of which is, is the optical switching, is that expected to be a meaningful contributor to this growth to get to 500 million? And then also, are you not expecting much

Speaker Change #134: from telecom or is that just upside if you get it? Thank you.

Alan Lowe: That is a multi-par question. I'm glad I wrote it down. Thanks, Richard. I say there was no method in my rambling of priorities. I'd say if you wanted me to do that, I'd say transceivers would be number one growth area. I say that optical switching is probably bigger in calendar 26. I wouldn't say less meaningful because I think we're counting on meaningful revenue in 25, but really setting this up for significant growth in 26 on the optical switching inside the data center. I already talked about EMLs, north of 40% growth over the next 12 months.

Speaker Change #135: That is a multi-part question. I'm glad I wrote it down. Thanks, Richard. I'd say there was no method in my rambling of priorities. I'd say, if you wanted me to do that, I'd say transceivers.

Alan Lowe: It's just not not feasible. I'd say that on the chip side, it's you can think of something north of 40% from the June quarter to next June quarter. And then on the run rate for transceivers, you know, we are, as you say, we're down from where we were in the March quarter, we're putting capacity in as the opportunities come to fruition. And as I said before, we made sure we have the shell construction of clean rooms ready.

Alan Lowe: And that's kind of the cheaper thing that needs to happen and then we can put equipment in much more rapidly like we talked about with this first win. We're putting capacity in place that will be ready to go and, you know, at the end of this year to grant production into early part of next year. So, I hesitate to say, you know, we're going to go from $X to $2X, but on the transceivers, it's certainly, you know, certainly, we're able to do more than two to three X of what we've done in the past.

Speaker Change #136: would be number one growth area. I'd say that optical switching is probably bigger in calendar 26 than in less...

Speaker Change #136: I wouldn't say less meaningful because I think we're counting on meaningful revenue in 2025, but really setting us up for significant growth in 2026 on the optical switching inside the data center. And I already talked about EMLs, you know, north of 40% growth over the next 12 months.

Alan Lowe: And then I say that I've been hoping that telecom will be bouncing back to the last year. So I'm not counting on that anymore, although we are seeing some growth in the short term. I do think that we don't need to get back to the pandemic levels. And we're not counting on that when we give you that projection for $500 billion. So I'd say it's really all about execution on transceivers and awards and EMLs and the transition to 200 gig where the revenue per unit is more than it is for the 100 gig. I hope that answered your question.

Speaker Change #136: And then, you know, I say that I've been hoping that telecom will be bouncing back for the last year and so I'm not counting on that anymore, although we are seeing some growth in the short term. I do think that, you know, we don't need to get back to the

Speaker Change #136: pandemic levels. And we're not counting on that when we give you that projection for $500 per quarter. So I'd say it's really all about execution on transceivers and awards and, and emails and the transition to 200 gig where the

Speaker Change #136: The revenue per unit is more than it is for the 100 gigs.

Unknown Attendee: Is that adding quite a bit to it, Alan? Thank you very much.

Speaker Change #137: I hope that answered your question.

Unknown Attendee: That's all for me. Okay, great. Thanks, Richard. Thank you, Richard.

Speaker Change #138: That added quite a bit to it, Alan. Thank you very much. That's all for me.

Alan Lowe: Are you entirely incremental, or are you moving capacity over from China effectively, or you know, shutting that down at all, are you maintaining that as a base, and I'll leave it there. I want to get greedy here. Yeah, that's a good question. I'd say that initially it's incremental, because, you know, customers don't want us to move existing products, but as we bring on new products, we'll be ramping them more up outside of China than adding more capacity inside of China.

Alan Lowe: So, with that, I think we're going to wrap the Q&A portion of the call, and I'll pass the call back over to Alan Christian for concluding remarks. Thanks, Kathy. And thank you, everyone.

Speaker Change #139: Okay, great. Thanks Richard. Thank you Richard. So with that, I think we're going to wrap the Q&A portion of the call and I'll pass the call back over to Alan for some concluding remarks.

Alan Lowe: And I think that it gets back to, I think where a lot of these questions are going, how much are we going to get, we're going to get what we earn. And we plan to earn a lot. So I think it comes down to being able to provide what they need when they need it and make sure we have the capacity and the materials and the people and the engineers to be able to drive high quality product and earn their business. Now, there is interoperability and we have to work with the various switch providers to make sure there is. But the specs are pretty consistent and clear.

Alan Lowe: So we know what we need to do to be able to interop as needed. Thanks for coming. Thank you. The next question is from Karl Ackerman with BNP Paribas. Yes, thank you. First off, could you discuss why you're stopping in-house development of coherent DSPs? Is that related to limited uptake for 100 gig coherent in the access market, or are there other factors to consider?

Karl Ackerman: And as you address that question, are you seeing any pause in coherent optics demand probably, at least for DCI? [inaudible] Yeah, I'd say that we have a fixed amount of R&D we can spend. And we're shifting to where we can make a big difference into markets that are growing faster. And so the combination of that, so we're adding more to the Datacom transceiver business, a combination of that and the partnering with third parties, both from our customers as well as from third party independent chip manufacturers allows us that ability to get what we think we need to get at a overall cost of ownership that's less than developing a three nanometer DSP.

Alan Lowe: I'd like to just leave you with a few thoughts as we wrap up the call. Our agility and photonic leadership position equip us to navigate current market challenges and opportunities. Lumentum is at the forefront of the data center revolution, dragon chip scale photonics, automated manufacturing, and hyper scale cloud partnerships. We are rapidly scaling manufacturing and R&D to capitalize on cloud opportunities and to meet surging data rate demands. As we discussed in prior quarters, the cloud light acquisition is accelerating our high-speed transfer qualifications and production. Positioning positioning us for multi-billion dollar cloud revenue and over 500 million dollar quarterly revenue by the end of calendar 2025.

Alan Lowe: So that over time, you know, over the next couple of years, there will be a transition to mainly in Thailand, or I should say outside of China, because that's what our customers want. And I think, you know, having a center of excellence in Thailand gives us that capability to move capacity and add capacity in Thailand with our workforce that we've got there. Thanks, Tim.

Alan Lowe: Thanks, Kathy. And thank you, everyone. I'd like to just leave you with a few thoughts as we wrap up the call. Our agility and platonics leadership position equip us to navigate current market challenges and opportunities.

Alan Lowe: So from that perspective, I have confidence in our ability to secure DSPs at competitive prices to be able to address the data center interconnect market. But that said, I believe that pivoting from spending to get on DSPs to spending on higher, higher growth markets like inside the data center will pay off some dividends. And Gemma Falocco.

Operator: Absolutely. The next question is from Ananda Baruah with Loop Capital. Your line is now open.

Alan Lowe: Momentum is at the forefront of the data center revolution, driving chip scale photonics, automated manufacturing, and hyperscale cloud partnerships.

Ananda Baruah: Yeah, thanks, guys. Congrats on the progress. Thanks for taking the question. I just have just one here. And they may be false as a clarification category.

Ananda Baruah: But, you know, Alan with the with the new wind and the way that you're talking about, do some shipping this quarter. Are you guys tracking ahead? on the data center call, sort of dynamics that you began to talk about, I think back at OSC. I like it, I guess, just as I recall it, it was mostly calls are going to take place kind of around the beginning of the year.

Ananda Baruah: And I know, you know, as Tom talked about, there's some Your name is ahead of off and into the call southern province of Arizona southern southern Nevada Arizona, That'd be helpful. Thanks a lot, guys. Yeah, thanks, Ananda. I'd say we're tracking right on schedule. We had, you know, had to finish out a clean room.

Alan Lowe: We've done that in our tie-in facility. We've now equipped it. We're ready to start building qualification units. And so that's right on track. And as you say, the qualification won't be done until late this calendar year.

Alan Lowe: It will allow us to ramp production into the January timeframe, so that's right on track for what at least our internal plan has been and what I thought we had discussed at OFC earlier this year. Okay, great. I appreciate it. Thanks.

Alan Lowe: We are rapidly scaling manufacturing and R&D to capitalize on cloud opportunities and to meet surging data rate demands.

Ananda Baruah: Thank you. Joel, could we have our next question, please? The next question is from Tim Savageaux with Northland Capital Markets. Your line is now open. Hey, good afternoon.

Tim Savageaux: I want to focus back on capacity from a couple of different perspectives, um maybe relative to to what you've got now you mentioned you're at capacity and in indium phosphide or eml, I mean, can you quantify the extent of the planned capacity addition there over, I don't know, the next year? Are you doubling, tripling, capacity, what have you? It's really the same question relative to your current run rate on the module side.

Tim Savageaux: I think that was expected to come down this quarter with the product transition. Um, what sort of capacity are you looking to add in Thailand there relative to that? And it sounds like it's a fluid situation, but over what?

Alan Lowe: timeframe. Sure, I'd say the chip one is easy, because, you know, equipment has to be there today for it to make much of a difference this calendar year or this fiscal year. But as I said earlier, we're planning on growing capacity faster than the market is growing, and the market is expected to grow 30 to 40% this year. So it's not doubling. That would take a lot of effort and a lot of capital and probably would distract the team if we tried to double in 12 months. It's just not feasible.

Alan Lowe: I'd say that on the chip side, you can think of something north of 40% from the June quarter to next June quarter. And then on the run rate for transceivers, you know, we are, as you say, we're down from where we were in the March quarter. We're putting capacity in as the opportunities come to fruition. And as I said before, we've made sure we have the shell construction of clean rooms ready. And that's kind of the cheaper thing that needs to happen.

Alan Lowe: As we discussed in prior quarters, the Cloudlight acquisition is accelerating our high-speed transceiver qualifications and production, positioning us for multi-billion dollar cloud revenue and over $500 million quarterly revenue by the end of calendar 2025.

Tim Savageaux: And then we can put equipment in much more rapidly. Like we talked about with this first win, we're putting capacity in place that will be ready to go at the end of this year to ramp production into early part of next year. So I hesitate to say, you know, we're going to go from X dollars to two X dollars.

Alan Lowe: But on the transceivers, it's certainly, certainly we're able to do more than two to three X of what we've done in the past, in the next 12 months. Got it. Yep. Understood. And for a quick follow up. Um, would that capacity in Thailand be entirely incremental? Or are you moving capacity over from China effectively? Or, you know, shutting that down at all?

Unknown Attendee: Joel, I'd like to be able to squeeze in one more question if we could. Absolutely. The next question is from Richard Janet with Craig Hallum. Your lines now open. Great, guys. I think you're taking my question. I think I'm going to spend both of my questions on one multi-parter here. On the topic I was asked earlier about how to think about your path from current guidance revenues to the $500 billion plus level ending next calendar year.

Operator: Thank you all for joining our call today. We look forward to seeing you again at investor conferences and upcoming meetings this quarter. Have a great day.

Tim Savageaux: Are you maintaining that as a base? I'll leave it there. I don't want to get greedy. Yeah, that's a good question.

Alan Lowe: I'd say that initially it's incremental because, you know, customers don't want us to move existing products, but as we bring on new products, we'll be ramping them more outside of China than adding more capacity inside of China. So that over time, you know, over the next couple of years, there will be a transition to mainly in Thailand or I should say outside of China because that's what our customers want. And I think, you know, having a center of excellence in Thailand gives us that capability to move capacity and add capacity in Thailand with our workforce that we've got there.

Tim Savageaux: Thanks, Tim. Joel, I'd like to be able to squeeze in one more question if we if we could. Absolutely. The next question is from Richard Shannon with Craig Hallam. Your line is now open.

Richard Shannon: Well, great, guys. Thanks for taking my question. I think I'm going to spend both of my questions on one multi-parter here.

Richard Shannon: It's on the topic that was asked earlier here about how to think about your path from current guidance revenues to the $500 million plus level ending next calendar year. Your response to that question was pretty interesting in a number of ways, Alan. Maybe I'll broach two or three of them here.

Speaker Change #140: Thank you all for joining our call today. We look forward to seeing you again at investor conferences and upcoming meetings this quarter. Have a great day.

Richard Shannon: Where you said you didn't need much telecom to get there, expecting most of it from e-mail chips, also transition 200 gig e-mails, datacom optical switching, and some transceiver stuff here. I'm not sure if that last part was intended to be an ascending or descending order of contribution, but maybe a comment on that, that would be great. And I guess specifically, I'm quite interested in two aspects of this, one of which is, is the optical switching, is that expected to be a meaningful contributor to this growth to get to $500 million? And then also, are you not expecting much? from telecom or is that just upside if you get it?

Alan Lowe: Thank you. That is a multi-part question. I'm glad I wrote it down. Thanks, Richard. I'd say there was no method in my rambling of priorities.

Alan Lowe: I'd say if you wanted me to do that, I'd say transceivers would be number one growth area. I'd say that optical switching is probably bigger in calendar 26, and I wouldn't say less meaningful, because I think we're counting on meaningful revenue in 25, but really setting this up for significant growth in 26 on the optical switching inside the data center. I already talked about EMLs north of 40% growth over the next 12 months.

Alan Lowe: I'd say that I've been hoping that telecom will be bouncing back for the last year, and so I'm not counting on that anymore. Although we are seeing some growth in the short term, I do think that we don't need to get back to the pandemic levels, and we're not counting on that when we give you that projection for $500 million per quarter.

Richard Shannon: I'd say it's really all about execution on transceivers and awards and EMLs and the transition to 200 gig, where the revenue per unit is more than it is for the 100 gig. I hope that answers your question. That added quite a bit to it, Alan.

Alan Lowe: Thank you very much, that's all. Okay, great. Thanks, Richard. Thank you, Richard. So, with that, I think we're going to wrap the Q&A portion of the call, and I'll pass the call back over to Alan for some concluding remarks. Thanks, Kathy. And thank you, everyone. I'd like to just leave you with a few thoughts as we wrap up the call. Our agility and photonics leadership position equip us to navigate current market challenges and opportunities.

Alan Lowe: Lumentum is at the forefront of the data center revolution, driving chip-scale photonics, automated manufacturing, and hyperscale cloud partnerships. We are rapidly scaling manufacturing and R&D to capitalize on cloud opportunities and to meet surging data rate demand. As we discussed in prior quarters, the Cloudlight acquisition is accelerating our high-speed transceiver qualifications and production, positioning us for multi-billion dollar cloud revenue and over $500 million quarterly revenue by the end of calendar 2025. Thank you all for joining our call today. We look forward to seeing you again at investor conferences and upcoming meetings this quarter. Have a great day. That concludes today's conference call. Thank you for your participation. You may now disconnect your line.

Operator: That concludes today's conference call. Thank you for your participation. You may now disconnect your line.

Speaker Change #141: That concludes today's conference call. Thank you for your participation. You may now disconnect your lines.

Unknown Attendee: Your response to that question is pretty interesting in a number of ways, Alan. Maybe I'll approach two or three of them here. We said you didn't need much telecom to get there. Expecting most of it from email chips, also transition 200 ggmls data com optical switching and some transceiver stuff here. I'm not sure if that that last part was intended to be in like a sending or sending order of contribution, but maybe a comment on that that would be great.

Speaker Change #142: in the in in in in in in in in in in in in in [inaudible]

Unknown Attendee: And I guess specifically, I'm quite interested in two aspects of this one of which is, is the optical switching. Is that expected to be a meaningful contributor to this growth to get the $500 billion? And then also are you not expecting much from telecom orders that just upside if you get it. Thank you. That is a multi-par question. I'm glad I wrote it down. Thanks Richard. I say there was no method in my rambling of priorities.

Unknown Attendee: I'd say if you wanted me to do that, I'd say transceivers would be number one growth area. I say that optical switching is probably bigger in calendar 26. I wouldn't say less meaningful because I think we're counting on meaningful revenue in 25 but really setting this up for significant growth in 26 on the optical switching inside the data center. I already talked about EMLs, north of 40% growth over the next 12 months.

Unknown Attendee: And then I say that I've been hoping that telecom will be bouncing back to the last year. So I'm not counting on that anymore, although we are seeing some growth in the short term. I do think that we don't need to get back to the pandemic levels. And we're not counting on that when we give you that projection for $500 billion. So I'd say it's really all about execution on transceivers and awards and EMLs and the transition to 200 gig where the revenue per unit is more than it is for the 100 gig. I hope that answered your question. Is that adding quite a bit to it Alan? Thank you very much.

Richard Janet: That's all for me. Okay, great. Thanks, Richard. Thank you, Richard.

Kathy Tom: So with that, I think we're going to wrap the Q&A portion of the call and I'll pass the call back over to Alan Christian, concluding remarks. Thanks, Kathy. And thank you, everyone. I'd like to just leave you with a few thoughts as we wrap up the call. Our agility and photonic leadership position equip us to navigate current market challenges and opportunities. Lumentum is at the forefront of the data center revolution, dragon chip scale photonics, automated manufacturing and hyper scale cloud partnerships.

Kathy Tom: We are rapidly scaling manufacturing and R&D to capitalize on cloud opportunities and to meet surging data rate demands. As we discussed in prior quarters, the cloud light acquisition is accelerating our high speed transfer qualifications and production. Positioning positioning us for multi billion dollar cloud revenue and over 500 million dollar quarterly revenue by the end of calendar 2025. Thank you all for joining our call today. We look forward to seeing you again at investor conferences and upcoming meetings this quarter. Have a great day.

Alan Lowe: That concludes today's conference call. Thank you for your participation. You may now disconnect your line.

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