Lumentum reported QQ4 2024 revenue of $308.3 million, flat to negative versus a year ago (-2.9%) and down sequentially (-15.9%). The quarter delivered a gross profit of $32.2 million for a gross margin of 10.4%, marking a material contraction from prior periods and a continuation of profitability pressure even as the company maintained a positive operating cash flow. The company posted a net loss of $252.5 million ($3.72 per share, diluted), driven by a high operating expense base and a substantial tax expense in the quarter, despite a modest EBITDA loss of $52.4 million and an EBITDAR of -16.9%. Free cash flow reached $10.9 million, aided by $35.5 million of cash from operations, while capital expenditures were modest at $24.6 million. Balance sheet leverage remains elevated with total debt around $2.56 billion and net debt of ~$2.12 billion, resulting in a debt-to-equity and debt-to-capital posture that warrants close monitoring. Liquidity remains workable, with a current ratio of 5.9 and a cash-and-equivalents balance of $436.7 million plus $450.3 million in short-term investments, but the substantial goodwill/intangible asset load and working capital dynamics (notably a ~130-day inventory position) imply continued profitability volatility. Absent explicit quarterly guidance in the supplied data, the near-term outlook will hinge on stabilizing gross margins, optimizing operating expense, and improving utilization of high-capacity optical components in OpComms, along with healthier working capital and possible balance sheet optimization.
Cash flow and liquidity:
- Net cash provided by operating activities: $35.5m
- Capital expenditures: $-24.6m
- Free cash flow: $10.9m
- Net change in cash: +$11.7m; Cash at end of period: $436.7m; Cash at beginning: $425.0m
- Working capital dynamics: change in working capital +$157.9m; accounts receivable +$35.1m; inventory +$21.3m; accounts payable -$6.9m; other working capital +$108.4m
Balance sheet and leverage:
- Total assets: $3.9319b; Total liabilities: $2.9746b; Total stockholders’ equity: $0.9573b
- Liquidity measures: Current ratio 5.90; Quick ratio 4.43; Cash ratio 1.622
- Debt profile: Total debt $2.5596b; Net debt $2.1229b; Long-term debt $2.5462b; Short-term debt $26.8m
- Intangibles and goodwill: Goodwill $1.0558b; Intangible assets $617.5m; Goodwill and intangible assets $1.6733b
- Cash and investments: Cash and cash equivalents $436.7m; Short-term investments $450.3m; Total cash and short-term investments $887.0m
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
308.30M
-2.93%
-15.88%
Gross Profit
32.20M
-66.00%
-22.22%
Operating Income
-96.30M
-19.18%
15.97%
Net Income
-252.50M
-271.87%
-98.82%
EPS
-3.72
-264.71%
-97.87%
Key Financial Ratios
currentRatio
5.9
grossProfitMargin
10.4%
operatingProfitMargin
-31.2%
netProfitMargin
-81.9%
returnOnAssets
-6.42%
returnOnEquity
-26.4%
debtEquityRatio
2.67
operatingCashFlowPerShare
$0.52
freeCashFlowPerShare
$0.16
priceToBookRatio
3.61
priceEarningsRatio
-3.42
Net Income vs. Revenue
Expense Breakdown
Management Commentary
Note: The earnings transcript data is not provided in the supplied dataset. As a result, there are no management quotes or theme-based highlights to extract. If the QQ4 2024 call transcript is provided, a thematically grouped synthesis (strategy, operations, market conditions) with context and significance will be added here.
N/A
— N/A
N/A
— N/A
Forward Guidance
No formal forward guidance is included in the provided dataset. Therefore, the analysis cannot anchor on explicit targets from management. Investors should monitor: (1) gross margin recovery and product mix evolution within OpComms and Lasers; (2) operating expense discipline and potential cost-reduction initiatives; (3) working capital trajectory given the elevated inventory days and receivable dynamics; (4) the company’s ability to reduce leverage or refinance near-term maturities; (5) end-market demand signals in telecom, data-center optics, and industrial applications; (6) competitive landscape and supplier cost dynamics. Absent guidance, the timeframe for achieving sustained profitability remains uncertain, contingent on demand recovery and margin expansion.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
0JVV.L Focus
10.44%
-31.20%
-26.40%
-3.42%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
QQ4 2024 underscores a transition phase: revenue remains modestly down YoY with a sharp sequential decline, while profitability is under pressure from a high fixed cost base and substantial depreciation, amortization, and interest expenses. The balance sheet confirms a significant leverage burden that could weigh on earnings and limit strategic flexibility in the near term. Yet, the company retains a robust liquidity buffer and a diverse product stack, positioning it to capitalize on longer-term optical networking and data-center growth if market demand stabilizes and margin recovery initiatives take hold. Investors should weigh the potential for margin expansion against the near-term risk of continued earnings erosion, particularly if operating expenses cannot be scaled in line with revenue trends. In the absence of explicit forward guidance, the scenarios hinge on demand stabilization, mix improvements toward higher-margin OpComms offerings, and disciplined capital management.
Key Investment Factors
Growth Potential
Lumentum operates in high-growth segments of optical communications and laser technologies. Near-term growth drivers include the continued expansion of high-speed coherent optics (e.g., 400G/800G wavelengths), wireless fronthaul, data-center interconnects, and AI/ML accelerator networking needs. Long-term opportunities may come from new product platforms (e.g., Super Transport Blade, tunable lasers, integrated photonics modules) and expanding addressable markets in telecommunications, data communications, and industrial applications. If OpComms volume growth accelerates and the mix shifts toward higher-margin offerings, gross margins could stabilize and improve.
Profitability Risk
Key risks include sustained profitability pressure from weak demand cycles in telecom and hyperscale data-center markets, high financial leverage (net debt around $2.12b), and a substantial goodwill/intangible asset base that could imply impairment risk if demand deteriorates. The company also faces typical photonics industry risks such as supply chain fluctuations, currency exposure (LSE-listed), competitive intensity, and potential customer concentration effects. A prolonged inventory buildup signals demand volatility and working capital pressures that could compress margins further if not managed.
Financial Position
Liquidity remains adequate via cash plus short-term investments (~$887m) and a strong current ratio (5.90). However, the balance sheet shows a heavy debt burden with total debt of ~$2.56b and negative net income, which underpins a leveraged risk profile. The sizable goodwill and intangible assets (~$1.673b) suggest potential impairment risk if revenue declines persist. Overall, the company has a solid liquidity cushion but a fragile profitability base and high leverage that require careful capital discipline.
SWOT Analysis
Strengths
Liquidity cushion with ~$887m in cash and short-term investments and a current ratio of 5.90
Diversified product portfolio across Optical Communications (OpComms) and Commercial Lasers
Global customer base and established position in critical fiber-optic components
Weaknesses
Sustained net losses (-$252.5m in QQ4 2024) and negative profitability metrics
High leverage: total debt ~$2.56b and net debt ~$2.12b
Material gross margin compression (10.4%) and sizable inventory days (~130)