Lumentum's fiscal first-quarter 2027 revenue rose 136.5% year over year to $1.263 billion, with adjusted earnings per share of $4.57—both exceeding expectations. Driven by demand for AI‑enabled optical interconnects, the company secured its second major NPO/CPO contract, with procurement commitments surpassing $5 billion. For the second quarter, the company guided net revenue to $1.575 billion to $1.625 billion, well above the market consensus estimate of $1.48 billion.
Photon Technology Company$Lumentum (LITE.US)$The company has moved up the release of its fiscal 2027 first-quarter earnings report, originally scheduled for after the market close on November 5, to before the U.S. market opens today. Riding the wave of investment in AI infrastructure, the company delivered a comprehensive quarterly performance that exceeded expectations and, with strong forward guidance, signaled accelerating demand to the market.
Lumentum reported its fiscal first-quarter results for 2027 (ended September 26, 2026), with net revenue of $1.263 billion, up 136.5% year over year; adjusted earnings per share were $4.57, exceeding the market estimate of $4.21; and adjusted gross margin was 53.2%, surpassing the forecast of 51.3%.
Meanwhile, the company's second-quarter net revenue guidance ranges from $1.575 billion to $1.625 billion, well above the market estimate of $1.48 billion, while adjusted earnings per share are guided at $5.90 to $6.20, also significantly surpassing the estimated $5.07.
Beyond the highlights of its financial performance, Lumentum President and CEO Michael Hurlston disclosed that the company secured a second major near‑packaged optics/co‑packaged optics (NPO/CPO) project order this quarter, backed by purchase commitments exceeding $5 billion. He also noted that demand visibility for optical circuit switching (OCS) has expanded significantly in recent months and is expected to grow into a business segment generating several billion dollars in annual revenue.
Revenue and profit margins both posted comprehensive breakthroughs.
Lumentum reported first-quarter net revenue of $1.263 billion, up 25.5% quarter over quarter and 136.5% year over year. Revenue in the same period of the prior fiscal year was only $534 million, indicating that the company's size more than doubled within a year.
Profitability improved markedly across the board. GAAP gross margin rose from 34.0% a year ago to 51.0%, while non-GAAP gross margin reached 53.2%, expanding by approximately 1,380 basis points year over year. Non-GAAP operating margin stood at 42.3%, a substantial increase of 2,360 basis points from 18.7% in the same period last year; non-GAAP operating income totaled $534.4 million, surpassing analysts' estimates of $500.7 million.
By product type, the Systems segment delivered particularly strong performance, posting revenue of $508.4 million this quarter, up 228.8% year over year and 42.4% sequentially; the Components segment reported revenue of $754.2 million, up 98.9% year over year and 16.1% sequentially. The rapid growth of the Systems business reflects a robust surge in demand for high-value-added products such as OCS.
NPO/CPO major deal closes, OCS enters a multi-billion-dollar market segment
The most strategically significant development this quarter was another major order win in the NPO/CPO space. Michael Hurlston stated that the company secured its "second major NPO/CPO project victory" and obtained procurement commitments exceeding $5 billion. This long-term order commitment not only provides visibility into the company's future revenue but also validates Lumentum's competitive position in optical interconnects for AI data centers.
On the OCS front, Hurlston noted that demand visibility has "expanded significantly" over the past few months, and the company expects the optical switching business to evolve into a revenue stream worth several billion dollars annually. Pump lasers and OCS were the primary drivers of growth this quarter, while the cloud‑module business also showed a positive trend toward improved gross margins.
Q2 guidance far exceeded expectations, with quarterly growth comparable to full-year revenue two years ago.
Looking ahead to the second fiscal quarter, Lumentum expects net revenue to range from $1.575 billion to $1.625 billion, with a non-GAAP operating margin of 45.0% to 46.0% and non-GAAP diluted earnings per share of $5.90 to $6.20—each of these metrics comfortably exceeding market expectations.
Hurlston put it more vividly: "We expect to post approximately $350 million in sequential growth in the second quarter, a figure that already exceeds the company's total revenue from two years ago." He also emphasized that operating margin for the second quarter is expected to surpass 45%.
In absolute terms, based on the midpoint of the second-quarter guidance—$1.6 billion—the company's quarterly revenue would nearly double year over year, with the growth trajectory remaining steep.
Cash Flow and Balance Sheet Position
As of September 26, 2026, Lumentum held a total of $2.00 billion in cash, cash equivalents, and short-term investments, down $758.8 million from the end of the previous quarter. On the current‑asset side, accounts receivable increased to $625.7 million, and inventory rose to $807.7 million, reflecting the substantial working‑capital consumption associated with the company's rapid business expansion.
On the capital expenditure front, net fixed assets increased to $1.4104 billion this quarter, a significant rise from $1.1591 billion at the end of the previous quarter, as capacity ramp-up at the Greensboro, North Carolina manufacturing site continues to progress. The company's adjusted EBITDA reached $578 million, up sharply from $127.6 million in the same period last year.