Loading...
01/11 13:52
Loading...
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call presented mixed sentiments. Strong revenue growth in telecom and HPC segments is positive, but concerns arise from datacom supply constraints and margin pressures. The Q&A revealed unclear responses about key growth drivers and component shortages, raising uncertainties. Despite optimistic guidance, the lack of clarity and unchanged share repurchase strategy suggest a cautious outlook. Consequently, the stock price is likely to remain stable in the short term, resulting in a neutral sentiment.
Revenue First quarter revenue was $978 million, an impressive increase of 22% from a year ago and an increase of 8% from Q4. This growth was driven by strong demand trends in optical communications, particularly data center interconnect products.
Non-GAAP Earnings Per Share (EPS) Non-GAAP EPS was $2.92, a record high, including the impact of a $2 million or $0.06 per share FX revaluation loss. This reflects the revenue upside flowing directly to the bottom line.
Optical Communications Revenue Optical Communications revenue was $747 million, up 19% from a year ago and 8% from Q4. This growth was driven by strong demand trends for data center interconnect products.
Telecom Revenue Telecom revenue grew to a record $412 million, surging 59% from a year ago and 15% from Q4. This growth was primarily driven by data center interconnect products.
Data Center Interconnect (DCI) Revenue DCI revenue was $138 million, representing remarkable growth of 92% from a year ago and 29% from Q4. This was driven by strong demand trends.
Datacom Revenue Datacom revenue totaled $273 million, down 17% from a year ago and 1% from Q4. The decline was attributed to longer lead times for a critical component, though overall demand trends remain strong.
Non-Optical Communications Revenue Non-optical communications revenue was $231 million, up 30% from a year ago and 5% from Q4. This increase was driven primarily by high-performance computing revenue of $15 million.
Automotive Revenue Automotive revenue was $122 million, up 19% from a year ago but down 5% from Q4. The sequential decline was anticipated.
Industrial Laser Revenue Industrial laser revenue was $40 million, up 12% from a year ago and flat sequentially.
Gross Margin First quarter gross margin was 12.3%, down 30 basis points from Q4. This was due to FX headwinds and the seasonal impact of annual merit increases, partially offset by continued operating leverage.
Operating Margin Operating margin was 10.6%, a 10 basis point decline from Q4. This was influenced by FX headwinds and seasonal impacts.
Operating Cash Flow Operating cash flow in the quarter was $103 million, reflecting strong cash generation.
Capital Expenditures Capital expenditures were $45 million, above maintenance levels, driven by the construction of Building 10.
High-Performance Computing (HPC) Products: Introduced a new revenue category for HPC products, contributing $15 million to Q1 revenue. The program is expected to scale significantly in the coming quarters.
Telecom Revenue: Achieved record telecom revenue of $412 million, a 59% increase YoY and 15% sequential growth, driven by data center interconnect (DCI) products. DCI revenue grew 92% YoY to $138 million.
Datacom Revenue: Declined 17% YoY to $273 million but showed resilience with only a 1% sequential decline. Strong demand trends persist despite component constraints.
Automotive Revenue: Revenue of $122 million, up 19% YoY but down 5% sequentially.
Industrial Laser Revenue: Revenue of $40 million, up 12% YoY and flat sequentially.
Revenue Growth: Achieved record Q1 revenue of $978 million, a 22% YoY increase and 8% sequential growth.
Gross Margin: Gross margin was 12.3%, down 30 basis points sequentially due to FX headwinds and seasonal merit increases.
Operating Cash Flow: Generated $103 million in operating cash flow during Q1.
Building Expansion: Construction of Building 10 (2 million sq. ft.) is on track for completion by the end of 2026, with a portion accelerated for mid-2026 completion to support growth.
Share Repurchase Program: Repurchased 970 shares at an average price of $276 per share, with $174 million remaining for future repurchases.
Component Constraints in Datacom: The company continues to experience longer lead times for one critical component in the datacom sector, which could impact production and delivery timelines.
Foreign Exchange Headwinds: The company faced a $2 million foreign exchange revaluation loss in Q1, and anticipates further FX headwinds in Q2, which could affect profitability.
Automotive Revenue Decline: Automotive revenue was down 5% from Q4 and is expected to be flat to slightly down in Q2, indicating potential challenges in this market segment.
Gross Margin Pressure: Gross margin decreased by 30 basis points in Q1 due to FX headwinds and seasonal merit increases, which could continue to pressure profitability.
Construction and Capital Expenditures: The acceleration of Building 10 construction and higher-than-maintenance capital expenditures could strain financial resources if growth does not meet expectations.
Revenue Projections: Second quarter revenue is expected to be in the range of $1.05 billion to $1.1 billion, representing a 29% year-over-year growth at the midpoint.
Earnings Per Share (EPS): Anticipated EPS for the second quarter is projected to be between $3.15 and $3.30.
High-Performance Computing (HPC) Growth: The HPC program is expected to ramp up quickly and contribute significantly to revenue growth in the second quarter.
Telecom Revenue: Continued growth in telecom is expected, driven by data center interconnect (DCI) expansion.
Datacom Demand: Strong demand trends in datacom are anticipated to persist despite component constraints.
Automotive Revenue: Automotive revenue is expected to be flat to slightly down in the second quarter.
Building 10 Construction: Construction of Building 10, a 2 million square foot facility, is on track for completion by the end of calendar 2026, with a portion accelerated for mid-2026 completion to support growth.
Share Repurchase Program: In the first quarter, our share repurchase program was not as active as in recent quarters. We repurchased 970 shares at an average price of $276 per share for a total cash outlay of $268,000. As of the end of the first quarter, $174 million remained available for repurchases.
The earnings call presented mixed sentiments. Strong revenue growth in telecom and HPC segments is positive, but concerns arise from datacom supply constraints and margin pressures. The Q&A revealed unclear responses about key growth drivers and component shortages, raising uncertainties. Despite optimistic guidance, the lack of clarity and unchanged share repurchase strategy suggest a cautious outlook. Consequently, the stock price is likely to remain stable in the short term, resulting in a neutral sentiment.
The earnings call reveals a positive sentiment with strong growth in FY '25, optimism for FY '26, and strategic expansions like Building 10. Despite component shortages, the company is proactive and expects temporary impacts. New partnerships, like with Amazon, and strong demand in telecom and datacom are promising. Share repurchases indicate confidence. However, some uncertainties remain, such as component shortages and lack of full-year guidance, slightly tempering the outlook.
The earnings call summary presents mixed signals: positive developments like the Amazon partnership and high telecom revenue are offset by concerns over declining gross margins and management's reluctance to provide detailed guidance on ASP trends and other specifics. The Q&A reveals uncertainties about margin opportunities and product transitions, leading to a cautious outlook. Given these factors, the stock is likely to remain relatively stable, with no major catalysts for significant movement in either direction.
All transcripts are sourced directly from the official live webcast or the company’s official investor relations website. We use the exact words spoken during the call with no paraphrasing of the core discussion.
Full verbatim transcripts are typically published within 4–12 hours after the call ends. Same-day availability is guaranteed for all S&P 500 and most mid-cap companies.
No material content is ever changed or summarized in the “Full Transcript” section. We only correct obvious spoken typos (e.g., “um”, “ah”, repeated 10 times”, or clear misspoken ticker symbols) and add speaker names/titles for readability. Every substantive sentence remains 100% as spoken.
When audio quality is poor or multiple speakers talk over each other, we mark the section instead of guessing. This ensures complete accuracy rather than introducing potential errors.
They are generated by a specialized financial-language model trained exclusively on 15+ years of earnings transcripts. The model extracts financial figures, guidance, and tone with 97%+ accuracy and is regularly validated against human analysts. The full raw transcript always remains available for verification.
