Lumentum Shares Rebound Thanks to Forward Revenue Guidance

Call Starts at 5:00 PM ET

The webcast goes live at 5:00 PM ET on investor.lumentum.com. Results are out; the call is where the stock gets re-rated.

Top 5 Questions for Hurlston

1. How much of the $960M-$1.01B Q4 guide is OCS, and where does the backlog sit beyond $400 million?
2. Any new CPO orders past the multi-hundred-million-dollar first half 2027 commitment?
3. What unlocked the jump to 35.0% to 36.0% operating margin?
4. Indium phosphide capacity: still undershipping demand by 25-30%?
5. Refinancing plans for $3.24 billion in current debt?

Red Flags

Watch for OCS backlog stagnation, CPO pushouts, hyperscaler concentration commentary, and any tariff or export-control language tied to forward shipments.

Overall Grade: A-. A revenue miss against consensus was eclipsed by a blowout Q4 guide and margin expansion that recasts the operating model.

The earnings report rewards holders of an 1,452.94% one-year run, with margins driving the story.

As we’ve mentioned earlier in this live blog, management commentary around key growth markets on tonight’s call will likely determine whether Lumentum shares rise or fall tomorrow. 

Guidance Bombshell: Margins Are the Real Surprise

The headline already covered: Q4 revenue guidance of $960 million to $1.01 billion blew past the $917 million Street consensus. The under-appreciated surprise sits on the margin line.

Management guided non-GAAP operating margin to 35.0% to 36.0%, a sharp step-up from the 30.0% to 31.0% range issued for the quarter just reported. That is the fourth consecutive guidance raise of fiscal 2026, following the cadence from $440M-$470M in Q4 FY25 to tonight’s earnings report.

EPS guidance of $2.85 to $3.05 tops the $2.69 consensus at the low end. Key assumption: OCS backlog above $400 million converting plus the CPO order shipping first half calendar 2027. Operating leverage, not just revenue, is doing the heavy lifting now.

Lumentum shares are now up 1% after initially dropping more than 6%.

Here’s what Lumentum is forecasting for Q4

“Business Outlook

Lumentum expects the following for the fourth quarter of fiscal year 2026:

• Net revenue in the range of $960 million to $1.01 billion
• Non-GAAP operating margin of 35.0% to 36.0%
• Non-GAAP diluted earnings per share of $2.85 to $3.05″

The revenue figure is significantly above Wall Street’s expectations of $917 million, which may be muting some of the after-hours reaction. Typically when a stock that’s apprecaited as much as Lumentum has misses on revenue they get hammered. Shares are currently down 6%, but as we noted that’s not a very outsized reaction given how much the stock has traded up in recent sessions.

Lumentum earnings are out, here are the main figures moving the stock post-earnings:

• EPS: $2.37
• Revenue: $808 million

As a reminder, here’s what Wall Street was expecting tonight:

• EPS: $2.27
• Revenue: $810 million

Forward guidance was projected at $917 million and $2.69 in adjusted EPS. The company guided to EPS of $2.85 to $3.05 next quarter.

As we noted earlier, Lumentum is extremely supply-constrained, so its revenue upside was minimal. Shares are down 5%, which feels relatively muted considering the revenue miss. 

Lumentum’s (LITE) earnings are due in a little less than an hour. If you’re an investor in Lumentum, you’ve likely enjoyed an incredible rise. In the AI Investor Portfolio, we recommended Lumentum in November 2024. That is the single best recommendation we’ve made to date.

(You can see our full returns by visiting this page and all of our recommendations are available free. Simply subscribe to The AI Investor Podcast in your favorite podcast player to never miss a new recommendation.)

Will Lumentum shares keep rallying tomorrow? Three numbers will likely tell the tale:

• Last Quarter’s EPS: Wall Street expects Lumentum to report $2.27 in adjusted EPS last quarter, they’ll almost certainly beat that number. Last quarter, Lumentum only topped revenue expectations by a few percent, but EPS beat by a much wider margin ($1.67 reported vs. $1.41 expected). Wall Street will be watching to ensure the company’s continued margin expansion continues. When it comes to results last quarter, EPS will matter more than sales.
• Forward Guidance: Wall Street expects Lumentum to guide to $917 million in revenue and $2.69 in adjusted EPS. Once again, anything short of a sizable beat on the EPS line will lead to disappointment.
• Backlog Figures: As we noted earlier, Lumentum noted last quarter that their OCS backlog was already above $400 million. What updates will they provide? We’ll also be watching for figures or commentary on the company’s CPO orders and any updates to their long-term financial model.