Sentiment Analysis of the earnings transcript to help figure out if there are any bullish or bearish sentiments that could be gathered from it. We're doing ML and AI based analysis on the earnings call to get some more insights.
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| Statement |
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| We have been receiving positive customer feedback about our 100-gig VCSEL performance for short-distance data center applications |
| In this brief period, we have had meaningful traction with customers on new data center opportunities which we expect will drive significant additional growth as we complete the development of the new products and receive customer qualifications |
| So, we're very excited about that and the diversification of the customers around our transceiver business |
| We are confident in our agility and leadership position to navigate the current market environment |
| On the VCSELs, we talked about the 100-gig VCSELs being released in the second-half of this year, very positive results, just going through final qualifications |
| It has been just three months since we acquired Cloud Light, and we are thrilled with the team that has joined us and the many opportunities that lie ahead |
| Longer-term, we believe geopolitical factors could pose a benefit to our revenue opportunity given our larger product footprint within other customers who are expected to be end-market share-gainers over time |
| And the Cloud Light transceiver platform has multimode transceiver, single-mode transceivers, so we're well-positioned to participate in both opportunities |
| So, I think we've got an opportunity to grow at least as fast as that, if not faster, given our more modest overall market share, but having all of the essential ingredients to be able to be a share gainer |
| And we expect to have a first-to-market advantage given our vertical integration and test results from our labs |
| Cloud Light transceiver shipments were very strong in the December quarter, contributing $59.5 million during the approximately eight weeks after the acquisition |
| We expect our shipments will be even stronger in the March quarter |
| We're confident that our combined efforts on manufacturing efficiency, inventory management, and cost control will pave the way for continued improvements in gross and operating margins as telecom revenue recovers and our cloud revenue continues to grow |
| Given the surging data demands of AI data centers and our strong traction on new transceiver opportunities, we are strategically expanding our leading-edge transceiver manufacturing capacity |
| Our Thai factor has proven photonics manufacturing capabilities, and has received numerous customer accolades, giving us confidence in our ability to ramp rapidly |
| We believe the combination of our established history of customer partnership, proven manufacturing leadership, and unrivaled breadth of differentiated photonic component capabilities puts us at an excellent position to accelerate top line revenue growth and margins in this rapidly growing cloud transceiver market |
| I think with regard to market share, we are very excited and believe that we have lots of opportunity to gain share |
| In terms of the magnitude of other customer opportunities, certainly, as we talked about when we announced the acquisition of Cloud Light, I mean, this is a very large market, and so the opportunity to add multiples of current revenue in the coming years is certainly well ahead of us and very well positioned with both the Cloud Light capabilities, then you add what momentum brings to the table |
| Moving to our Industrial Tech segment, we are very excited about our traction on new products serving new applications, particularly for our ultrafast lasers |
| And then, can we pull in the new products into the September quarter that would make that June quarter the low? And I think that's probably the case, as we have made tremendous progress on the new products and the demand for those new products are strong |
| Alan Lowe I would say on existing capacity and short-term growth of capacity, that's on our dime and our customers are encouraging us and will reward us over time with orders |
| This, combined with our wins at new customers in new markets, should lead to an Industrial Tech segment recovery during second-half of the calendar year |
| So, I think from that perspective, we're very confident in our position and the market share today and going forward |
| I'm very excited about the contribution that our Cloud Light acquisition had on the quarter, and will have in the future given the technology and capability of the combined companies to address the rapidly growing AI and ML photonics market |
| The combination of these lower fixed costs and the rebound in revenue will result in an accelerated expansion in our margins during fiscal '25 |
| And you're right, I think the combination of 130 gigabaud and 200 gigabaud and our own DSP is a real winning solution to meet the needs of next generation ZR products, as well as the long-haul and metro products |
| So, that's a very, very strong positive |
| We are focused on lowering our fixed cost base so that as the revenue recovers, operating margin dollars will expand faster than revenue |
| The future is bright for our cloud technology roadmap |
| Our Cloud Light acquisition has already proven to be a success with a fantastic team and valuable insight propelling our high speed transceiver production to meet surging demand |
| Statement |
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| Industrial Tech was down 35% year over year, primarily due to increased competition for market share on a certain 3D sensing socket that we have discussed previously and overall macroeconomic softness |
| Our second quarter industrial tech segment revenue at $80.1 million was down 8.9% sequentially and down 34.9% year-on-year |
| Second quarter non-GAAP gross margin was 32.6%, which was down sequentially, and down year-on-year driven by product mix and factory underutilization |
| Second quarter industrial tech non-GAAP reporting profit of 15.9% was down sequentially and year-on-year |
| Fiscal Q2 was down 9% sequentially as expected, driven by seasonality in our 3D sensing business and inventory consumption at one of our large industrial lasers customers |
| That said, we do expect a period of lower demand over the coming quarters driven by typical seasonality in our consumer business and by macro softness in the industrial market, along with elevated customer inventory levels at one of our large laser customers |
| Cloud and networking segment non-GAAP reporting profit at 10.1% decreased sequentially and year-on-year |
| Net revenue for the second quarter was $366.8 million, which was up 15.5% sequentially and down 27.5% year-on-year |
| And then, on the industrial side, you have outside a pretty fencing you've got the inventory consumption at a large customer, and obviously macro weakness ongoing |
| Our assumption is that these export regulations will continue indefinitely, and result in an approximately $40 million to $50 million reduction in calendar year '24 revenue from our prior expectations |
| We stopped shipping due to the need to follow regulations obviously |
| Turning to segment details, second quarter cloud and networking segment revenue at $286.7 million increased 24.8% sequentially and was down 25.1% year-on-year |
| While cloud data centers are forecasting double-digit CapEx growth in calendar '24, we are navigating challenging market conditions in other parts of our business |
| Second quarter non-GAAP operating margin was 3.5%, which was up sequentially and down year-on-year |
| So, while there are other customers and other customers are growing, they're not sufficient to offset that product transition, if you will |
| Alan Lowe Yes, so on the high gigabaud products, those are constrained by our ability to meet customer demand today |
| And you sort of teed up my follow-up nicely, in that, in the deck, the footnote mentions that Industrial Tech is expected to decline approximately $40 million sequentially |
| And so, I would think from a modeling standpoint it could be down 30% through that transition period |
| So, unfortunately, the situation is that some of the major product lines that we have driven a lot of our historical revenues are the ones that where there are high levels of inventory that are remaining to burn off in the coming couple of quarters |
| Consequently, in December, we stopped the majority of our product shipments to the largest networking equipment manufacturer in China |
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