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What changed in Lumentum Holdings Inc.'s 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of Lumentum Holdings Inc.'s 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+400 added−443 removedSource: 10-K (2025-08-19) vs 10-K (2024-08-21)

Top changes in Lumentum Holdings Inc.'s 2025 10-K

400 paragraphs added · 443 removed · 307 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

61 edited+20 added−26 removed32 unchanged
Biggest changeDue to possible changes in product delivery schedules and cancellation of product orders, and because our sales often reflect orders shipped in the same quarter in which they are received, our backlog at any particular date is not necessarily indicative of actual revenue or the level of orders for any succeeding period.
Biggest changeSome of our products may be incorporated into consumer electronic products, which are subject to seasonality and fluctuations in demand. 8 Table of Contents Customers During fiscal years 2025, 2024, and 2023, net revenue generated from a single customer which represented 10% or more of our total net revenue of the applicable fiscal year is summarized in the table below: Years Ended June 28, 2025 June 29, 2024 July 1, 2023 Customer A 16.0 % 11.4 % 15.3 % Customer B 15.4 % 18.9 % * Customer C * * 12.1 % Customer D * * 10.5 % *Represents less than 10% of total net revenue Backlog Due to possible changes in product delivery schedules and cancellation of product orders, and because our sales often reflect orders shipped in the same quarter in which they are received, our backlog at any particular date is not necessarily indicative of actual revenue or the level of orders for any succeeding period.
Information in, or that can be accessed through, our website is not incorporated into this Form 10-K.
Information in, or that can be accessed through, our website is not incorporated into this Form 10-K. 10
For more information on risks associated with supply chain constraints and customer inventory, refer to Item 1A “Risk Factors” of this Annual Report. Geopolitical Landscape Developments As a global business with operations spanning diverse geographic regions, we are exposed to geopolitical risks.
For more information on risks associated with supply chain constraints and customer inventory, refer to Item 1A “Risk Factors” of this Annual Report. Geopolitical Developments As a global business with operations spanning diverse geographic regions, we are exposed to geopolitical risks.
These technologies will continue to enable us to develop highly integrated products to satisfy our customers’ ever-increasing needs for smaller, lower power and lower cost optical and photonic products. In December 2018, we completed the acquisition of Oclaro, Inc. (“Oclaro”).
These technologies will continue to enable us to develop highly integrated products to satisfy our customers’ ever-increasing needs for smaller, lower power and lower cost optical and photonic products. In December 2018, we completed the acquisition of Oclaro, Inc.
DCI technology optimizes resource utilization by allowing cloud data centers to leverage computing power across multiple locations. The exponential growth of data across industries is driving the expansion of long-haul, metro, and access networks. Dense wavelength-division multiplexing (DWDM) technologies are being leveraged to increase data speeds while reducing costs.
DCI technology optimizes resource utilization by allowing cloud data centers to leverage computing power across multiple locations. The exponential growth of data across industries is driving the expansion of long-haul, metro, and access networks. Dense wavelength-division multiplexing (“DWDM”) technologies are being leveraged to increase data speeds while reducing costs.
In August 2015, we were spun-off from JDSU and became an independent publicly traded company through the distribution of our common stock by JDSU to its stockholders. In 2015, the remaining parent company, JDSU was renamed Viavi Solutions Inc. (“Viavi”). Our business traces its origins to Uniphase Corporation, which was formed in 1979 and became publicly traded in 1992.
In August 2015, the Company was spun-off from JDSU and became an independent publicly traded company through the distribution of our common stock by JDSU to its stockholders. In 2015, the remaining parent company, JDSU, was renamed Viavi Solutions Inc. (“Viavi”). Our business traces its origins to Uniphase Corporation, which was formed in 1979 and became publicly traded in 1992.
Technologies like Reconfigurable Optical Add-Drop Multiplexers (ROADMs), wavelength-selective switches, and tunable transmission products facilitate remote capacity adjustments, reducing the need for manual interventions. Furthermore, the widespread deployment of 5G mobile networks and bandwidth-intensive applications is increasing data speeds at the network edge.
Technologies like Reconfigurable Optical Add-Drop Multiplexers (“ROADMs”), wavelength-selective switches, and tunable transmission products facilitate remote capacity adjustments, reducing the need for manual interventions. Furthermore, the widespread deployment of 5G mobile networks and bandwidth-intensive applications is increasing data speeds at the network edge.
Operating Segments and Geographic Information” to the consolidated financial statements. For information regarding risks associated with our international operations, refer to Item 1A “Risk Factors” of this Annual Report. Available Information Our website is located at www.lumentum.com, and our investor relations website is located at www.investor.lumentum.com.
Refer to “Note 17. Operating Segments and Geographic Information” to the consolidated financial statements. For information regarding risks associated with our international operations, refer to Item 1A “Risk Factors” of this Annual Report. Available Information Our website is located at www.lumentum.com, and our investor relations website is located at www.investor.lumentum.com.
We believe that the future performance of our Company relies upon the strength of our employees, and our ability to recruit, retain, develop and motivate the services of executive, engineering, sales and marketing, and support personnel is critical to our success.
We believe that the future performance of our Company relies on the strength of our employees, and our ability to recruit, retain, develop and motivate the services of executive, engineering, sales and marketing, and support personnel is critical to our success.
High-end networking equipment must now handle both legacy and internet protocol traffic while meeting stringent requirements for bandwidth, scalability, speed, reliability, compactness, and cost-effectiveness. The dynamic and unpredictable nature of network traffic demands agile optical networks capable of adapting to changing conditions.
High-end networking equipment must now handle both legacy and internet protocol traffic while meeting stringent requirements for bandwidth, scalability, speed, reliability, compactness, and cost-effectiveness. 5 Table of Contents The dynamic and unpredictable nature of network traffic demands agile optical networks capable of adapting to changing conditions.
These products are targeted at serving customers engaging in the semiconductor device, solar cell, display, and electric vehicle and battery manufacturing markets as well as broader materials processing and precision micromachining end-markets. We also continue to develop new and enhanced laser diode products with higher performance and efficiency at lower cost for the consumer, automotive, and industrial end-markets.
These products are targeted at serving customers engaging in the semiconductor device, solar cell, display, and electric vehicle and battery manufacturing markets as well as broader materials processing and precision micromachining end-markets. We also continue to develop new and enhanced laser diode products with higher performance and efficiency at lower cost, primarily for the consumer end-market.
By providing a wide range of innovative optical solutions, from components to integrated modules and subsystems, we enable our customers to build the high-performance data center and communication networks of today and engineer those of the future.
By providing a wide range of innovative optical solutions, from components to integrated modules to complete systems, we enable our customers to build the high-performance data center and communication networks of today and engineer those of the future.
We also expend significant engineering resources to enhance both product performance and our ability to manufacture products in greater volume and at lower cost. In our Cloud & Networking segment , we are maintaining our capability to provide leading products throughout the network, while focusing on several important sub-segments.
We also expend significant engineering resources to enhance both product performance and our ability to manufacture products in greater volume and at lower cost. 7 Table of Contents In our Cloud & Networking segment , we are maintaining our capability to provide leading products throughout the network, while focusing on several important sub-segments.
In metro and long-haul optical networks, Lumentum offers a comprehensive suite of coherent and direct detect optical transmission components and modules and optical transport solutions. Our tunable transceivers and transmitter modules and high-speed coherent components, are essential to dense wavelength division multiplexing (DWDM) systems, and maximize fiber capacity and minimize cost per bit.
In metro and long-haul optical networks, Lumentum offers a comprehensive suite of coherent and direct detect optical transmission components and modules and optical transport solutions. Our tunable transceivers and transmitter modules and high-speed coherent components are essential to DWDM systems and maximize fiber capacity and minimize cost per bit.
Cloud Light designs, markets, and manufactures advanced optical modules for data center interconnect applications. The acquisition enables us to be well-positioned to serve the growing needs of cloud and networking customers, particularly those customers focused on optimizing their data center infrastructure for the demands of AI/ML.
Our Cloud Light business designs, markets, and manufactures advanced optical modules for data center interconnect applications. The acquisition has enabled us to be well-positioned to serve the growing needs of cloud and networking customers, particularly those customers focused on optimizing their data center infrastructure for the demands of AI/ML.
The two operating segments were primarily determined based on how the CODM views and evaluates our operations. The CODM regularly reviews operating results to make decisions about resources to be allocated to the segments and to assess their performance.
The two operating segments were primarily determined based on how our Chief Operating Decision Maker (“CODM”) views and evaluates our operations. The CODM regularly reviews operating results to make decisions about resources to be allocated to the segments and to assess their performance.
We review our benefits packages annually, or more frequently as needed, to ensure we remain competitive with our peers and continue to attract and retain talent throughout our organization. 9 Table of Contents Employee Recruitment, Retention and Development We are committed to recruiting, hiring, retaining, promoting and engaging a diverse workforce to best serve our global customers.
We review our benefits packages annually, or more frequently as needed, to ensure we remain competitive with our peers and continue to attract and retain talent throughout our organization. Employee Recruitment, Retention and Development We are committed to recruiting, hiring, retaining, promoting and engaging a global, diverse workforce to best serve our global customers, suppliers, and partners.
Frequently, customers request shipment of our products to their factories, contract manufacturer factories, or other locations in countries that differ from their headquarter location. Our net revenue is primarily denominated in U.S. dollars, including our net revenue from customers outside the United States based on customer shipment locations as described above. Refer to “Note 17.
Frequently, customers request shipment of our products to their factories, contract manufacturer factories, or other locations in countries that differ from their headquarter location (which in many cases is in the U.S.). Our net revenue is primarily denominated in U.S. dollars, including our net revenue from customers outside the United States based on customer shipment locations as described above.
Ultrafast lasers, with their exceptionally short pulses, are particularly adept at the delicate and precise micromachining required in semiconductor, display, solar cell, and EV battery production. In the consumer market, laser light sources are integral to 3D sensors used in mobile devices, gaming, payment systems, computers, and other consumer electronics.
Ultrafast lasers, with their exceptionally short pulses, are particularly adept at the delicate and precise micromachining required in semiconductor, display, solar cell, and EV battery production. In the consumer market, laser light sources are integral to 3D sensors primarily used in mobile devices.
We aim to drive the next phase of data center infrastructure and communication data network scaling with technologies and products that are faster, more energy efficient, more agile and more reliable. Competition We compete against various public and private companies providing optical communications components, modules, and systems. Some of these competitors are also our customers for certain of our products.
We aim to drive the next phase of data center infrastructure and communication data network scaling with technologies and products that are faster, more energy efficient, more agile and more reliable. Competition We compete against various public and private companies providing optical communications components, modules, and systems.
Manufacturing We use a combination of our own wafer fabrication facilities, or wafer fabs, assembly and test facilities, as well as third-party contract manufacturers to produce our products. Our significant manufacturing facilities are located in the United States, Thailand, China, the United Kingdom, Slovenia, and Japan.
Manufacturing We use a combination of our own wafer fabrication facilities, or wafer fabs, assembly and test facilities, as well as third-party contract manufacturers to produce our products. Our significant manufacturing facilities are located in the United States, Thailand, China, the United Kingdom, Slovenia, and Japan. In fiscal year 2023, we expanded our manufacturing footprint with the acquisition of NeoPhotonics.
We do not intend to broadly license our intellectual property rights unless we can obtain adequate consideration or enter into acceptable patent cross-license agreements. As of June 29, 2024, we owned approximately 1,025 U.S. patents and 1,100 foreign patents with expiration dates through 2044 and had approximately 790 patent applications pending throughout the world.
We do not intend to broadly license our intellectual property rights unless we can obtain adequate consideration or enter into acceptable patent cross-license agreements. As of June 28, 2025, we owned approximately 1,020 U.S. patents and 1,100 foreign patents with expiration dates through 2045 and had approximately 780 patent applications pending throughout the world.
Operating Segments and Geographic Information” to the consolidated financial statements. Cloud & Networking Markets We maintain leading market positions in the fast-growing Cloud & Networking markets through our extensive product and technology portfolio and close relationships with a wide range of market leading customers.
Cloud & Networking Markets We maintain leading market positions in the fast-growing Cloud & Networking markets through our extensive product and technology portfolio and close relationships with a wide range of market leading customers.
ITEM 1. BUSINESS General Overview Lumentum Holdings Inc. (“we,” “us,” “our”, “Lumentum” or the “Company”) is an industry-leading provider of optical and photonic products essential to a range of cloud, artificial intelligence and machine learning (“AI/ML”), telecommunications, consumer, and industrial end-market applications. We operate in two end-market focused reportable segments, Cloud & Networking and Industrial Tech.
ITEM 1. BUSINESS General Overview Lumentum Holdings Inc. (“we,” “us,” “our”, “Lumentum” or the “Company”) is a leading provider of optical and photonic products and is recognized as an industry leader based on revenue and market share. Our products are essential to a range of cloud, artificial intelligence and machine learning (“AI/ML”), telecommunications, consumer, and industrial end-market applications.
Mergers and Acquisitions We evaluate strategic opportunities regularly and, where appropriate, may acquire additional businesses, products, or technologies that are complementary to, or broaden the markets for our products.
Competition We compete against various public and private companies in the industrial and consumer markets we serve. Mergers and Acquisitions We evaluate strategic opportunities regularly and, where appropriate, may acquire additional businesses, products, or technologies that are complementary to, or broaden the markets for our products.
Refer to “Note 4. Business Combination” to the consolidated financial statements for additional information. Research and Development We devote substantial resources to research and development (“R&D”) for the development of new and enhanced products to serve our current markets and attractive new markets for our technology.
Research and Development We devote substantial resources to research and development (“R&D”) for the development of new and enhanced products to serve our current markets and attractive new markets for our technology.
Trends The industrial laser market is driven by the relentless pursuit of precision and efficiency in material processing. Fiber lasers have surpassed CO2 lasers in sheet metal processing and welding due to their superior power, beam quality, power efficiency and cost-effectiveness.
These 3D sensing capabilities enable applications such as biometric identification, augmented and virtual reality, and computational photography. Trends The industrial laser market is driven by the relentless pursuit of precision and efficiency in material processing. Fiber lasers have surpassed gas lasers in sheet metal processing and welding due to their superior power, beam quality, power efficiency and cost-effectiveness.
We have manufacturing capabilities and facilities in North America, South America, Asia-Pacific and Europe. Our headquarters are located in San Jose, California, and we employed approximat ely 7,257 full -time employees around the world as of June 29, 2024. Lumentum was incorporated in Delaware as a wholly owned subsidiary of JDS Uniphase Corporation (“JDSU”) on February 10, 2015.
Our headquarters are located in San Jose, California, and we employed approximat ely 10,562 full -time employees around the world as of June 28, 2025. 2 Table of Contents Lumentum was incorporated in Delaware as a wholly owned subsidiary of JDS Uniphase Corporation (“JDSU”) on February 10, 2015.
For more information on risks associated with the change in geopolitical landscape and regulatory actions, refer to Item 1A “Risk Factors” of this Annual Report. 4 Table of Contents Reportable Segments Prior to fiscal year 2024, we operated in two reportable segments consisting of Optical Communications (“OpComms”) and Commercial Lasers (“Lasers”).
For more information on risks associated with the change in geopolitical landscape and regulatory actions, refer to Item 1A “Risk Factors” of this Annual Report. 4 Table of Contents Reportable Segments We have two reportable segments, Cloud & Networking and Industrial Tech.
Our product portfolio extends beyond individual components to include modules, circuit packs, and subsystems for amplification, switching, and wavelength management. 6 Table of Contents Lumentum's commitment to innovation, particularly in photonic integration, drives the development of optical products that meet the evolving demands of data centers. Each product generation offers enhanced functionality, reduced size, lower power consumption, and improved cost-effectiveness.
Lumentum's commitment to innovation, particularly in photonic integration, drives the development of optical products that meet the evolving demands of data centers. Each product generation offers enhanced functionality, reduced size, lower power consumption, and improved cost-effectiveness.
The change in our operating segments had no impact on our previously reported consolidated results of operations, financial condition, or cash flows. We do not track all of our property, plant and equipment by operating segments. For the geographic identification of these assets and for further information regarding our operating segments, refer to “Note 17.
We do not track all of our property, plant and equipment by operating segments. For the geographic identification of these assets and for further information regarding our operating segments, refer to “Note 17. Operating Segments and Geographic Information” to the consolidated financial statements.
Although our intention is to establish at least two sources of supply for materials whenever possible, for certain components we have sole or limited source supply arrangements.
Sources and Availability of Raw Materials We use various suppliers and contract manufacturers to supply parts and components for manufacturing and support of multiple product lines. Although our intention is to establish at least two sources of supply for materials whenever possible, for certain components we have sole or limited source supply arrangements.
The addition of NeoPhotonics expanded our opportunities in optical components used in cloud and telecom network infrastructure.
In August 2022, we completed the acquisition of NeoPhotonics Corporation (“NeoPhotonics”), which expanded our opportunities in optical components used in cloud and telecom network infrastructure.
We 8 Table of Contents have undertaken various initiatives to consolidate and restructure certain of our manufacturing and operational sites, particularly in light of efficiencies and synergies achievable from prior acquisitions, while also expanding overall manufacturing capacity for new and high growth product lines. Our significant contract manufacturing partners are located primarily in Thailand, Taiwan, Malaysia and the Philippines.
In fiscal year 2024, we acquired Cloud Light which further added manufacturing facilities in Asia. We have undertaken various initiatives to consolidate and restructure certain of our manufacturing and operational sites, particularly in light of efficiencies and synergies achievable from prior acquisitions, while also expanding overall manufacturing capacity for new and high growth product lines.
This acquisition strengthened our product portfolio, by adding Oclaro’s indium phosphide laser and photonic integrated circuit and coherent component and module capabilities which broadened our revenue mix and helps position us well to meet the future needs of our customers. In August 2022, we completed the acquisition of NeoPhotonics Corporation (“NeoPhotonics”).
(“Oclaro”), which enhanced our product portfolio by adding Oclaro’s indium phosphide laser and photonic integrated circuit technologies, as well as its coherent component and module capabilities. These additions broadened our revenue mix and strengthened our position to meet the evolving needs of our customers.
In the industrial manufacturing end-market, our lasers are incorporated into our customers’ manufacturing machine tools used for the precision processing of materials in a range of industries including semiconductor device and microelectronics fabrication, electric vehicle and battery production, metal cutting and welding, and advanced manufacturing. Our lasers also address certain semiconductor inspection and life-science applications.
In the industrial manufacturing market, our lasers are embedded in machine tools used for precision material processing across diverse industries, including semiconductor and microelectronics fabrication, electric vehicle and battery production, metal cutting and welding, and advanced manufacturing.
Segment profit includes operating expenses directly managed by operating segments, including research and development, and direct sales and marketing expenses. Segment profit does not include stock-based compensation, acquisition or integration related costs, amortization and impairment of acquisition-related intangible assets, restructuring and related charges, and certain other charges.
Segment profit does not include stock-based compensation, acquisition or integration related costs, amortization and impairment of acquisition-related intangible assets, restructuring and related charges, and certain other charges. Additionally, we do not allocate certain marketing and general and administrative expenses, as these expenses are not directly attributable to our operating segments.
Additionally, high-power, solid-state and ultrafast lasers are used by manufacturers for precision 7 Table of Contents machining tasks like drilling in printed circuit boards, wafer singulation, glass cutting, and solar cell scribing.
Our fiber lasers deliver kilowatt-class output power and excellent beam quality, making them ideal for sheet metal processing and general manufacturing applications. Additionally, high-power, solid-state and ultrafast lasers are used by manufacturers for precision machining tasks like drilling in printed circuit boards, wafer singulation, glass cutting, and solar cell scribing.
Material Government Regulations Our business activities are international and subject us to various federal, state, local and foreign laws in the countries in which we operate, and our products and services are subject to certain laws and regulations affecting the sale of our products.
We believe that our commitment to our internship program and university partnerships contributes to developing the next generation of talent and provides a pipeline of recent college graduates into our talent pool. 9 Table of Contents Material Government Regulations Our business activities are international and subject us to various federal, state, local and foreign laws in the countries in which we operate, and our products and services are subject to certain laws and regulations affecting the sale of our products.
Global Trade and Export Controls As our business operates in many global jurisdictions, the import and export of our products and services are subject to laws and regulations including international treaties, U.S. export controls and sanctions laws, customs regulations, and local trade rules around the world which vary widely across different countries and may change from time-to-time.
Global Trade and Export Controls As a global business, we operate in many jurisdictions and our products and services are subject to diverse and evolving import and export laws, including international treaties, U.S. export controls and sanctions, customs regulations, and local trade laws.
This technology enables real-time depth perception, transforming image capture and granting devices the ability to perceive the world in three dimensions. Applications span biometric identification, computational photography, virtual and augmented reality, and natural user interfaces. Furthermore, 3D sensing continues to find evolving applications in automotive autonomy and safety systems, industrial robotics, drones, and 3D object capture for imaging and printing.
This technology enables real-time depth perception, transforming image capture and granting devices the ability to perceive the world in three dimensions. Applications span biometric identification, computational photography, virtual and augmented reality, and natural user interfaces. Offerings We offer a comprehensive range of industrial lasers to address diverse manufacturing needs.
Industrial Tech Markets Within the industrial market, our diode lasers serve as pump sources for high-power fiber lasers used in metal fabrication and other demanding applications. Our ultrafast lasers cater to industries such as printed circuit board manufacturing, semiconductor processing, electric vehicle battery production, solar cell production, and flat panel display fabrication, where precise micromachining is essential.
Our ultrafast lasers cater to industries such as printed circuit board manufacturing, semiconductor processing, electric vehicle battery production, solar cell production, and flat panel display fabrication, where precise micromachining is essential. In the consumer electronics sector, our laser light sources are integral components of 3D sensing cameras used in smartphones, computers, and other consumer electronics devices.
Lumentum is well-positioned to capitalize on this trend through the provision of ultrafast lasers for micromachining and advanced material processing, as well as laser-based 3D sensing and LiDAR technologies for applications across various sectors. Our optical and photonic solutions, developed in close partnership with OEMs and end users, are well-positioned to capitalize on these emerging market opportunities.
Lumentum is well-positioned to capitalize on this trend through the provision of ultrafast lasers for micromachining and advanced material processing, as well as laser emitters for 3D sensing applications.
We have established relationships with professional associations and industry groups to proactively attract talent, and we partner with universities for our internship program. We believe that our commitment to our internship program and university partnerships contributes to developing the next generation of talent and provides a pipeline of recent college graduates into our talent pool.
We have established relationships with professional associations and industry groups to proactively attract talent, and we partner with universities for our internship program.
For transport solutions, we provide ROADMs, optical amplifiers, and optical channel monitors to efficiently switch, route, and condition optical signals. Our product range also encompasses pumps for optical amplifiers and passive components like switches, attenuators, and wavelength-division multiplexers (WDMs).
For optical transport applications, we offer a broad range of products, including ROADMs, optical amplifiers, and optical channel monitors to efficiently switch, route, and condition optical signals. Our portfolio also includes pump lasers for optical amplifiers and passive components such as switches, attenuators, and WDMs.
Our Cloud & Networking products also support network equipment manufacturers building enterprise network infrastructure. Demand for our Cloud & Networking products is driven by the rapid growth in cloud and network capacity required for expanding cloud computing and services, including for AI/ML, streaming video and video conferencing, gaming, wireless and mobile devices, and internet of things (“IoT”).
Additionally, our Cloud & Networking products serve enterprise network infrastructure needs, including storage area networks (“SANs”), local area networks (“LANs”), and wide area networks (“WANs”). Demand for our products is fueled by the ongoing expansion of network capacity required to support cloud and services, AI/ML processing, streaming video, video conferencing, wireless and mobile connectivity, and the internet of things (“IoT”).
Adoption of our products in the industrial end-market is driven by the needs of customers to advance semiconductor and microelectronics industry roadmaps, including those that support cloud data center and AI/ML infrastructure, and by Industry 4.0/5.0 trends, including increasing manufacturing precision and flexibility and reducing waste and environmental impact.
Adoption of our Industrial Tech products is driven by the need to advance semiconductor and microelectronics technology roadmaps and by Industry 4.0 and 5.0 trends that emphasize greater manufacturing precision, flexibility, and sustainability.
For additional information concerning regulatory compliance and a discussion of the risks associated with governmental regulations that may materially impact us, refer to Item 1A “Risk Factors” of this Annual Report. 10 Table of Contents International Operations During fiscal 2024, 2023 and 2022, net revenue from customers outside the United States based on the geographic region and country where our product is initially shipped represented 73.8%, 86.3% and 89.8% of net revenue, respectively.
International Operations During fiscal years 2025, 2024 and 2023, net revenue from customers outside the United States based on the geographic region and country where our product is initially shipped represented 81.0% , 73.8% and 86.3% of net revenue, respectively.
Fluctuations in the geopolitical landscape, including war, military conflicts, changes in export regulations, and shifts in national priorities and foreign relations policies, can significantly impact our business. For instance, modifications to trade restrictions and export regulations can adversely affect both product demand and our ability to supply customers, which would harm revenue and profit margins.
Fluctuations in the geopolitical landscape, including war, military conflicts, changes in export regulations, the effects of heightened, scheduled, or proposed tariffs, and shifts in national priorities and foreign relations policies, can significantly impact our business.
This advancement can significantly accelerate AI and HPC applications, optimizes the utilization of compute cluster hardware, and positions data centers for future scaling as AI demands intensify. To enable seamless data exchange between geographically dispersed data center units, high-speed data center interconnects (DCIs) are being constructed.
A key innovation within data center photonics is the adoption of 200G lane speed optical components, which double data transfer rates compared to traditional 100G lanes. This advancement can significantly accelerate AI and HPC applications, optimizes the utilization of compute cluster hardware, and positions data centers for future scaling as AI demands intensify.
Our Cloud & Networking products include a comprehensive portfolio of optical and photonic components, modules, and subsystems supplied to cloud and communications network operators and network equipment manufacturers building cloud data center infrastructure, including products for AI/ML and data center interconnect (“DCI”) applications, and communications service provider networks, including products for access (local), metro (intracity), long-haul (city-to-city and worldwide), and submarine (undersea) network infrastructure.
Our products enable high-capacity optical links for cloud computing, AI/ML workloads, and data center interconnect (“DCI”) applications, as well as for communications service provider networks. Our offerings support access (local), metro (intracity), long-haul (intercity and global), and submarine (undersea) network infrastructure.
We rely on the capabilities of our contract manufacturers to plan and procure components and manage the inventory in these locations. Sources and Availability of Raw Materials We use various suppliers and contract manufacturers to supply parts and components for manufacturing and support of multiple product lines.
Our significant contract manufacturing partners are located primarily in Thailand, Taiwan, Malaysia and the Philippines. We rely on the capabilities of our contract manufacturers to plan and procure components and manage the inventory in these locations.
Seasonality Our revenue may be influenced on a quarter-to-quarter basis by customer demand patterns and new product introductions. Some of our products may be incorporated into consumer electronic products, which are subject to seasonality and fluctuations in demand. Backlog Backlog consists of purchase orders for products for which we have assigned shipment dates.
Seasonality Our revenue may be influenced on a quarter-to-quarter basis by customer demand patterns and new product introductions.
In the automotive end-market, our lasers are used in our customers’ LiDAR and other optical sensor devices, which are being used in advanced driver assistance systems (“ADAS”) and in-cabin driver and occupant monitoring systems. 2 Table of Contents We have a global footprint that enables us to address global market opportunities for our products with employees engaged in research and development (“R&D”), administration, manufacturing, support and sales and marketing activities.
We have a global footprint that enables us to address global market opportunities for our products with employees engaged in research and development (“R&D”), administration, manufacturing, support and sales and marketing activities in various locations worldwide. We have manufacturing capabilities and facilities in North America, Asia-Pacific and Europe.
The immense computational demands of training and running AI models are driving a shift to high-speed photonics from traditional electrical interconnects. Additionally, the surging data traffic generated by video streaming, search engines, e-commerce, and other cloud services fuels the expansion of data center infrastructure.
Trends The convergence of cloud computing and AI is driving rapid innovation and expansion in optical hardware for hyperscale cloud operators. The immense computational demands of training and running AI models are driving a shift to high-speed photonics from traditional electrical interconnects.
Photonic solutions offer substantial advantages over electrical connections, including ultra-fast data transmission at higher volumes and reduced susceptibility to electromagnetic interference. As a result, high-speed photonics are increasingly deployed to alleviate data traffic bottlenecks, accelerating AI model training and enhancing high-performance computing (HPC) efficiency.
As a result, high-speed photonics are increasingly deployed to alleviate data traffic bottlenecks, accelerating AI model training and enhancing high-performance computing (“HPC”) efficiency. To address these challenges, web-scale companies are investing heavily in optical hardware solutions, including high-speed optical transceivers.
One of the collective bargaining agreements will be subject to renewal in December 2025. We believe that our relations with both our union and non-union employees are in good standing.
Of the 10,562 employees, approximately 2% are represented by three national collective bargaining agreements with local chapters in Slovenia, Italy and Brazil and two labor unions in China. We believe that our relations with both our union and non-union employees are in good standing.
Recent and continuing changes in export regulations pertaining to specific Chinese customers have resulted in substantial revenue losses from the Chinese market and inventory write-offs. Moreover, disruptions in our customers' supply chains due to geopolitical events could reduce or delay their demand for our products, ultimately impacting our revenue.
For instance, modifications to trade restrictions and export regulations can adversely affect both product demand and our ability to supply customers, which would harm revenue and profit margins. Moreover, disruptions in our customers' supply chains due to geopolitical events could reduce or delay their demand for our products, ultimately impacting our revenue and operating results.
While we maintain a positive outlook on the long-term prospects for our products and technologies, we acknowledge the presence of industry and market risks and uncertainties.
While we maintain a positive outlook on the long-term prospects for our products and technologies, we acknowledge the presence of industry and market risks and uncertainties, including fluctuations in supply and demand, that have led to volatility in our business and financial performance. 3 Table of Contents Supply Chain and Inventory Management Our supply chain is complex, and we need to manage supply of certain components required to build our products while confronted with fluctuating demand from our customers.
A significant portion of our revenue arises from vendor-managed inventory (“VMI”) arrangements where the timing and volume of customer utilization is difficult to predict. Products that are shipped through VMI are not included in our reported backlog amounts above.
A significant portion of our revenue arises from vendor-managed inventory (“VMI”) arrangements where the timing and volume of customer utilization is difficult to predict. Human Capital Resources As of June 28, 2025, we employed approximately 10,562 full-time employees, including approximately 8,706 employees in manufacturing, 1,132 employees in R&D and 724 employees in SG&A.
Our Industrial Tech products include solid-state lasers, kilowatt-class fiber lasers, diode lasers, ultrafast lasers, and gas lasers, which address applications in numerous end-markets.
Our Industrial Tech products include short-pulse solid-state lasers, kilowatt-class fiber lasers, diode lasers, and gas lasers, serving a wide range of end-markets applications. In the consumer market, our laser light sources are integrated into customers’ 3D sensing cameras, primarily used in mobile devices.
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Our products can also be used in the industrial end-market in imaging and sensing systems for process feedback and control, quality assurance, and waste reduction.
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We operate in two end-market focused reportable segments, Cloud & Networking and Industrial Tech. Our Cloud & Networking products comprise a comprehensive portfolio of optical and photonic chips, components, modules, and subsystems supplied to cloud data center operators, AI/ML infrastructure providers, and network equipment manufacturer customers who are building cloud data center and network infrastructures.
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Demand for our products in the industrial end-market is driven by end-customer investments in manufacturing capacity. In the consumer end-market, our laser light sources are integrated into our customers’ 3D sensing cameras, which are used in mobile devices and other consumer electronics devices to enable applications including biometric identification, computational photography and virtual and augmented reality.
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Our business and our customers’ businesses were negatively impacted by worldwide logistics and supply chain issues during and following the COVID-19 pandemic, including constraints on available cargo capabilities and limited availability of once broadly available supplies of both raw materials and finished components.
Removed
Fluctuations in supply and demand, exacerbated by the COVID-19 pandemic and subsequent inventory adjustments, coupled with evolving export regulations, have led to volatility in our financial performance and created uncertainty regarding future customer demand. 3 Table of Contents Industry Inventory Correction In response to supply shortages caused by the COVID-19 pandemic, certain customers accumulated higher-than-normal inventory levels, including our products, as a precautionary measure.
Added
From time to time, we experience shortages of the types of components we and our customers require in our products, and we have had to incur incremental supply and procurement costs in order to increase our ability to fulfill demands from our customers.
Removed
As supply constraints started easing, towards the latter half of fiscal year 2023, customers began reducing purchases of our products to align their inventory levels with more normalized levels of end-market demand. This inventory correction was amplified by similar actions subsequently taken by our customers' customers, who also sought to reduce their excess inventory by decreasing purchases.
Added
In addition, through fiscal year 2024, we experienced significant fluctuations in demand as customers delayed projected shipments or built up inventory in response to supply shortages and then brought down inventories as supply chain constraints eased.
Removed
Consequently, our business has experienced a prolonged period of lower revenue, leading to significant underutilization of manufacturing capacity and reduced profit margins in fiscal year 2024. While we anticipate an eventual normalization of inventory levels across the supply chain, the timing and pace of this recovery remain uncertain and could be influenced by macroeconomic and financial market conditions.
Added
Our revenue fluctuated in response to these changes in demand and our margins were adversely impacted as we were not been able to fully recover costs, such as underutilized manufacturing capacity.
Removed
During the fiscal first quarter of 2024, our chief operating decision maker (“CODM”) implemented changes in how he organizes the business, allocates resources, and assesses performance. We changed our organizational structure to better align with trends in our markets and our customer and product mix.
Added
However, during fiscal year 2025, network equipment manufacturers continued to normalize inventory levels and we saw increasing demand from AI and cloud customers as they continue to expand their data centers. Due to worldwide operations, we and our customers are also subject to risks relating to the global trade environment.
Removed
Beginning in fiscal year 2024, our new operating segments are Cloud & Networking and Industrial Tech. The Cloud & Networking segment includes the Telecom & Datacom product lines that were previously part of the OpComms segment. The Industrial Tech segment includes the previous Lasers segment and the Industrial & Consumer product lines that were previously part of the OpComms segment.
Added
The Company is actively monitoring and assessing the global trade environment, particularly with respect to recent changes and proposed changes in tariff regulations and trade restrictions. The ongoing uncertainty surrounding trading policies, including the potential for additional tariffs, restrictions related to our customers and retaliatory measures by non-U.S. governments, continues to create a volatile environment that could disrupt our operations.
Removed
In conjunction with this change, our CODM began to evaluate each segment’s performance and allocates resources based on segment revenue and segment profit, instead of gross profit, as our CODM believes segment profit is a more comprehensive profitability measure for each operating segment.
Added
The imposition of tariffs on certain imported goods and materials and export controls on critical components may increase our costs and place upward pressure on the cost of goods sold, which, in turn, may reduce our gross margins if we are unable to pass these costs onto customers through price increases.
Removed
Additionally, we do not allocate certain marketing and general and administrative expenses, as these expenses are not directly attributable to our operating segments. Comparative prior period segment information has been recast to conform to the new segment structure and segment profitability measure.
Added
If these tariff-related cost increases persist or escalate, our financial results could be adversely affected, including lower profitability. Additionally, changes in the global trade landscape could result in reduced market competitiveness and a slowdown in consumer demand as well as disruptions to our supply chain, including longer lead times, higher shipping costs, or limited availability of key inputs.
Removed
Customers During fiscal 2024, 2023, and 2022, net revenue generated from a single customer which represented 10% or more of our total net revenue of the applicable fiscal year is summarized in the table below: Years Ended June 29, 2024 July 1, 2023 July 2, 2022 Google 18.9 % * * Apple * 12.1 % 28.7 % Ciena 11.4 % 15.3 % 12.6 % Nokia * 10.5 % * *Represents less than 10% of total net revenue 5 Table of Contents Trends The convergence of cloud computing and artificial intelligence (AI) is driving rapid innovation and expansion in optical hardware for hyperscale cloud operators.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

157 edited+35 added−34 removed205 unchanged
Biggest changeRisk Factor Summary Our business operations are subject to numerous risks, factors and uncertainties, including those outside of our control, which could cause our actual results to be harmed, including risks regarding the following: Risks Related to our Business • unfavorable economic and market conditions; • our reliance on a limited number of suppliers and customers; • order cancellations, reductions or delays in delivery schedules by our customers or distributors; • failure of banking institutions and liquidity concerns at other financial institutions; • our backlog may not be an accurate indicator of our level and timing of future revenue; • our gross margins and operating margins may vary overtime; • challenges relating to supply chain constraints; • changes in technology and intense competition; • our ability to sell to a significant customer, as well as tariffs and other trade and export restrictions between the U.S. and China; • the impact of a widespread health crisis; • our international operations structure; 11 • volatility and maintenance of our real property portfolio; • our ability to timely procure components needed to manufacture our products; • our ability to manufacture our products; • our leverage in negotiations with large customers; • design and manufacturing defects or quality issues in our products; • changes in laws and the adoption and interpretation of administrative rules and regulations, including U.S. and international customs and export regulations; • our strategic transactions and implementation strategy for our acquisitions, including the recently completed acquisition of Cloud Light; • restructuring and related charges; • changes in spending levels, demand and customer requirements for our products; • changes in tax laws; • fluctuations in foreign currency; • our future capital requirements; • actual or perceived security or privacy breaches or incidents, as well as defects, errors or vulnerabilities in our technology and that of third-party providers; • the unpredictability of our results of operations; • our ability to protect our product and proprietary rights; • factors relating to our intellectual property rights as well as the intellectual property rights of others; and • litigation risks, including intellectual property litigation; • our reliance on licensed third-party technology; and • our ability to maintain an effective system of disclosure controls and internal control over financial reporting Risks Related to Human Capital • our ability to hire and retain key personnel • the effects of immigration policy on our ability to hire and retain employees; and • employment related disputes and claims Risks Related to Legal, Regulatory and Compliance • our ability to obtain government authorization to export our products; and • changes in social and environmental responsibility regulations, policies and provisions, as well as customer and investor demands Risks Related to Our Common Stock • the volatility of the trading price of our common stock; • our ability to service our current and future debt; • dilution related to our convertible notes; • our intention not to pay dividends for the foreseeable future; • provisions of Delaware law and our certificate of incorporation and bylaws that may make a merger, tender offer or proxy contest difficult; and 12 • exclusive forum provisions in our bylaws Risks Related to Our Business Our operating results may be adversely affected by unfavorable changes in macroeconomics and market conditions and the uncertain geopolitical environment.
Biggest changeRisk Factor Summary Our business operations are subject to numerous risks, factors and uncertainties, including those outside of our control, which could cause our actual results to be harmed, including risks regarding the following: Risks Related to our Business • unfavorable economic and market conditions, including the impact of trade restrictions or regulations, including tariffs, duties and export controls; • our reliance on a limited number of suppliers and customers; • order cancellations, reductions or delays in delivery schedules by our customers or distributors; • failure of banking institutions and liquidity concerns at other financial institutions; • our backlog may not be an accurate indicator of our level and timing of future revenue; • our gross margins and operating margins may vary overtime; • challenges relating to supply chain constraints; • changes in technology and intense competition; • our ability to sell to a significant customer, as well as higher tariffs and other trade restrictions between the U.S. and other countries, including China and Thailand; • headwinds caused by heightened, scheduled, or threatened tariffs imposed by the U.S. or other countries; • the impact of a widespread health crisis; • our international operations structure; • volatility and maintenance of our real property portfolio; • our ability to timely procure components needed to manufacture our products; • our ability to manufacture our products; • our leverage in negotiations with large customers; • design and manufacturing defects or quality issues in our products; • changes in laws and the adoption and interpretation of administrative rules and regulations, including U.S. and international customs and export regulations; • our strategic transactions and implementation strategy for our acquisitions, including the Cloud Light acquisition; • restructuring and related charges; • changes in spending levels, demand and customer requirements for our products; • changes in tax laws; • fluctuations in foreign currency; 11 • our future capital requirements; • actual or perceived security or privacy breaches or incidents, as well as defects, errors or vulnerabilities in our technology and that of third-party providers; • the failure or absence of business continuity plans with respect to our global facilities and operations; • the unpredictability of our results of operations; • our ability to protect our product and proprietary rights; • factors relating to our intellectual property rights as well as the intellectual property rights of others; • actions taken by authorized or unauthorized resellers or distributors that adversely affect our reputation or violate import or export regulations; • litigation risks, including intellectual property litigation; • our reliance on licensed third-party technology; and • our ability to maintain an effective system of disclosure controls and internal control over financial reporting Risks Related to Human Capital • our ability to hire and retain key personnel • the effects of immigration policy on our ability to hire and retain employees; and • employment related disputes and claims Risks Related to Legal, Regulatory and Compliance • our ability to obtain government authorization to export our products; and • changes in social and environmental responsibility regulations, policies and provisions, as well as government, customer, business partner, investor or other stakeholder demands Risks Related to Our Common Stock • the volatility of the trading price of our common stock; • our ability to service our current and future debt; • dilution related to our convertible notes; • our intention not to pay dividends for the foreseeable future; • provisions of Delaware law and our certificate of incorporation and bylaws that may make a merger, tender offer or proxy contest difficult; and • exclusive forum provisions in our bylaws 12 Risks Related to Our Business Our operating results may be adversely affected by unfavorable changes in macroeconomics and market conditions and the uncertain geopolitical environment.
If we were to lose any one of these or other critical sources, or there is as an industry-wide increase in demand for, or the discontinuation of, raw materials used in our products, it could be difficult for us, or we may be unable, to find an alternative supplier or raw material, in which case our operations could be adversely affected.
If we were to lose any one of these or other critical sources, or if there is as an industry-wide increase in demand for, or the discontinuation of, raw materials used in our products, it could be difficult for us, or we may be unable, to find an alternative supplier or raw material, in which case our operations could be adversely affected.
Despite our implementation of security measures, our systems and those of our third-party service providers are vulnerable to damage from these or other types of attacks, errors or acts of omissions. In addition, our systems may be impacted by natural disasters, terrorism or other similar disruptions.
Despite our implementation of security measures, our systems and those of our third-party service providers are vulnerable to damage from these or other types of attacks, errors, acts or omissions. In addition, our systems may be impacted by natural disasters, terrorism or other similar disruptions.
The litigation or settlement of these matters, regardless of the merit of the claims, could result in significant expense and divert the efforts of our technical and management personnel, regardless of whether or not we are successful.
The litigation or settlement of these matters, regardless of the merit of the claims, could result in significant expense and divert the efforts of our technical and management personnel, regardless of whether or not we are successful.
If we are unable to comply with, or are unable to cause our suppliers or contract manufacturers to comply with such policies or provisions, or meet the requirements of our customers and investors, a customer may stop purchasing products from us or an investor may sell their shares, and may take legal action against us, which could harm our reputation, revenue and results of operations.
If we are unable to comply with, or are unable to cause our suppliers or contract manufacturers to comply with such policies or provisions, or if we are unable to meet the requirements of our customers and investors, a customer may stop purchasing products from us or an investor may sell their shares, and may take legal action against us, which could harm our reputation, revenue and results of operations.
Potential impacts on our operations and financial performance include: • significant reductions in demand for one or more of our products or a curtailment to one or more of our product lines caused by, among other things, any temporary inability of our customers to purchase and utilize our products due to shutdown orders or financial hardship; 26 • workforce constraints triggered by any applicable shutdown orders or stay-at-home policies; • disruptions to our third-party contract manufacturing and raw materials supply arrangements caused by constraints over our suppliers’ workforce capacity, financial, or operational difficulties; • disruption in our own ability to produce and ship products; • heightened risk and uncertainty regarding the loss or disruption of essential third-party service providers, including transportation services, contract manufacturing, marketing, and distribution services; • requirements to comply with governmental and regulatory responses such as quarantines, import/export restrictions, price controls, or other governmental or regulatory actions, including closures or other restrictions that limit or close our operating and manufacturing facilities, restrict our workforce’s ability to travel or perform necessary business functions, or otherwise impact our suppliers or customers, which could adversely impact our operating results; • general economic uncertainty in key global markets and financial market volatility; and • increased operating expenses and potentially reduced efficiency of operations.
Potential impacts on our operations and financial performance include: • significant reductions in demand for one or more of our products or a curtailment to one or more of our product lines caused by, among other things, any temporary inability of our customers to purchase and utilize our products due to shutdown orders or financial hardship; • workforce constraints triggered by any applicable shutdown orders or stay-at-home policies; • disruptions to our third-party contract manufacturing and raw materials supply arrangements caused by constraints over our suppliers’ workforce capacity, financial, or operational difficulties; • disruption in our own ability to produce and ship products; • heightened risk and uncertainty regarding the loss or disruption of essential third-party service providers, including transportation services, contract manufacturing, marketing, and distribution services; • requirements to comply with governmental and regulatory responses such as quarantines, import/export restrictions, price controls, or other governmental or regulatory actions, including closures or other restrictions that limit or close our operating and manufacturing facilities, restrict our workforce’s ability to travel or perform necessary business functions, or otherwise impact our suppliers or customers, which could adversely impact our operating results; 27 • general economic uncertainty in key global markets and financial market volatility; and • increased operating expenses and potentially reduced efficiency of operations.
Failure to obtain export licenses for these shipments could significantly reduce our revenue and materially adversely affect our business, financial condition, relationships with our customers and results of operations. Compliance with U.S. government regulations also subjects us to additional fees and costs. The absence of comparable restrictions on competitors in other countries may adversely affect our competitive position.
Failure to obtain export licenses for these shipments could significantly reduce our revenue and adversely affect our business, financial condition, relationships with our customers and results of operations. Compliance with U.S. government regulations also subjects us to additional fees and costs. The absence of comparable restrictions on competitors in other countries may adversely affect our competitive position.
Further, there is increased attention from the government and the media regarding potential threats to U.S. national security and foreign policy relating to certain foreign entities, particularly Chinese entities, and the imposition of enhanced restrictions or sanctions regarding the export of our products or on specific foreign entities that would restrict their ability to do business with U.S. companies may materially adversely affect our business.
Further, there is increased attention from the government and the media regarding potential threats to U.S. national security and foreign policy relating to certain foreign entities, particularly Chinese entities, and the imposition of enhanced restrictions or sanctions regarding the export of our products or on specific foreign entities that would restrict their ability to do business with U.S. companies may adversely affect our business.
As a result of shipping disruptions, we have experienced among other things, increased costs to ship products and delays in receiving components and any disruption in the future would likely materially and adversely affect our operating results and financial condition. In addition to the above risks related to our international operations, we also face risks related to pandemics and epidemics.
As a result of shipping disruptions, we have experienced among other things, increased costs to ship products and delays in receiving components and any disruption in the future would likely adversely affect our operating results and financial condition. In addition to the above risks related to our international operations, we also face risks related to pandemics and epidemics.
Additionally, if our contract manufacturers continue experiencing disruptions or discontinue operations, we may be required to identify and qualify alternative manufacturers, which 20 is expensive and time consuming. If we are required to change or qualify a new contract manufacturer, this would likely cause business disruptions and adversely affect our results of operations and could harm our existing customer relationships.
Additionally, if our contract manufacturers continue experiencing disruptions or discontinue operations, we may be required to identify and qualify alternative manufacturers, which is expensive and time consuming. If we are required to change or qualify a new contract manufacturer, this would likely cause business disruptions and adversely affect our results of operations and could harm our existing customer relationships.
Global economic volatility has had a significant impact on the exchange markets, which heightened this risk, and we expect the higher level of volatility in foreign exchange markets will likely continue. We may require additional capital to support business growth, and this capital might not be available on acceptable terms, if at all.
Global economic volatility has had a significant impact on the exchange markets, which heightened this risk, and we expect the higher level of volatility in foreign exchange markets will likely continue. 26 We may require additional capital to support business growth, and this capital might not be available on acceptable terms, if at all.
In the past, stockholders 35 have instituted securities class action litigation following periods of market volatility. If we were to become involved in securities litigation, it could subject us to substantial costs, divert resources and the attention of management from our business and adversely affect our business, results of operations, financial condition and cash flows.
In the past, stockholders have instituted securities class action litigation following periods of market volatility. If we were to become involved in securities litigation, it could subject us to substantial costs, divert resources and the attention of management from our business and adversely affect our business, results of operations, financial condition and cash flows.
If we fail to continue to develop enhanced or new products that enable us to increase revenues while maintaining consistent margins, or over time are unable to adjust our cost structure to continue to competitively price more mature products, our financial condition and results of operations could be materially and adversely affected.
If we fail to continue to develop enhanced or new products that enable us to increase revenues while maintaining consistent margins, or over time are unable to adjust our cost structure to continue to competitively price more mature products, our financial condition and results of operations could be adversely affected.
We have also seen, and may continue to see, our gross margins negatively impacted by increases in component costs, logistics costs, elevated inventory balances, and pricing pressure. Failure to sustain or improve our gross margins reduces our profitability and may materially and adversely affect our business, financial condition and results of operations.
We have also seen, and may continue to see, our gross margins negatively impacted by increases in component costs, logistics costs, elevated inventory balances, and pricing pressure. Failure to sustain or improve our gross margins reduces our profitability and may adversely affect our business, financial condition and results of operations.
We may 21 be unable to obtain, or we may experience delays in obtaining, customer qualification of our manufacturing lines. If we introduce new contract manufacturing partners and move any production lines from existing internal or external facilities, the new production lines will likely need to be re-qualified with our customers.
We may be unable to obtain, or we may experience delays in obtaining, customer qualification of our manufacturing lines. If we introduce new contract manufacturing partners and move any production lines from existing internal or external facilities, the new production lines will likely need to be re-qualified with our customers.
These regulations include, for example, the Registration, Evaluation, Authorization and Restriction of Chemicals (“REACH”), the 33 Restriction of the Use of Certain Hazardous Substances in Electrical and Electronic Equipment Directive (“RoHS”) and the Waste Electrical and Electronic Equipment Directive (“WEEE”) enacted in the European Union which regulate the use of certain hazardous substances in, and require the collection, reuse and recycling of waste from, certain products we manufacture.
These regulations include, for example, the Registration, Evaluation, Authorization and Restriction of Chemicals (“REACH”), the Restriction of the Use of Certain Hazardous Substances in Electrical and Electronic Equipment Directive (“RoHS”) and the Waste Electrical and Electronic Equipment Directive (“WEEE”) enacted in the European Union which regulate the use of certain hazardous substances in, and require the collection, reuse and recycling of waste from, certain products we manufacture.
Future demand for our products is uncertain and will primarily depend on continued technological development and the introduction of new or enhanced products. 16 If this does not continue, sales of our products may decline which could adversely impact our business, results of operations and financial condition.
Future demand for our products is uncertain and will primarily depend on continued technological development and the introduction of new or enhanced products. If this does not continue, sales of our products may decline which could adversely impact our business, results of operations and financial condition.
Any failure to manage, expand and update our information technology infrastructure, including our ERP system and other applications, any failure in the extension implementation or operation of this infrastructure, or any failure by our hosting and support partners or other third-party service providers in the performance of their services could materially harm our business.
Any failure to manage, expand and update our information technology infrastructure, including our ERP system and other applications, any failure in the extension implementation or operation of this infrastructure, or any failure by our hosting and support partners or other third-party service providers in the performance of their services could harm our business.
Any such developments could have a material impact on our ability to meet our customers’ expectations and may materially impact our operating results and financial condition. If our customers do not qualify our manufacturing lines or the manufacturing lines of our subcontractors for volume shipments, our operating results could suffer.
Any such developments could have a material impact on our ability to meet our customers’ expectations and may materially impact our operating results and financial condition. 22 If our customers do not qualify our manufacturing lines or the manufacturing lines of our subcontractors for volume shipments, our operating results could suffer.
In addition, certain of our significant customers and suppliers have products that are subject to U.S. export controls, and therefore these customers and suppliers may also be subject to legal and regulatory consequences if they do not comply with 32 applicable export control laws and regulations.
In addition, certain of our significant customers and suppliers have products that are subject to U.S. export controls, and therefore these customers and suppliers may also be subject to legal and regulatory consequences if they do not comply with applicable export control laws and regulations.
Our ability to pay cash dividends may also be subject to covenants and financial ratios related to existing or future indebtedness, and other agreements with third parties. 36 Certain provisions in our charter and Delaware corporate law could hinder a takeover attempt.
Our ability to pay cash dividends may also be subject to covenants and financial ratios related to existing or future indebtedness, and other agreements with third parties. Certain provisions in our charter and Delaware corporate law could hinder a takeover attempt.
We are exposed to foreign exchange risks with regard to our international operations which may affect our operating results. Since we conduct business in currencies other than U.S. dollars but report our financial results in U.S. dollars, we face 25 exposure to fluctuations in currency exchange rates.
We are exposed to foreign exchange risks with regard to our international operations which may affect our operating results. Since we conduct business in currencies other than U.S. dollars but report our financial results in U.S. dollars, we face exposure to fluctuations in currency exchange rates.
In addition, certain holders of the convertible notes may engage in short selling to hedge their position in the convertible notes. Anticipated future conversions of the convertible notes into shares of our common stock could depress the price of our common stock. We do not expect to pay dividends on our common stock.
In addition, certain holders of the convertible notes may engage in short selling to hedge their position in the convertible notes. Anticipated future conversions of the convertible notes into shares of our common stock could depress the price of our common stock. 37 We do not expect to pay dividends on our common stock.
There can be no assurance that our employees, contractors, channel partners and agents will not take actions in violation of our policies and procedures, which are designed to ensure compliance with U.S. and foreign laws and policies.
There can be no assurance that our employees, contractors, channel partners and agents will not take actions in violation of our policies and procedures, which are designed to ensure compliance with applicable U.S. and foreign laws and policies.
Additionally, while our security systems are designed to maintain the physical security of our facilities and information systems, accidental or willful security breaches or incidents or other unauthorized access by third parties to our facilities or our information systems could lead to unauthorized access to, or misappropriation, disclosure, or other processing of proprietary, confidential and other information.
Additionally, while our security systems are designed to maintain the physical security of our facilities and information systems, accidental or willful security breaches or incidents or other unauthorized access by third parties to our facilities or our information systems could lead to unauthorized access to, or misappropriation, disclosure, or 28 other processing of proprietary, confidential and other information.
Moreover, new laws and regulations, such as the European Union’s General Data Protection Regulation, the California Consumer Privacy Act (“CCPA”), and China’s Personal Information Protection Law, add to the complexity of our compliance obligations and increases our compliance costs.
Moreover, new laws and regulations, such as the European Union’s General Data Protection Regulation (“GDPR”), the California Consumer Privacy Act (“CCPA”), and China’s Personal Information Protection Law, add to the complexity of our compliance obligations and increases our compliance costs.
Our buildings subject us to the risks of owning real property, which include, but are not limited to: • adverse changes in the value of these properties due to economic conditions, the movement by many companies to a hybrid work environment, interest rate changes, changes in the neighborhood in which the property is located, or other factors; • the possible need for structural improvements in order to comply with zoning, seismic and other legal or regulatory requirements; • the potential disruption of our business and operations arising from or connected with a relocation due to moving or to renovating the facility; • increased cash commitments for improvements to the buildings or the property, or both; • increased operating expenses for the buildings or the property, or both; and • the risk of financial loss in excess of amounts covered by insurance, or uninsured risks, such as the loss caused by damage to the buildings as a result of earthquakes, floods and/or other natural disasters.
Our buildings subject us to the risks of owning real property, which include, but are not limited to: • adverse changes in the value of these properties due to economic conditions, the movement by many companies to a hybrid work environment, interest rate changes, changes in the neighborhood in which the property is located, or other factors; • the possible need for structural improvements in order to comply with zoning, seismic and other legal or regulatory requirements; • the potential disruption of our business and operations arising from or connected with a relocation due to moving or to renovating the facility; • increased cash commitments for improvements to the buildings or the property, or both; • increased operating expenses for the buildings or the property, or both; and • the risk of financial loss in excess of amounts covered by insurance, or uninsured risks, such as the loss caused by damage to the buildings as a result of earthquakes, floods, typhoons, tsunamis, fire, and/or other natural disasters.
Difficulties in obtaining the materials, or services used in the conduct of our business or additional fees or higher prices to do so, have adversely affected our revenue and results of operations, and further challenges or decisions to seek alternate suppliers to secure supply in order to meet demand would increase our costs and reduce our profitability. 13 Our financial results may be adversely affected due to changes in product demand impacted by recessions, increases in interest rates, stagflation and other economic conditions.
Difficulties in obtaining the materials, or services used in the conduct of our business or additional fees or higher prices to do so, have adversely affected our revenue and results of operations, and further challenges or decisions to seek alternate suppliers to secure supply in order to meet demand would increase our costs and reduce our profitability. 14 Our financial results may be adversely affected due to changes in product demand impacted by recessions, increases in interest rates, stagflation and other economic conditions.
The markets in which we operate are dynamic and complex, and our success depends upon our ability to deliver both our current product offerings and new products and technologies on time and at acceptable prices to our customers.
The markets in which we operate are dynamic and complex, and our success depends on our ability to deliver both our current product offerings and new products and technologies on time and at acceptable prices to our customers.
The outbreak of a widespread health crisis, whether global in scope or localized in an area in which we, our customers or our suppliers do business, could have a material and adverse effect on our operations and the operations of our suppliers and customers.
The outbreak of a widespread health crisis, whether global in scope or localized in an area in which we, our customers or our suppliers do business, could have an adverse effect on our operations and the operations of our suppliers and customers.
The failure to effectively manage our spending and operations could disrupt our business and harm our operating results. A widespread health crisis could materially and adversely affect our business operations, financial performance, results of operations, financial position and the achievement of our strategic objectives.
The failure to effectively manage our spending and operations could disrupt our business and harm our operating results. A widespread health crisis could adversely affect our business operations, financial performance, results of operations, financial position and the achievement of our strategic objectives.
The impact of economic challenges on the global financial markets could further negatively impact our operations by affecting the solvency of our customers, the solvency of our key suppliers or the ability of our customers to obtain credit to finance purchases of our products.
The impact of economic challenges on the global financial markets could negatively impact our operations by affecting the solvency of our customers, the solvency of our key suppliers or the ability of our customers to obtain credit to finance purchases of our products.
Foreign nationals who are not U.S. citizens or permanent residents constitute an important part of our U.S. workforce, 31 particularly in the areas of engineering and product development.
Foreign nationals who are not U.S. citizens or permanent residents constitute an important part of our U.S. workforce, particularly in the areas of engineering and product development.
The effects could include restrictions on our ability to travel to support our sites in Asia or our customers located there, disruptions in our ability to distribute products, and/or temporary closures of our facilities in Asia or the facilities of our suppliers or customers and their contract manufacturers. 19 In the past, these and similar risks have disrupted our operations and the operations of our suppliers, customers and contract manufacturers and increased our costs, and we expect that they may do so in the future.
The effects could include restrictions on our ability to travel to support our sites in Asia or our customers located there, disruptions in our ability to distribute products, and/or temporary closures of our facilities in Asia or the facilities of our suppliers or customers and their contract manufacturers. 20 In the past, these and similar risks have disrupted our operations and the operations of our suppliers, customers and contract manufacturers and increased our costs, and we expect that they may do so in the future.
In addition, if we incur expenses in response to forecasted demand and do not have a corresponding increase in revenue, our profitability may suffer. Any of these factors could adversely affect our business, financial condition and results of operations. 17 Intense competition in our markets may lead to an accelerated reduction in our prices, revenues, margins and market share.
In addition, if we incur expenses in response to forecasted demand and do not have a corresponding increase in revenue, our profitability may suffer. Any of these factors could adversely affect our business, financial condition and results of operations. 18 Intense competition in our markets may lead to an accelerated reduction in our prices, revenues, margins and market share.
Our future success depends upon our ability to recruit and retain the services of executive, engineering, manufacturing, sales and marketing, and support personnel. The supply of highly qualified individuals, in particular engineers in very specialized technical areas, or salespeople specializing in the service provider, enterprise and commercial laser markets, is limited and competition for such individuals is intense.
Our future success depends on our ability to recruit and retain the services of executive, engineering, manufacturing, sales and marketing, and support personnel. The supply of highly qualified individuals, in particular engineers in very specialized technical areas, or salespeople specializing in the service provider, enterprise and commercial laser markets, is limited and competition for such individuals is intense.
An outbreak of a contagious disease, and other adverse public health developments, particularly in Asia, could have a material and adverse effect on our business operations.
An outbreak of a contagious disease, and other adverse public health developments, particularly in Asia, could have an adverse effect on our business operations.
Furthermore, imposition of tariffs or new or revised export, import or doing-business regulations, including trade sanctions, could cause a decrease in the demand for, or sales of our 22 products to customers located in China or other customers selling to Chinese end users or increase the cost for our products, which would directly impact our business and results of operations.
Furthermore, imposition of new or additional tariffs or new or revised export, import or doing-business regulations, including trade sanctions, could cause a decrease in the demand for, or sales of our products to customers located in China or other customers selling to Chinese end users or increase the cost for our products, which would directly impact our business and results of operations.
Laws and regulations relating to privacy and data protection continue to evolve in various jurisdictions, with existing laws and regulations subject to new and differing interpretations and new laws and regulations being proposed and adopted.
Laws and regulations relating to privacy, data protection and cybersecurity continue to evolve in various jurisdictions, with existing laws and regulations subject to new and differing interpretations and new laws and regulations being proposed and adopted.
In the United States, the European Union, and China there are various current and proposed regulatory frameworks relating to the use of AI in products and services.
In the United States, the European Union, and China there are various current and proposed regulatory frameworks relating to the development and use of AI in products and services.
Chinese laws and regulations are subject to frequent change, and if our suppliers are unable to obtain or retain the requisite legal permits or otherwise to comply with Chinese legal requirements, we may be forced to obtain products from other manufacturers or to make other operational changes, including transferring our manufacturing to another manufacturer or to our own manufacturing facilities.
Chinese and U.S. laws and regulations are subject to frequent change, and if our suppliers are unable to obtain or retain the requisite legal permits or otherwise to comply with Chinese and U.S. legal requirements, we may be forced to obtain products from other manufacturers or to make other operational changes, including transferring our manufacturing to another manufacturer or to our own manufacturing facilities.
Additionally, there may be existing patents that we are unaware of, which could be pertinent to our business. It is not possible for us to know whether there are patent applications pending that our products might infringe upon since these applications are often not made publicly available until a patent is issued or published.
Additionally, there may be existing patents that we are unaware of, which could be pertinent to our business. It is not possible for us to know whether there are patent applications pending that our products might infringe on since these applications are often not made publicly available until a patent is issued or published.
Some of the challenges involved integrating businesses and acquisitions include: • difficulty preserving relationships with customers, suppliers or partners; • potential difficulties in completing projects associated with in-process R&D; • unanticipated liabilities or our exposure for known contingencies and liabilities may exceed our estimates; • insufficient net revenue or unexpected expenses that negatively impact our margins and profitability; • unexpected losses of key employees of the acquired company, inability to attract, recruit, retain, and motivate current and prospective employees or inability to maintain our company culture; 23 • unexpected expenses for cost of litigation against us or our directors and officers, or against the acquired company; • conforming the acquired company’s standards, processes, procedures and controls with our operations, including integrating Enterprise Resource Planning (“ERP”) systems and other key business applications; • coordinating new product and process development; • increasing complexity from combining operations, including administrative functions, finance and human resources; • increasing the scope, geographic diversity and complexity of our operations; • difficulties in integrating operations across different cultures and languages and to address the particular economic, currency, political, and regulatory risks associated with specific countries; • difficulties in integrating acquired technology; • difficulties in coordinating and integrating geographically separated personnel, organizations, systems and facilities; • difficulty managing customer transitions or entering into new markets; • difficulties in consolidating facilities and transferring processes and know-how; • diversion of management’s attention from other business concerns; • temporary loss of productivity or operational efficiency; • dilution of our current stockholders as a result of any issuance of equity securities as acquisition consideration; • adverse tax or accounting impact; • expenditure of cash that would otherwise be available to operate our business; and • indebtedness on terms that are unfavorable to us, limit our operational flexibility or that we are unable to repay.
Some of the challenges involved integrating businesses and acquisitions include: • difficulty preserving relationships with customers, suppliers or partners; • potential difficulties in completing projects associated with in-process R&D; • unanticipated liabilities or our exposure for known contingencies and liabilities may exceed our estimates; • insufficient net revenue or unexpected expenses that negatively impact our margins and profitability; • unexpected losses of key employees of the acquired company, inability to attract, recruit, retain, and motivate current and prospective employees or inability to maintain our company culture; • unexpected expenses for cost of litigation or other legal proceedings related to the acquisition or the acquired company; • conforming the acquired company’s standards, processes, procedures and controls with our operations, including integrating Enterprise Resource Planning (“ERP”) systems and other key business applications; • coordinating new product and process development; • increasing complexity from combining operations, including administrative functions, finance and human resources; • increasing the scope, geographic diversity and complexity of our operations; • difficulties in integrating operations across different cultures and languages and to address the particular economic, currency, political, and regulatory risks associated with specific countries; • difficulties in integrating acquired technology; • difficulties in coordinating and integrating geographically separated personnel, organizations, systems and facilities; 24 • difficulty managing customer transitions or entering into new markets; • difficulties in consolidating facilities and transferring processes and know-how; • diversion of management’s attention from other business concerns; • temporary loss of productivity or operational efficiency; • dilution of our current stockholders as a result of any issuance of equity securities as acquisition consideration; • adverse tax or accounting impact; • expenditure of cash that would otherwise be available to operate our business; and • indebtedness on terms that are unfavorable to us, limit our operational flexibility or that we are unable to repay.
Thus, an unfavorable outcome or settlement of one or more of these lawsuits could have a material adverse effect on our financial condition, liquidity and results of operations. Even if these lawsuits are not resolved against us, the uncertainty and expense associated with unresolved lawsuits could seriously harm our business, financial condition and reputation.
Thus, an unfavorable outcome or settlement of one or more of these lawsuits could have an adverse effect on our financial condition, liquidity and results of operations. Even if these lawsuits are not resolved against us, the uncertainty and expense associated with unresolved lawsuits could seriously harm our business, financial condition and reputation.
We have been in the past, and may be in the future, subject to social engineering and other cybersecurity attacks, and these attacks may become more prevalent with substantial portion of our workforce being distributed geographically, particularly given the increased remote access to our networks and systems as a result.
We have been in the past, and may be in the future, subject to social engineering attacks and other cyber-attacks, and these attacks may become more prevalent with substantial portion of our workforce being distributed geographically, particularly given the increased remote access to our networks and systems as a result.
In addition, if we are unable to continue to meet these requirements, we may not be able to remain listed on the NASDAQ stock market. Risks Related to Human Capital Our ability to develop, market and sell products could be harmed if we are unable to retain or hire key personnel.
In addition, if we are unable to continue to meet these requirements, we may not be able to remain listed on Nasdaq. Risks Related to Human Capital Our ability to develop, market and sell products could be harmed if we are unable to retain or hire key personnel.
Second, patent-holding companies that do not make or sell products (often referred to as “patent trolls”) may claim that our products infringe upon their proprietary rights. We respond to these claims in the course of our business operations.
Second, patent-holding companies that do not make or sell products (often referred to as “patent trolls”) may claim that our products infringe on their proprietary rights. We respond to these claims in the course of our business operations.
If global economic and market conditions, or economic conditions in key markets, remain uncertain or deteriorate further, our prospects for growth may be negatively impacted, and we may experience material and adverse impacts on our business, operating results, and financial condition.
If global economic and market conditions, or economic conditions in key markets, remain uncertain or deteriorate, our prospects for growth may be negatively impacted, and we may experience adverse impacts on our business, operating results, and financial condition.
We expect increased worldwide regulatory activity relating to climate change in the future. Future compliance with these laws and regulations, as well as meeting related customer and investor expectations, may adversely affect our business and results of operations. Our reputation and/or business could be negatively impacted by ESG matters and/or our reporting of such matters.
We expect to face increasing worldwide regulatory activity relating to climate change in the future. Future compliance with these laws and regulations, as well as meeting related customer and investor expectations, may adversely affect our business and results of operations. Our reputation and/or business could be negatively impacted by ESG matters and/or our reporting of such matters.
Violations of laws or key control policies by our employees, contractors, channel partners, or agents could result in termination of our relationships with customers and suppliers, financial reporting problems, fines and/or penalties for us, or prohibition on the importation or exportation of our products, and could have a material adverse effect on our business, financial condition and results of operations.
Violations of laws or key control policies by our employees, contractors, channel partners, or agents could result in termination of our relationships with customers and suppliers, financial reporting problems, fines and/or penalties for us, or prohibition on the importation or exportation of our products, and could have an adverse effect on our business, financial condition and results of operations.
Our failure or perceived failure to comply with any of the foregoing legal and regulatory requirements, or other actual or asserted obligations relating to privacy, data protection or information security could result in increased costs for our products, monetary penalties, damage to our reputation, government inquiries, subpoenas, investigations and other legal proceedings, legal claims, demands and litigation and other obligations and liabilities.
Our failure or perceived failure to comply with any of the foregoing legal and regulatory requirements, or other actual or asserted obligations relating to privacy, data protection or cybersecurity could result in increased costs for our products, monetary penalties, damage to our reputation, government inquiries, subpoenas, investigations and other legal proceedings, legal claims, demands and litigation and other obligations and liabilities.
For example, sanctions on sales to certain parties of U.S. semiconductors and semiconductor equipment has caused a delay in 5G deployment in China while the affected companies seek alternative solutions, which has reduced the demand for our products from some of our Chinese 18 customers; • varying and potentially conflicting laws and regulations; • overlapping, differing or more burdensome tax structure and laws; • markets for 5G infrastructure not developing in the manner or in the time periods we anticipate, including as a result of unfavorable developments with evolving laws and regulations worldwide; • wage inflation or a tightening of the labor market; • the impact of recessions and other economic conditions in economies outside the United States, including, for example, dips in the manufacturing Purchasing Managers Index as well as the Institute for Supply Management data in the Eurozone; • tax and customs changes that adversely impact our global sourcing strategy, manufacturing practices, transfer-pricing, or competitiveness of our products for global sales; • volatility in oil prices and increased costs, or limited supply of other natural resources; • political developments, geopolitical unrest or other conflicts in foreign nations, including Brexit, the Russia-Ukraine war, the Israel-Hamas war and political developments in Hong Kong and Taiwan and the potential impact such developments or further actions could have on our customers in the markets in which we operate; and • the impact of the following on service provider and government spending patterns as well as our contract and internal manufacturing: political considerations, changes in or delays in government budgeting processes, unfavorable changes in tax treaties or laws, unfavorable events that affect foreign currencies on an absolute or relative basis, natural disasters, epidemic disease, labor unrest, earnings expatriation restrictions, misappropriation of intellectual property, military actions, acts of terrorism, political and social unrest and difficulties in staffing and managing international operations.
For example, sanctions on sales to certain parties of U.S. semiconductors and semiconductor equipment has caused a delay in 5G deployment in China while the affected 19 companies seek alternative solutions, which has reduced the demand for our products from some of our Chinese customers; • varying and potentially conflicting laws and regulations; • overlapping, differing or more burdensome tax structure and laws; • markets for 5G infrastructure not developing in the manner or in the time periods we anticipate, including as a result of unfavorable developments with evolving laws and regulations worldwide; • wage inflation or a tightening of the labor market; • the impact of recessions and other economic conditions in economies outside the United States, including, for example, dips in the manufacturing Purchasing Managers Index as well as the Institute for Supply Management data in the Eurozone; • tax and customs changes that adversely impact our global sourcing strategy, manufacturing practices, transfer-pricing, or competitiveness of our products for global sales; • volatility in oil prices and increased costs, or limited supply of other natural resources; • political developments, geopolitical unrest or other conflicts in foreign nations, including the Russia-Ukraine war, the ongoing conflicts in the Middle East, the conflict between Cambodia and Thailand, and political developments in Hong Kong and Taiwan and the potential impact such developments or further actions could have on our customers in the markets in which we operate; and • the impact of the following on service provider and government spending patterns as well as our contract and internal manufacturing: political considerations, changes in or delays in government budgeting processes, unfavorable changes in tax treaties or laws, unfavorable events that affect foreign currencies on an absolute or relative basis, natural disasters, epidemic disease, labor unrest, earnings expatriation restrictions, misappropriation of intellectual property, military actions, acts of terrorism, political and social unrest and difficulties in staffing and managing international operations.
Thus, if the current economic conditions continue to deteriorate or experience a sustained period of weakness or slower growth, our business and financial results could be materially and adversely affected. Our ability to sell our products to a significant customer has been restricted. In August 2020, the Bureau of Industry and Security of the U.S.
Thus, if economic conditions deteriorate or experience a sustained period of weakness or slower growth, our business and financial results could be adversely affected. Our ability to sell our products to a significant customer has been restricted. In August 2020, the Bureau of Industry and Security of the U.S.
Challenges relating to supply chain constraints, including semiconductor components, could adversely impact our business, results of operations and financial condition. Due to increased demand across a range of industries, our business and customers’ businesses have experienced and could experience supply constraints due to both constrained manufacturing capacity, as well as component parts shortages.
Challenges relating to supply chain constraints, including semiconductor components, could adversely impact our business, results of operations and financial condition. Due to increased demand across a range of industries, our business and customers’ businesses have experienced and could, in the future, experience supply constraints due to both constrained manufacturing capacity, as well as component parts shortages.
We expect that the legal and regulatory environment relating to emerging technologies such as AI will continue to develop and could increase the cost of doing business, and create compliance risks and potential liability, all which may have a material adverse effect on our financial condition and results of operations.
We expect that the legal and regulatory environment relating to emerging technologies such as AI will continue to develop and could increase the cost of doing business, and create compliance risks and potential liability, all which may have an adverse effect on our financial condition and results of operations.
It is possible that our practices may be deemed not to comply with those privacy and data protection legal requirements that apply to us now or in the future.
It is possible that our practices may be deemed not to comply with those legal requirements relating to privacy, data protection and cybersecurity that apply to us now or in the future.
Adverse changes to and uncertainty in the global economy has affected industries in which our customers operate and has resulted in decreases in the rate of demand, consumption or use of certain of our customers’ products which, in turn, has resulted in, and may continue to result in decreased demand for our products, revenue fluctuations, increased price competition for our products, and increased the risk of excess and obsolete inventories as well as higher overhead costs as a percentage of revenue.
Adverse changes to and uncertainty in the global economy have affected industries in which our customers operate and have resulted in decreases in the rate of demand, consumption or use of certain of our customers’ products which, in turn, have resulted in, and may in the future result in, decreased demand for our products, revenue fluctuations, increased price competition for our products, and increased the risk of excess and obsolete inventories as well as higher overhead costs as a percentage of revenue.
In some cases, we may rely upon third-party providers of hosting, support and other services to meet our information technology requirements.
In some cases, we may rely on third-party providers of hosting, support and other services to meet our information technology requirements.
Due to these and other factors, the results of any prior periods should not be relied upon as an indication of future performance.
Due to these and other factors, the results of any prior periods should not be relied on as an indication of future performance.
These actions have resulted in escalating tensions between the U.S. and China and create the possibility that the Chinese government may take additional steps to retaliate against U.S. companies or industries. We are currently unable to supply any products to Huawei and we cannot predict whether we will again be able to sell to Huawei.
These actions have resulted in escalating tensions between the U.S. and China and create the possibility that the Chinese government may take additional steps to retaliate against U.S. companies or industries. We currently do not supply any products to Huawei, and we cannot predict whether we will again be able to sell to Huawei.
Additionally, changes in our or our suppliers' manufacturing processes or the inadvertent use of defective materials by us or our suppliers could result in a material and adverse effect on our ability to achieve acceptable manufacturing yields and product reliability.
Additionally, changes in our or our suppliers' manufacturing processes or the inadvertent use of defective materials by us or our suppliers could result in an adverse effect on our ability to achieve acceptable manufacturing yields and product reliability.
Our ability to hire and retain these workers and their ability to remain and work in the United States are impacted by laws and regulations, as well as by procedures and enforcement practices of various government agencies and global events such as COVID-19 may interfere with our ability to hire or retain workers who require visas or entry permits.
Our ability to hire and retain these workers and their ability to remain and work in the United States are impacted by laws and regulations, as well as by procedures and enforcement practices of various government agencies and global events that may interfere with our ability to hire or retain workers who require visas or entry permits.
Moreover, to the extent the governments of China, the United States or other countries seek to promote use of domestically produced products or to reduce the dependence upon or use of products from another (sometimes referred to as “decoupling”), they may adopt or apply regulations or policies that have the effect of reducing business opportunities for us.
Moreover, to the extent the governments of China, the United States or other countries seek to promote use of domestically produced products or to reduce the dependence on or use of products from each other (sometimes referred to as “decoupling”), they may adopt or apply regulations or policies that have the effect of reducing business opportunities for us.
Any or all of these factors could have a material and adverse impact on our business, financial condition, and results of operations. We are subject to the risks of owning real property.
Any or all of these factors could have an adverse impact on our business, financial condition, and results of operations. We are subject to the risks of owning real property.
Department of Commerce (“BIS”) issued final rules that further restricted access by Huawei Technologies Co. Ltd. (“Huawei”) to items produced domestically and abroad from U.S. technology and software. The final rules prevent us from selling certain products subject to the Export Administration Regulations (“EAR”) to identified Huawei entities without a license issued by BIS.
Department of Commerce (“BIS”) issued final rules that further restricted access by Huawei Technologies Co. Ltd. and certain of its affiliates (collectively, “Huawei”) to U.S. technology, software and equipment produced domestically and abroad. The final rules prevent us from selling certain products subject to the Export Administration Regulations (“EAR”) to identified Huawei entities without a license issued by BIS.
We are also subject to laws and regulations to our collection and other processing of personal data of our employees, customers and others. These laws and regulations are subject to frequent modifications and updates and require ongoing supervision.
We are also subject to laws and regulations relating to our collection, use, protection and other processing of personal data of our employees, customers and others. These laws and regulations are subject to frequent modifications and updates and require ongoing supervision.
We may find it necessary to make further changes to our handling of personal data of residents of the European Economic Area, Switzerland and the United Kingdom, each of which may require us to incur significant costs and expenses. New technology trends, such as AI, require us to keep pace with evolving regulations and industry standards.
We may find it necessary to make further changes to our handling of personal data of residents of the EEA, Switzerland and the United Kingdom, each of which may require us to incur significant costs and expenses. 35 New technology trends, such as AI, require us to keep pace with evolving regulations and industry standards.
The defense of these lawsuits could also result in continued diversion of our management’s time and attention away from business operations, which could harm our business. For additional discussion regarding litigation, refer to “Part I, Item 3. Legal Proceedings,” and “Note 16.
The defense of these lawsuits could also result in continued diversion of our management’s time and attention away from business operations, which could harm our business. For additional discussion regarding litigation, refer to “Part I, Item 3. Legal Proceedings,” and “Note 16. Commitments and Contingencies” to the consolidated financial statements.
We rely on a limited number of customers for a significant portion of our sales; and the majority of our customers do not have contractual purchase commitments.
We rely on a limited number of customers for a significant portion of our sales; and the majority of our customers do not have contractual purchase commitments. We have consistently relied on a small number of customers for a significant portion of our sales.
Major developments in tax policy or trade relations, such as the imposition of tariffs on imported products, for example, tariffs on the import of certain products manufactured in China, could increase our product and product-related costs or require us to seek alternative suppliers, either of which could result in decreased sales or increased product and product-related costs.
Major developments in tax policy or trade relations, such as the imposition of tariffs on imported products, for example, higher U.S. tariffs on the import of certain products manufactured in Thailand or China (and vice-versa), could increase our product and product-related costs or require us to seek alternative suppliers, either of which could result in decreased sales or increased product and product-related costs.
If we or our suppliers fail to comply with such laws or regulations, we could face sanctions for such noncompliance, and our customers may refuse to purchase our products, which would have a material adverse effect on our business, financial condition and results of operations.
If we or our suppliers fail or are perceived to fail to comply with such laws or regulations, we could face sanctions for such noncompliance, and our customers may refuse to purchase our products, which would have an adverse effect on our business, financial condition and results of operations.
The ultimate impact of a widespread health crisis on our operations and financial performance depends on many factors that are not within our control, including, but not limited, to: governmental, business and individuals’ actions that have been and continue to be taken in response to the pandemic; the impact of the pandemic and actions taken in response on global and regional economies, travel, and economic activity; general economic uncertainty in key global markets and financial market volatility, including increasing levels of inflation in the United States; and global economic conditions and levels of economic growth.
The ultimate impact of any future widespread health crisis on our operations and financial performance depends on many factors that are not within our control, including, but not limited, to: governmental, business and individuals’ actions may be taken in response to the crisis; the impact of the crisis and actions taken in response on global and regional economies, travel, and economic activity; general economic uncertainty in key global markets and financial market volatility, including increasing levels of inflation in the United States; and global economic conditions and levels of economic growth.
Department of Commerce, additional regulatory restrictions were imposed in May and August 2020 and in October 2022 to the Foreign-Produced Direct Product Rule, which impose limitations on the supply of certain U.S. items and product support to Huawei, and FiberHome Technologies was added to the Entity List on May 22, 2020.
For example, on May 16, 2019, Huawei was added to the Entity List, additional regulatory restrictions were imposed in May and August 2020 and in October 2022 to the Foreign-Produced Direct Product Rule, which impose limitations on the supply of certain U.S. items and product support to Huawei, and FiberHome Technologies was added to the Entity List on May 22, 2020.
For example, it could: • make it more difficult for us to satisfy our debt obligations under the convertible notes ; • increase our vulnerability to general adverse economic and industry conditions; • require us to dedicate a substantial portion of our cash flow from operations to payments on our indebtedness, thereby reducing the availability of our cash flow to fund working capital and other general corporate purposes; • limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate; • restrict us from exploiting business opportunities; • place us at a competitive disadvantage compared to our competitors that have less indebtedness; and • limit our availability to borrow additional funds for working capital, capital expenditures, acquisitions, debt service requirements, execution of our business strategy or other general purposes Transactions relating to our convertible notes may dilute the ownership interest of existing stockholders, or may otherwise depress the price of our common stock.
For example, it could: • make it more difficult for us to satisfy our debt obligations under the convertible notes ; • increase our vulnerability to general adverse economic and industry conditions; • require us to dedicate a substantial portion of our cash flow from operations to payments on our indebtedness, thereby reducing the availability of our cash flow to fund working capital and other general corporate purposes; • limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate; • restrict us from exploiting business opportunities; • place us at a competitive disadvantage compared to our competitors that have less indebtedness; and • limit our availability to borrow additional funds for working capital, capital expenditures, acquisitions, debt service requirements, execution of our business strategy or other general purposes.
If we raise additional funds through future issuances of equity, equity-linked or convertible debt securities, our existing stockholders could suffer significant dilution, and any new equity securities we issue could have rights, preferences and privileges superior to those of holders of our common stock.
We may in the future engage in additional equity or debt financings to secure additional funds. If we raise additional funds through future issuances of equity, equity-linked or convertible debt securities, our existing stockholders could suffer significant dilution, and any new equity securities we issue could have rights, preferences and privileges superior to those of holders of our common stock.
These include: • general economic and market conditions and other external factors; • changes in global economic conditions, including those resulting from trade tensions, rising inflation, and fluctuations in foreign currency exchange and interest rates; • speculation in the press or investment community about our strategic position; • actual or anticipated fluctuations in our quarterly or annual operating results; • changes in earnings estimates by securities analysts or our ability to meet those estimates; • the operating and stock price performance of other comparable companies; • a shift in our investor base; • the financial performance of other companies in our industry, and of our customers; • general market, economic and political conditions, including market conditions in the semiconductor industry; • pandemics and similar major health concerns, including the COVID-19 pandemic; • success or failure of our business strategy; • credit market fluctuations which could negatively impact our ability to obtain financing as needed; • changes in governmental regulation including taxation and tariff policies; • changes in global political tensions that may affect business with our customers; • announcements by us, competitors, customers, or our contract manufacturers of significant acquisitions or dispositions, strategic alliances or overall movement toward industry consolidations among our customers and competitors; • investor perception of us and our industry; • changes in recommendations by securities analysts; • changes in accounting standards, policies, guidance, interpretations or principles; • differences, whether actual or perceived, between our corporate social responsibility and ESG practices and disclosure and investor expectations; • litigation or disputes in which we may become involved; • overall market fluctuations; • issuances of our shares upon conversion of some or all of the convertible notes; • sales of our shares by our officers, directors, or significant stockholders; and • the timing and amount of share repurchases, if any.
These include: • general economic and market conditions and other external factors; • changes in global economic conditions, including those resulting from trade tensions, rising inflation, and fluctuations in foreign currency exchange and interest rates; • speculation in the press or investment community about our strategic position; • actual or anticipated fluctuations in our quarterly or annual operating results; • changes in earnings estimates by securities analysts or our ability to meet those estimates; • the operating and stock price performance of other comparable companies; • a shift in our investor base; • the financial performance of other companies in our industry, and of our customers; • general market, economic and political conditions, including market conditions in the semiconductor industry; • pandemics and similar major health concerns; • success or failure of our business strategy; • credit market fluctuations which could negatively impact our ability to obtain financing as needed; • changes in governmental regulation including taxation and tariff policies; • changes in global political tensions that may affect business with our customers, such as trade wars caused by or resulting in the imposition of heightened or scheduled proposed tariffs or the possibility of future tariffs; • announcements by us, competitors, customers, or our contract manufacturers of significant acquisitions or dispositions, strategic alliances or overall movement toward industry consolidations among our customers and competitors; • investor perception of us and our industry; • changes in recommendations by securities analysts; • changes in accounting standards, policies, guidance, interpretations or principles; • differences, whether actual or perceived, between our corporate social responsibility and ESG practices and disclosure and government or customer, business partner, investor or other stakeholder expectations; 36 • litigation or disputes in which we may become involved; • overall market fluctuations; • issuances of our shares upon conversion of some or all of the convertible notes; and • sales of our shares by our officers, directors, or significant stockholders.
As a result of our international operations, in addition to similar risks we face in our U.S. operations, we are affected by economic, business, regulatory, social, and political conditions in foreign countries, including the following: • adverse social, political and economic conditions, such as inflation, rising interest rates and risk of global or regional recession; • effects of adverse changes in currency rates; • impacts related to business disruptions and restrictions related to pandemics and endemics, such as COVID-19, including supply chain disruptions and labor shortages and differential impacts in different regions and geographies; • changes in general IT spending; • less effective protection of intellectual property; • the imposition of government controls, inclusive of critical infrastructure protection; • changes in or limitations imposed by trade protection laws or other regulatory orders or requirements in the United States or in other countries, including tariffs, sanctions, or other costs or requirements which may affect our ability to import or export our products from various countries or increase the cost to do so, including government action to restrict our ability to sell to foreign customers where sales of products may require export licenses (See Risk Factor entitled “Our ability to sell our products to a significant customer has been restricted”); the restrictions in China on the export of gallium and germanium; and increased tariffs on various products that have been proposed and implemented by the U.S. government and other non-U.S. governments; • the imposition of sanctions on customers in China may cause those customers to seek domestic alternatives to our products, including developing alternatives internally, and our customers demand for our products could be impacted by their inability to obtain other materials subject to sanctions.
As a result of our international operations, in addition to similar risks we face in our U.S. operations, we are affected by economic, business, regulatory, social, and political conditions in foreign countries, including the following: • adverse social, political and economic conditions, such as inflation, high interest rates and risk of global or regional recession; • effects of adverse changes in currency rates; • impacts related to business disruptions and restrictions related to pandemics and endemics, including supply chain disruptions and labor shortages and differential impacts in different regions and geographies; • changes in general IT spending; • less effective protection of intellectual property; • the imposition of government controls, inclusive of critical infrastructure protection; • changes in or limitations imposed by trade protection laws or other regulatory orders or requirements in the United States or in other countries, including changes in the trade policies of the U.S. and its trading partners, heightened, scheduled, or threatened tariffs, sanctions, or other costs or requirements which may affect our ability to import or export our products from various countries or increase the cost to do so, including government action to restrict our ability to sell to foreign customers where sales of products may require export licenses (See Risk Factor entitled “Our ability to sell our products to a significant customer has been restricted”); the restrictions in China on the export of gallium and germanium and other rare earth metals and critical minerals; and other retaliatory responses in the trade policies of the U.S. or foreign governments; • the imposition of sanctions on customers in China may cause those customers to seek domestic alternatives to our products, including developing alternatives internally, and our customers demand for our products could be impacted by their inability to obtain other materials subject to sanctions.
If substantial modifications to our international structure or the way we operate our business are made, such as if future acquisitions or divestitures occur, if changes in domestic and international tax laws negatively impact the structure, if we do not operate our business consistent with the structure and applicable tax provisions, if we fail to achieve our revenue and profit goals, or if the international structure or our application of arm’s-length principles to intercompany arrangements is successfully challenged by the U.S. or foreign tax authorities, our effective tax rate may increase, which could have a material adverse effect on our operating and financial results.
If substantial modifications to our international structure or the way we operate our business are made, such as if future acquisitions or divestitures occur, if we or our customers or suppliers change our logistics, if changes in domestic and international tax laws negatively impact the structure, if we do not operate our business consistent with the structure and applicable tax provisions, if we fail to achieve our revenue and profit goals, or if the international structure or our application of arm’s-length principles to intercompany arrangements is successfully challenged by the U.S. or foreign tax authorities, our effective tax rate may increase, which could have an adverse effect on our operating and financial results. 25 Changes in tax laws could have an adverse effect on our business, cash flow, results of operations or financial conditions.
Furthermore, the COVID-19 pandemic and related supply chain disruptions and labor market constraints have created heightened risk that sole suppliers or limited number of suppliers may be unable to meet their obligations to us.
Furthermore, supply chain disruptions and labor market constraints have created heightened risk that sole suppliers or limited number of suppliers may be unable to meet their obligations to us.
Our gross margins, operating margins and segment profit are expected to vary, and may be adversely affected in the future by numerous factors, including, but not limited to: • an increase or decrease in demand of our products; • changes in product mix; • increased price competition in one or more of the markets in which we compete; • modifications to our pricing strategy to gain or retain footprint in markets or with customers; • currency fluctuations that impact our costs or the cost of our products to our customers; • inflation; • increases in material, labor, manufacturing, logistics, warranty costs, or inventory carrying costs; • issues with manufacturing or component availability; • issues relating to the distribution of our products, quality or efficiencies; 15 • increased costs due to changes in component pricing or charges incurred due to the inaccurately forecasting product demand or underutilization of manufacturing capacity; • warranty related issues; • factors beyond our control such as natural disasters, climate change, acts of war or terrorism, and public health emergencies; • changing market, economic, and political conditions, including the impact of tariffs and other trade restrictions, regulatory restrictions on imports or exports or efforts to withdraw from or materially modify international trade agreements, or • our introduction of new products and enhancements, or entry into new markets with different pricing and cost structures.
Our gross margins, operating margins and segment profit are expected to vary, and may be adversely affected in the future by numerous factors, including, but not limited to: • an increase or decrease in demand of our products; • changes in product mix; • increased price competition in one or more of the markets in which we compete; • modifications to our pricing strategy to gain or retain footprint in markets or with customers; • currency fluctuations that impact our costs or the cost of our products to our customers; • the impact of inflation on costs and on demand for our products; • increases in material, labor, manufacturing, logistics, warranty costs, or inventory carrying costs; • issues with manufacturing or component availability; • issues relating to the distribution of our products, quality or efficiencies; • increased costs due to changes in component pricing or charges incurred due to the inaccurately forecasting product demand or underutilization of manufacturing capacity; • warranty related issues; • factors beyond our control such as natural disasters, climate change, acts of war or terrorism, and public health emergencies; 16 • changing market, economic, and political conditions, including the impact of changes in the trade policies of the U.S. or its trading partners, heightened, scheduled or threatened tariffs, changes in the applicable trade restrictions, including for certain rare earth minerals, any retaliatory actions in response thereto, and other trade restrictions, regulatory restrictions on imports or exports to withdraw from or materially modify international trade agreements, or • our introduction of new products and enhancements, or entry into new markets with different pricing and cost structures.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeOur cybersecurity program is led by our CISO who manages a team of cybersecurity professionals. Our CISO has over 20 years of experience in cybersecurity and technology, including as a CISO at another public company. Members of our cybersecurity team, combined, have over 80 years of cybersecurity experience and hold professional certifications, including Certified Information Systems Security Professional (“CISSP”).
Biggest changeOur cybersecurity program is led by our CISO, who manages a team of cybersecurity professionals. Our CISO has over 20 years of experience in cybersecurity and technology, including as a CISO at another public company.
Additionally, in furtherance of assessing, identifying, and managing material cybersecurity risks, we: • Leverage technology solutions to provide protection for our assets and detect threats in our environment; • Regular vulnerability assessments and penetration testing to identify, assess, and remediate weaknesses; • Maintain an enterprise-wide disaster recovery governance program, which includes cybersecurity-related disaster recovery policies and procedures related thereto; • Regularly perform cybersecurity-related disaster recovery testing designed to ensure that the Company’s mission-critical systems are recoverable, in support of our business continuity needs; and • Work with each of our business and corporate groups with our internal cybersecurity program to integrate cybersecurity requirements into operating environments as appropriate, which drives business strategies, budgeting, 37 and similar processes.
Additionally, in furtherance of assessing, identifying, and managing material cybersecurity risks, we: • Leverage technology solutions designed to provide protection for our assets and detect threats in our environment; • Regular vulnerability assessments and penetration testing in efforts to identify, assess, and remediate weaknesses; • Maintain an enterprise-wide disaster recovery governance program, which includes cybersecurity-related disaster recovery policies and procedures related thereto; • Regularly perform cybersecurity-related disaster recovery testing designed to ensure that the Company’s mission-critical systems are recoverable, in support of our business continuity needs; and • Work with each of our business and corporate groups with our internal cybersecurity program to integrate cybersecurity requirements into operating environments as appropriate, which drives business strategies, budgeting, and similar processes.
For additional information regarding whether any risks from cybersecurity threats are reasonably likely to materially affect our company, including our business strategy, results of operations, or financial condition, please refer to Item 1A, “Risk Factors - Any failure, disruption or security breach or incident of or impacting our information technology infrastructure or information systems have an adverse impact on our business and operations.” We believe that risks from prior cybersecurity threats, including as a result of any previous cybersecurity incidents, have not materially affected our business to date.
For additional information regarding whether any risks from cybersecurity threats are reasonably likely to materially affect our company, including our business strategy, results of operations, or financial condition, please refer to Item 1A, “Risk Factors - Any failure, disruption or security breach or incident of or impacting our information technology infrastructure or information management systems could have an adverse impact on our business and operations.” We believe that risks from prior cybersecurity threats, including as a result of any previous cybersecurity incidents, have not materially affected our business to date.
In addition, executive management, as well as our Board, regularly review our financial planning processes for these areas, inclusive of our cybersecurity programs. Changes or additions to our cybersecurity risk assessment program and related practices and procedures described above in response to cybersecurity needs are reviewed by our Cybersecurity Steering Committee (“CSC”), which is an executive management-level cross-functional group.
In addition, executive management, as well as our Board, regularly review our financial planning processes for these areas, inclusive of our cybersecurity programs. Changes or additions to our cybersecurity risk assessment program and related practices and procedures described above in response to cybersecurity needs are reviewed by our Cybersecurity Steering Committee (“CSC”), an executive management-level cross-functional group.
We maintain an enterprise-wide cybersecurity risk assessment program and framework that is designed to identify, assess, and manage cybersecurity risk, vulnerabilities, and threats. The foundation of our cybersecurity program is based on the International Organization for Standardization (ISO) and the National Institute of Standards and Technology ("NIST") Cybersecurity Framework.
We maintain an enterprise-wide cybersecurity risk assessment program and framework that is designed to identify, assess, and manage cybersecurity risk, vulnerabilities, and threats. The 38 foundation of our cybersecurity program is based on the International Organization for Standardization (“ISO”) and the National Institute of Standards and Technology ("NIST") Cybersecurity Framework.
As noted above, we also maintain a Cybersecurity Steering Committee, or CSC, which consists of our Group Vice President, IT and CISO, Executive Vice President, Chief Financial Officer, Executive Vice President, Chief Human Resources Officer, Senior Vice President, General Counsel, Senior Vice President, Global Operations, Senior Vice President, Chief Accounting Officer, and Vice President, Internal Audit.
As noted above, we also maintain a CSC, which consists of our Group Vice President, IT and CISO, Executive Vice President, Chief Financial Officer, Senior Vice President, Chief Human Resources Officer, Senior Vice President, General Counsel, Executive Vice President, Global Operations, Senior Vice President, Chief Accounting Officer, and Vice President, Internal Audit.
This includes review and monitoring of the third party, and inclusion of cybersecurity requirements in contractual agreements to ensure third party services meet our standards for such providers, and the cybersecurity risks associated with the use of these services is appropriate.
This includes review and monitoring of the third party, and inclusion of cybersecurity requirements in contractual agreements to help ensure third party services meet our standards for such providers and that the cybersecurity risks associated with the use of these services are appropriate.
The CSC group has the primary day to day responsibility to monitor and manage cybersecurity risks. The CSC provides oversight of the cybersecurity initiatives within Lumentum and is responsible integrating cybersecurity risk management practices with critical business processes so that cybersecurity is appropriately addressed throughout Lumentum. 38
The CSC has the primary day to day responsibility to monitor and manage cybersecurity risks. The CSC provides oversight of cybersecurity initiatives within Lumentum and is responsible for integrating cybersecurity risk management practices with critical business processes to help ensure that cybersecurity is appropriately addressed throughout Lumentum. 39
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Members of our cybersecurity team, combined, have over 80 years of cybersecurity experience and members of the team hold various professional certifications, including Certified Information Systems Security Professional (“CISSP”).

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeOur lease of the building at the premises was terminated as a result of the purchase.
Biggest changeOur lease of the building at the premises was terminated as a result of the purchase. In March 2025, we completed a transaction to sell the land and building of the 250,000 square feet manufacturing facility located in Shenzhen, China.
Leased sites include properties located in Canada, China, Italy, Japan, Switzerland, Taiwan, the United Kingdom, the United States, Brazil and South Korea. We believe our existing properties, including both owned and leased sites, are in good condition and suitable for the conduct of our business. From time-to-time we consider various alternatives related to our long-term facilities’ needs.
Leased sites include properties located in Canada, China, Hong Kong, Italy, Japan, Switzerland, Taiwan, the United Kingdom, the United States, Brazil and South Korea. We believe our existing properties, including both owned and leased sites, are in good condition and suitable for the conduct of our business. From time-to-time we consider various alternatives related to our long-term facilities’ needs.
ITEM 2. PROPERTIES We own and lease various properties in the United States and eleven other countries around the world. We use the properties for executive and administrative offices, data centers, product development offices, customer service offices and manufacturing facilities. Our current corporate headquarters, which we own, is approximately 238,000 square feet and located in San Jose, California.
ITEM 2. PROPERTIES We own and lease various properties in the United States and eleven other countries around the world. We use the properties for executive and administrative offices, product development offices, customer service offices and manufacturing facilities. Our current corporate headquarters, which we own, is approximately 238,000 square feet and located in San Jose, California.
As of June 29, 2024, our leased and owned properties in total are approximately 3,350,000 square feet, of which we own approximately 2,147,000 square feet, including the 1,173,000 square feet manufacturing sites in Thailand, the 183,000 square feet manufacturing site in the United Kingdom, the 250,000 square feet manufacturing sites in China, the 238,000 square feet on the San Jose campus, the 130,000 square feet manufacturing and R&D site in Japan, and the 36,000 square feet manufacturing and R&D sites in Slovenia.
As of June 28, 2025, our leased and owned properties in total are approximately 3,100,000 square feet, of which we own approximately 2,147,000 square feet, including the 1,173,000 square feet manufacturing sites in Thailand, the 183,000 square feet manufacturing site in the United Kingdom, the 238,000 square feet on the San Jose campus, the 472,000 square feet manufacturing and R&D site in Japan, and the 36,000 square feet manufacturing and R&D sites in Slovenia.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeRecent Sale of Unregistered Equity Securities None. 40 Issuer Purchases of Equity Securities The following table sets forth issuer purchases of equity securities for the fourth quarter of fiscal 2024 ( in millions, except share and per share amounts ): Period Total number of shares purchased Average price paid per share (1) Total number of shares purchased as part of publicly announced plans or programs Maximum number (or approximation dollar value) of shares that may yet be purchased under the plans or programs (2) March 31, 2024 to April 27, 2024 $ 569.6 April 28, 2024 to June 1, 2024 $ 569.6 June 2, 2024 to June 29, 2024 $ 569.6 Total — $ — — $ 569.6 (1) Average price paid per share includes costs associated with the repurchases.
Biggest changeRecent Sale of Unregistered Equity Securities None. 41 Issuer Purchases of Equity Securities The following table sets forth issuer purchases of equity securities for the fourth quarter of fiscal year 2025 ( in millions, except share and per share amounts ): Period Total number of shares purchased Average price paid per share Total number of shares purchased as part of publicly announced plans or programs Maximum number (or approximation dollar value) of shares that may yet be purchased under the plans or programs (1) March 30, 2025 to April 26, 2025 $ 569.6 April 27, 2025 to May 24, 2025 $ 569.6 May 25, 2025 to June 28, 2025 $ 569.6 Total — $ — — $ 569.6 (1) On May 7, 2021, our board of directors approved the 2021 share buyback program, which authorizes us to use up to $700.0 million to purchase our own shares of common stock.
The following graph compares the cumulative total return of our common stock with the total return for the NASDAQ Composite Index (the “IXIC”) and the NASDAQ 100 Technology Sector Index (the “NDXT”) from market close on June 29, 2018 (the last trading day before the beginning of our fifth preceding fiscal year) through June 29, 2024.
The following graph compares the cumulative total return of our common stock with the total return for the Nasdaq Composite Index (the “IXIC”) and the Nasdaq 100 Technology Sector Index (the “NDXT”) from market close on June 26, 2020 (the last trading day before the beginning of our fifth preceding fiscal year) through June 28, 2025.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our common stock trades on the NASDAQ Stock Market under the symbol “LITE”. According to records of our transfer agent, we had 2,044 stockholders of record as of August 14, 2024, and we believe there is a substantially greater number of beneficial holders.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our common stock trades on the Nasdaq Global Select Market under the symbol “LITE”. According to records of our transfer agent, we had 1,883 stockholders of record as of August 12, 2025, and we believe there is a substantially greater number of beneficial holders.
On April 5, 2023, our board of directors approved a further increase in our share buyback program, which authorizes us to use up to an aggregate amount of $1.2 billion (an increase from $1.0 billion) to purchase our own shares of common stock through May 2025, but may be suspended or terminated at any time . ITEM 6. [RESERVED] 41
On April 5, 2023, our board of directors approved a further increase in our share buyback program, which authorized us to use up to an aggregate amount of $1.2 billion (an increase from $1.0 billion ) to purchase our own shares of common stock through May 2025 . Our share buyback program expired in May 2025. ITEM 6. [RESERVED] 42
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(2) On May 7, 2021, our board of directors approved the 2021 share buyback program, which authorizes us to use up to $700.0 million to purchase our own shares of common stock.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeThe following table summarizes selected consolidated statements of operations items as a percentage of net revenue: Years Ended June 29, 2024 July 1, 2023 July 2, 2022 Segment net revenue: Cloud & Networking 79.8 % 74.8 % 58.9 % Industrial Tech 20.2 25.2 41.1 Net revenue 100.0 100.0 100.0 Cost of sales 75.3 63.0 50.3 Amortization of acquired developed intangibles 6.2 4.8 3.7 Gross profit 18.5 32.2 46.0 Operating expenses: Research and development 22.2 17.4 12.9 Selling, general and administrative 22.9 19.7 15.5 Restructuring and related charges 5.3 1.6 (0.1) Total operating expenses 50.4 38.7 28.3 Income (loss) from operations (31.9) (6.5) 17.7 Interest expense (2.5) (2.0) (4.7) Other income, net 4.6 2.8 0.7 Income (loss) before income taxes (29.8) (5.7) 13.7 Income tax provision 10.4 1.7 2.1 Net income (loss) (40.2) % (7.4) % 11.6 % Financial Data for Fiscal 2024, 2023, and 2022 The following table summarizes selected consolidated statements of operations items ( in millions, except for percentages ): 2024 2023 Change Percentage Change 2023 2022 Change Percentage Change Segment net revenue: Cloud & Networking $ 1,084.9 $ 1,322.5 $ (237.6) (18.0) % $ 1,322.5 $ 1,008.7 $ 313.8 31.1 % Industrial Tech 274.3 444.5 (170.2) (38.3) 444.5 703.9 (259.4) (36.9) Net revenue $ 1,359.2 $ 1,767.0 $ (407.8) (23.1) % $ 1,767.0 $ 1,712.6 $ 54.4 3.2 % Gross profit $ 251.5 $ 569.0 $ (317.5) (55.8) % $ 569.0 $ 788.6 $ (219.6) (27.8) % Gross margin 18.5 % 32.2 % 32.2 % 46.0 % Research and development $ 302.2 $ 307.8 $ (5.6) (1.8) % $ 307.8 $ 220.7 $ 87.1 39.5 % Percentage of net revenue 22.2 % 17.4 % 17.4 % 12.9 % Selling, general and administrative $ 310.7 $ 348.8 $ (38.1) (10.9) % $ 348.8 $ 265.7 $ 83.1 31.3 % Percentage of net revenue 22.9 % 19.7 % 19.7 % 15.5 % Restructuring and related charges $ 72.6 $ 28.1 $ 44.5 158.4 % $ 28.1 $ (1.1) $ 29.2 n/a Percentage of net revenue 5.3 % 1.6 % 1.6 % (0.1) % 49 Net Revenue Net revenue decreased by $407.8 million, or 23.1%, during fiscal 2024 as compared to fiscal 2023, due to a $237.6 million decrease in Cloud & Networking revenue and a $170.2 million decrease in Industrial Tech revenue.
Biggest changeThe following table summarizes selected consolidated statements of operations items as a percentage of net revenue: Years Ended June 28, 2025 June 29, 2024 July 1, 2023 Segment net revenue: Cloud & Networking 85.8 % 79.8 % 74.8 % Industrial Tech 14.2 20.2 25.2 Net revenue 100.0 100.0 100.0 Cost of sales 67.0 75.3 63.0 Amortization of acquired developed intangibles 5.0 6.2 4.8 Gross profit 28.0 18.5 32.2 Operating expenses: Research and development 18.5 22.2 17.4 Selling, general and administrative 21.2 22.9 19.7 Restructuring and related charges 1.4 5.3 1.6 Gain on sale of facility (2.1) — — Total operating expenses 38.9 50.4 38.7 Loss from operations (10.9) (31.9) (6.5) Interest expense (1.3) (2.5) (2.0) Other income, net 1.8 4.6 2.8 Loss before income taxes (10.5) (29.8) (5.7) Income tax (benefit) provision (12.0) 10.4 1.7 Net income (loss) 1.6 % (40.2) % (7.4) % 50 Financial Data for Fiscal Years 2025, 2024, and 2023 The following table summarizes selected consolidated statements of operations items ( in millions, except for percentages ): 2025 2024 Change Percentage Change 2024 2023 Change Percentage Change Segment net revenue: Cloud & Networking $ 1,410.8 $ 1,084.9 $ 325.9 30.0 % $ 1,084.9 $ 1,322.5 $ (237.6) (18.0) % Industrial Tech 234.2 274.3 (40.1) (14.6) 274.3 444.5 (170.2) (38.3) Net revenue $ 1,645.0 $ 1,359.2 $ 285.8 21.0 % $ 1,359.2 $ 1,767.0 $ (407.8) (23.1) % Gross profit $ 459.9 $ 251.5 $ 208.4 82.9 % $ 251.5 $ 569.0 $ (317.5) (55.8) % Gross margin 28.0 % 18.5 % 18.5 % 32.2 % Research and development $ 303.9 $ 302.2 $ 1.7 0.6 % $ 302.2 $ 307.8 $ (5.6) (1.8) % Percentage of net revenue 18.5 % 22.2 % 22.2 % 17.4 % Selling, general and administrative $ 348.2 $ 310.7 $ 37.5 12.1 % $ 310.7 $ 348.8 $ (38.1) (10.9) % Percentage of net revenue 21.2 % 22.9 % 22.9 % 19.7 % Restructuring and related charges $ 22.8 $ 72.6 $ (49.8) (68.6) % $ 72.6 $ 28.1 $ 44.5 158.4 % Percentage of net revenue 1.4 % 5.3 % 5.3 % 1.6 % Gain on sale of facility $ (34.9) $ — $ (34.9) — % $ — $ — $ — n/a Percentage of net revenue (2.1) % — % — % — % Net Revenue Net revenue increased by $285.8 million, or 21.0%, during fiscal year 2025 as compared to fiscal year 2024, due to a $325.9 million increase in Cloud & Networking net revenue offset by a $40.1 million decrease in Industrial Tech net revenue.
For more information on risks associated with supply chain constraints and customer inventory, refer to Item 1A “Risk Factors” of this Annual Report. Critical Accounting Policies and Estimates Our consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) as set forth in the Financial Accounting Standards Board’s Accounting Standards Codification (“ASC”).
For more information on risks associated with supply chain constraints and customer inventory, refer to Item 1A “Risk Factors” of this Annual Report. 44 Critical Accounting Policies and Estimates Our consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) as set forth in the Financial Accounting Standards Board’s Accounting Standards Codification (“ASC”).
Applying the practical expedient, we recognize commissions as expense when incurred, as the amortization period of the commission asset we would have otherwise recognized is less than one year. 45 Contract Balances We record accounts receivable when we have an unconditional right to consideration. Contract liabilities are recorded when cash payments are received or due in advance of performance.
Applying the practical expedient, we recognize commissions as expense when incurred, as the amortization period of the commission asset we would have otherwise recognized is less than one year. Contract Balances We record accounts receivable when we have an unconditional right to consideration. Contract liabilities are recorded when cash payments are received or due in advance of performance.
Changes to these estimates or a change in judgment may have a material impact on our tax provision in a future period. 46 Business Combinations In accordance with the guidance for business combinations, we determine whether a transaction or event is a business combination, which requires that the assets acquired and liabilities assumed constitute a business.
Changes to these estimates or a change in judgment may have a material impact on our tax provision in a future period. Business Combinations In accordance with the guidance for business combinations, we determine whether a transaction or event is a business combination, which requires that the assets acquired and liabilities assumed constitute a business.
Tax laws themselves are subject to change as a result of changes in fiscal policy, changes in legislation, and the evolution of regulations and court rulings and tax audits. The recognition and measurement of current taxes payable or refundable and deferred tax assets and liabilities requires that we make certain estimates and judgments.
Tax laws themselves are subject to change as a result of changes in fiscal policy, changes in legislation, and the evolution of regulations and court rulings and tax audits. 47 The recognition and measurement of current taxes payable or refundable and deferred tax assets and liabilities requires that we make certain estimates and judgments.
These estimates and assumptions include, among others, revenue growth rates and operating margins used to calculate projected future cash flows, risk-adjusted discount rates, future economic and market conditions, and the determination of appropriate market comparables. 47 We make judgments about the recoverability of purchased finite lived intangible assets whenever events or changes in circumstances indicate that impairment may exist.
These estimates and assumptions include, among others, revenue growth rates and operating margins used to calculate projected future cash flows, risk-adjusted discount rates, future economic and market conditions, and the determination of appropriate market comparables. 48 We make judgments about the recoverability of purchased finite-lived intangible assets whenever events or changes in circumstances indicate that impairment may exist.
Our estimates of forecasted demand are based upon our analysis and assumptions including, but not limited to, expected product lifecycles, product development plans and historical usage by product. Our product line management personnel play a key role in our excess review process by providing updated sales forecasts, managing product transitions and working with manufacturing to minimize excess inventory.
Our estimates of forecasted demand are based on our analysis and assumptions including, but not limited to, expected product lifecycles, product development plans and historical usage by product. Our product line management personnel play a key role in our excess review process by providing updated sales forecasts, managing product transitions and working with manufacturing to minimize excess inventory.
Revenue Recognition Pursuant to Topic 606, we recognize our revenues upon the application of the following steps: • identification of the contract, or contracts, with a customer; • identification of the performance obligations in the contract; • determination of the transaction price; • allocation of the transaction price to the performance obligations in the contract; and • recognition of revenues when, or as, the contractual performance obligations are satisfied. 44 The majority of our revenue comes from product sales, consisting of sales of hardware products to our customers.
Revenue Recognition Pursuant to Topic 606, we recognize our revenues upon the application of the following steps: • identification of the contract, or contracts, with a customer; • identification of the performance obligations in the contract; • determination of the transaction price; • allocation of the transaction price to the performance obligations in the contract; and • recognition of revenues when, or as, the contractual performance obligations are satisfied. 45 The majority of our revenue comes from product sales, consisting of sales of hardware products to our customers.
Critical estimates in valuing intangible assets include, but are not limited to, discount rates, the period required for customer revenues to mature, and future expected cash flows from customer relationships, acquired developed technology and acquired in-process research and development assets. Our estimates of fair value are based upon assumptions using the best information available.
Critical estimates in valuing intangible assets include, but are not limited to, discount rates, the period required for customer revenues to mature, and future expected cash flows from customer relationships, acquired developed technology and acquired in-process research and development assets. Our estimates of fair value are based on assumptions using the best information available.
I f the closing price of our stock exceeds $129.08 (130% of the conversion price of $99.29) for 20 of the last 30 trading days of any future fiscal quarter, our 2026 Notes would become convertible at the option of the holders during the subsequent fiscal quarter and the debt component would be reclassified to current liabilities.
I f the closing price of our stock exceeds $129.08 (130% of the conversion price of $99.29 ) for 20 of the last 30 trading days of any future fiscal quarter, our 2026 Notes would become convertible at t he option of the holders during the subsequent fiscal quarter and the debt component would be reclassified to current liabilities.
Certain estimates associated with the accounting for acquisitions may change as additional information becomes available regarding the assets acquired and liabilities assumed. Any change in facts and circumstances that existed as of the acquisition date and impacts to our preliminary estimates is recorded to goodwill if identified within the measurement period.
Certain estimates associated with the accounting for acquisitions may change as additional information becomes available regarding the assets acquired and liabilities assumed. Any change in facts and circumstances that existed as of the acquisition date and impacts to our preliminary estimates are recorded to goodwill if identified within the measurement period.
Our income tax provision is highly dependent upon the geographic distribution of our worldwide earnings or losses, tax laws and regulations in various jurisdictions, tax incentives, the availability of tax credits and loss carryforwards, and the effectiveness of our tax planning strategies. The application of tax laws and regulations is subject to legal and factual interpretation, judgment and uncertainty.
Our income tax provision is highly dependent on the geographic distribution of our worldwide earnings or losses, tax laws and regulations in various jurisdictions, tax incentives, the availability of tax credits and loss carryforwards, and the effectiveness of our tax planning strategies. The application of tax laws and regulations is subject to legal and factual interpretation, judgment and uncertainty.
In such situations, we are required to evaluate whether the net book values of our finite lived intangible assets are recoverable. We determine whether finite lived intangible assets are recoverable based upon the forecasted future cash flows that are expected to be generated by the lowest level associated asset grouping.
In such situations, we are required to evaluate whether the net book values of our finite-lived intangible assets are recoverable. We determine whether finite-lived intangible assets are recoverable based on the forecasted future cash flows that are expected to be generated by the lowest level associated asset grouping.
However, in some instances depending upon the product, specific market, product line and geography in which we operate, and what is common in the industry, our warranties can vary and range from six months to five years.
However, in some instances depending on the product, specific market, product line and geography in which we operate, and what is common in the industry, our warranties can vary and range from six months to five years.
We believe that the estimates, judgments and assumptions upon which we rely are reasonable based upon information available to us at the time that we make these estimates, judgments and assumptions.
We believe that the estimates, judgments and assumptions on which we rely are reasonable based on information available to us at the time that we make these estimates, judgments and assumptions.
The markets in which we sell products are undergoing product, architectural and business model transitions, have high customer concentrations, are highly competitive, are price sensitive and/or are affected by customer seasonal and have variant 51 buying patterns.
The markets in which we sell products are undergoing product, architectural and business model transitions, have high customer concentrations, are highly competitive, are price sensitive and/or are affected by customer seasonality and have variant buying patterns.
There are a number of factors that could positively or negatively impact our liquidity position, including: • global economic conditions which affect demand for our products and services and impact the financial stability of our suppliers and customers, including the impact of uncertainty in the banking and financial services industries; • fluctuations in demand for our products as a result of changes in regulations, tariffs or other trade barriers, and trade relations in general; • changes in accounts receivable, inventory or other operating assets and liabilities, which affect our working capital; • increase in capital expenditures to support our business and growth, including increases in manufacturing capacity; • the tendency of customers to delay payments or to negotiate favorable payment terms to manage their own liquidity positions; • timing of payments to our suppliers; • volatility in fixed income and credit, which impact the liquidity and valuation of our investment portfolios; • cost and availability of credit, which may impact available financing for us, our customers or others with whom we do business; • volatility in foreign exchange markets, which impacts our financial results; • possible investments or acquisitions of complementary businesses, products or technologies, or other strategic transactions or partnerships; • issuance of debt or equity securities, or other financing transactions, including bank debt; • potential funding of pension liabilities either voluntarily or as required by law or regulation; • acquisitions or strategic transactions, in particular our recently completed acquisition of Cloud Light; • the settlement of any conversion or redemption of our convertible notes in cash; and • common stock repurchases under the share buyback program.
There are a number of factors that could positively or negatively impact our liquidity position, including: • global economic conditions which affect demand for our products and services and impact the financial stability of our suppliers and customers, including the impact of uncertainty in the banking and financial services industries; • fluctuations in demand for our products as a result of changes in regulations, tariffs or other trade barriers, and trade relations in general; • changes in accounts receivable, inventory or other operating assets and liabilities, which affect our working capital; • increase in capital expenditures to support our business and growth, including increases in manufacturing capacity; • the tendency of customers to delay payments or to negotiate favorable payment terms to manage their own liquidity positions; • timing of payments to our suppliers; • volatility in fixed income and credit, which impact the liquidity and valuation of our investment portfolios; • cost and availability of credit, which may impact available financing for us, our customers or others with whom we do business; • volatility in foreign exchange markets, which impacts our financial results; • possible investments or acquisitions of complementary businesses, products or technologies, or other strategic transactions or partnerships; • issuance of debt or equity securities, or other financing transactions, including bank debt; 57 • potential funding of pension liabilities either voluntarily or as required by law or regulation; • acquisitions or strategic transactions; and • the settlement of any conversion or redemption of our convertible notes in cash.
However, regulatory and enforcement actions by the United States and other governmental agencies, as well as changes in tax and trade policies and tariffs, have impacted and may continue to adversely impact net revenue from customers outside the United States. Gross Margin Gross margin in fiscal 2024 decreased to 18.5% from 32.2% in fiscal 2023.
However, regulatory and enforcement actions by the United States and other governmental agencies, as well as changes in tax and trade policies and tariffs, have impacted and may continue to adversely impact net revenue from customers outside the United States. Gross Margin Gross margin in fiscal year 2025 increased to 28.0% from 18.5% in fiscal year 2024.
During our fiscal 2024, 2023 and 2022, net revenue generated from a single customer which represented 10% or greater of total net revenue is summarized as follows: Years Ended June 29, 2024 July 1, 2023 July 2, 2022 Google 18.9 % * * Apple * 12.1 % 28.7 % Ciena 11.4 % 15.3 % 12.6 % Nokia * 10.5 % * *Represents less than 10% of total net revenue Revenue by Region We operate in three geographic regions: Americas, Asia-Pacific, and EMEA (Europe, Middle East, and Africa).
During our fiscal years 2025, 2024 and 2023, net revenue generated from a single customer which represented 10% or greater of total net revenue is summarized as follows: Years Ended June 28, 2025 June 29, 2024 July 1, 2023 Customer A 16.0 % 11.4 % 15.3 % Customer B 15.4 % 18.9 % * Customer C * * 12.1 % Customer D * * 10.5 % *Represents less than 10% of total net revenue 51 Revenue by Region We operate in three geographic regions: Americas, Asia-Pacific, and EMEA (Europe, Middle East, and Africa).
As of June 29, 2024, the defined benefit plans in Switzerland were partially funded, while defined benefit plans in Japan and Thailand were unfunded. As of June 29, 2024, our projected benefit obligations, net, in Japan, Switzerland, and Thailand were $3.6 million, $2.4 million and $3.6 million, respectively.
As of June 28, 2025, the defined benefit plans in Switzerland were partially funded, while defined benefit plans in Japan and Thailand were unfunded. As of June 28, 2025, our projected benefit obligations, net, in Japan, Switzerland, and Thailand were $2.3 million, $2.6 million and $5.7 million, respectively.
We estimate a 100 basis point decrease or increase in the discount rate would cause a corresponding increase or decrease of $4.0 million or $3.1 million, respectively, in the PBO based upon data as of June 29, 2024. We expect to contribut e $1.6 million to our defined benefit pension plans in fiscal 2025.
We estimate a 100 basis point decrease or increase in the discount rate would cause a corresponding increase or decrease of $5.1 million or $4.0 million, respectively, in the PBO based on data as of June 28, 2025. We expect to contribut e $2.0 million to our defined benefit pension plans in fiscal year 2026.
The following table presents net revenue by the three geographic regions we operate in and net revenue from countries that represented 10% or more of our total net revenue (in millions, except percentage data): 50 Years Ended June 29, 2024 July 1, 2023 July 2, 2022 Net revenue: Americas: United States $ 356.1 26.2 % $ 241.3 13.7 % $ 173.9 10.2 % Mexico 91.7 6.7 180.0 10.2 160.9 9.4 Other Americas 3.4 0.3 9.3 0.5 12.1 0.7 Total Americas $ 451.2 33.2 % $ 430.6 24.4 % $ 346.9 20.3 % Asia-Pacific: Thailand $ 183.8 13.5 % $ 269.0 15.2 % $ 102.3 5.9 % Hong Kong 261.9 19.3 246.7 14.0 458.2 26.7 South Korea 75.2 5.5 170.2 9.6 265.2 15.5 Japan 84.6 6.2 179.5 10.2 181.2 10.6 Other Asia-Pacific 174.3 12.9 276.3 15.6 242.4 14.2 Total Asia-Pacific $ 779.8 57.4 % $ 1,141.7 64.6 % $ 1,249.3 72.9 % EMEA $ 128.2 9.4 % $ 194.7 11.0 % $ 116.4 6.8 % Total net revenue $ 1,359.2 100.0% $ 1,767.0 100.0% $ 1,712.6 100.0% During fiscal 2024, 2023 and 2022, net revenue from customers outside the United States, based on customer shipping location, represented 73.8%, 86.3% and 89.8% of net revenue, respectively.
The following table presents net revenue by the three geographic regions we operate in and net revenue from countries that represented 10% or more of our total net revenue (in millions, except percentage data): Years Ended June 28, 2025 June 29, 2024 July 1, 2023 Net revenue: Americas: United States $ 312.3 19.0 % $ 356.1 26.2 % $ 241.3 13.7 % Mexico 148.5 9.0 91.7 6.7 180.0 10.2 Other Americas 20.1 1.2 3.4 0.3 9.3 0.5 Total Americas $ 480.9 29.2 % $ 451.2 33.2 % $ 430.6 24.4 % Asia-Pacific: Thailand $ 291.8 17.7 % $ 183.8 13.5 % $ 269.0 15.2 % Hong Kong 398.6 24.2 261.9 19.3 246.7 14.0 South Korea 32.4 2.0 75.2 5.5 170.2 9.6 Japan 78.3 4.8 84.6 6.2 179.5 10.2 Other Asia-Pacific 199.5 12.2 174.3 12.9 276.3 15.6 Total Asia-Pacific $ 1,000.6 60.9 % $ 779.8 57.4 % $ 1,141.7 64.6 % EMEA $ 163.5 9.9 % $ 128.2 9.4 % $ 194.7 11.0 % Total net revenue $ 1,645.0 100.0% $ 1,359.2 100.0% $ 1,767.0 100.0% During fiscal years 2025, 2024 and 2023, net revenue from customers outside the United States, based on customer shipping location, represented 81.0% , 73.8% and 86.3% of net revenue, respectively.
Supply Chain Constraints Our business and our customers’ businesses have been negatively impacted by worldwide logistics and supply chain issues, including constraints on available cargo capabilities and limited availability of once broadly available supplies of both raw materials and finished components.
Our business and our customers’ businesses were negatively impacted by worldwide logistics and supply chain issues during and following the COVID-19 pandemic, including constraints on available cargo capabilities and limited availability of once broadly available supplies of both raw materials and finished components.
The acquisition enables us to be well-positioned to serve the growing needs of cloud & networking customers, particularly those focused on optimizing their data center infrastructure for the demands of AI/ML. On the Closing date, we paid $705.0 million of total cash consideration to Cloud Light.
Cloud Light designs, markets, and manufactures advanced optical modules for data center interconnect applications. This acquisition enabled us to be well-positioned to serve the growing needs of cloud & networking customers, particularly those focused on optimizing their data center infrastructure for the demands of AI/ML. On the Closing date, we paid $705.0 million of total cash consideration to Cloud Light.
As of June 29, 2024, the net carrying amount of our 2026 Notes (as defined below) of $1,047.2 million, which have an aggregate principal balance of $1,050.0 maturing in 2026, is presented in non-current liabilities in our condensed consolidated balance sheets .
As of June 28, 2025, the net carrying amount of our 2026 Notes of $1,048.3 million, which have an aggregate principal balance of $1,050.0 million maturing in 2026, is presented in non-current liabilities in our condensed consolidated balance sheets.
The following table reflects the changes in contract balances as of June 29, 2024 ( in millions, except percentages ): Contract balances Balance sheet location June 29, 2024 July 1, 2023 Change Percentage Change Accounts receivable, net Accounts receivable, net $ 194.7 $ 246.1 $ (51.4) (20.9) % Deferred revenue and customer deposits Other current liabilities $ 0.6 $ 2.1 $ (1.5) (71.4) % Disaggregation of Revenue We disaggregate revenue by geography and by product.
The following table reflects the changes in contract balances as of June 28, 2025 ( in millions, except percentages ): Contract balances Balance sheet location June 28, 2025 June 29, 2024 Change Percentage Change Accounts receivable, net Accounts receivable, net $ 250.0 $ 194.7 $ 55.3 28.4 % Deferred revenue and customer deposits Other current liabilities $ 0.7 $ 0.6 $ 0.1 16.7 % Disaggregation of Revenue We disaggregate revenue by geography and by product.
Gross margin in fiscal 2024 was also negatively impacted by 1.4% due to higher excess capacity as a result of our manufacturing synergy plans in connection with the NeoPhotonics integration, transferring product lines out of China due to U.S. export restrictions, and a drop in demand due to customers actively working to reduce their elevated inventory levels.
In fiscal year 2024, we also incurred $20.7 million of higher excess capacity charges as a result of our manufacturing synergy plans in connection with the NeoPhotonics integration, transferring product lines out of China due to U.S. export restrictions, and a drop in demand due to customers actively working to reduce their elevated inventory levels.
The total amount of cash outside the United States held by the non-U.S. entities as of June 29, 2024 and July 1, 2023 was $306.9 million and $298.4 million, respe ctively, which was primarily held by entities incorporated in the United Kingdom, the British Virgin Islands, Japan, Hong Kong, China, Switzerland, the Cayman Islands, Thailand and Brazil.
The total amount of cash outside the United States held by the non-U.S. entities as of June 28, 2025 and June 29, 2024 was $398.3 million and $306.9 million, respe ctively, which was primarily held by entities incorporated in the United Kingdom, Japan, Hong Kong, China, Switzerland, and Thailand.
Financial Condition Liquidity and Capital Resources As of June 29, 2024 and July 1, 2023, our cash and cash equivalents were $436.7 million and $859.0 million, respectively. As of June 29, 2024 and July 1, 2023, our short-term investments of $450.3 million a nd $1,154.6 million, respectively, were all held in the United States.
Financial Condition Liquidity and Capital Resources As of June 28, 2025 and June 29, 2024, our cash and cash equivalents were $520.7 million and $436.7 million, respectively. As of June 28, 2025 and June 29, 2024, our short-term investments of $356.4 million and $450.3 million, respectively, were all held in the United States.
The stock buyback program may be suspended or terminated at any time. 56 Contractual Obligation s The following table summarizes our contractual obligations as of June 29, 2024, and the effect such obligations are expected to have on our liquidity and cash flow ( in millions ): Payments due Total Less than 1 year More than 1 year Contractual Obligations Asset retirement obligations $ 7.5 $ 0.3 $ 7.2 Operating lease liabilities, including imputed interest (1) 61.8 15.3 46.5 Pension plan contributions (2) 1.6 $ 1.6 — Purchase obligations (3) 475.1 418.0 57.1 Convertible notes - principal (4) 2,514.7 — 2,514.7 Convertible notes - interest (4) 80.1 18.7 61.4 Total $ 3,140.8 $ 453.9 $ 2,686.9 (1) The amounts of operating lease liabilities do not include any sublease income amounts nor do they include payments for short-term leases or variable lease payments.
Contractual Obligation s The following table summarizes our contractual obligations as of June 28, 2025, and the effect such obligations are expected to have on our liquidity and cash flow ( in millions ): Payments due Total Less than 1 year More than 1 year Contractual Obligations Asset retirement obligations $ 7.1 $ — $ 7.1 Operating lease liabilities, including imputed interest (1) 37.6 12.7 24.9 Pension plan contributions (2) 2.0 $ 2.0 — Purchase obligations (3) 837.6 781.4 56.2 Term loans - principal (4) 67.0 10.6 56.4 Term loans - interest (4) 1.7 0.6 1.1 Convertible notes - principal (5) 2,514.7 — 2,514.7 Convertible notes - interest (5) 61.6 18.7 42.9 Total $ 3,529.3 $ 826.0 $ 2,703.3 (1) The amounts of operating lease liabilities do not include any sublease income amounts nor do they include payments for short-term leases or variable lease payments.
Our Cloud & Networking products also support network equipment manufacturers building enterprise network infrastructure, including storage-area networks (“SANs”), local-area networks (“LANs”) and wide-area networks (“WANs”).
Additionally, our Cloud & Networking products serve enterprise network infrastructure needs, including storage area networks (“SANs”), local area networks (“LANs”), and wide area networks (“WANs”).
Virtual meetings, video calls, and hybrid in-person and virtual environments for work and other aspects of life will continue to drive strong needs for bandwidth growth and present dynamic new challenges that our technology addresses.
We expect that the accelerating shift to digital and virtual approaches to many aspects of work and life will continue into the future. Virtual meetings, video calls, and hybrid in-person and virtual environments for work and other aspects of life will continue to drive strong needs for bandwidth growth and present dynamic new challenges that our technologies address.
We are unable to reliably estimate the timing of future payments related to uncertain tax positions. 57 Liquidity and Capital Resources Requirements We believe that our cash and cash equivalents as of June 29, 2024, and cash flows from our operating activities will be sufficient to meet our liquidity and capital spending requirements for at least the next 12 months.
Liquidity and Capital Resources Requirements We believe that our cash and cash equivalents as of June 28, 2025, and cash flows from our operating activities will be sufficient to meet our liquidity and capital spending requirements for at least the next 12 months.
Interest Expense Our interest expense is as follows for the years presented ( in millions ): Years Ended June 29, 2024 July 1, 2023 July 2, 2022 Interest expense $ 33.8 $ 35.5 $ 80.2 Interest expense is driven by the amortization of the debt discount and issuance costs of our convertible notes.
Interest Expense Our interest expense is as follows for the years presented ( in millions ): Years Ended June 28, 2025 June 29, 2024 July 1, 2023 Interest expense $ 22.2 $ 33.8 $ 35.5 Interest expense is primarily driven by interest on our convertible notes and term loans.
Cash provided by operating activities was $459.3 million during the year ended July 2, 2022, which reflects net income of $198.9 million and non-cash items of $351.0 million, partially offset by $90.6 million of changes in our operating assets and liabilities.
Cash provided by operating activities was $126.3 million during the year ended June 28, 2025, which reflects the net income of $25.9 million and non-cash items of $414.9 million, partially offset by $314.5 million of changes in our operating assets and liabilities.
Beginning in fiscal 2023, the Tax Cuts and Jobs Act of 2017 requires taxpayers to capitalize research and development expenditures and amortize domestic expenditures over five years and foreign expenditures over fifteen years. This will delay deductibility of these expenses and potentially increase the amount of cash taxes we pay in the next several years.
Beginning in fiscal year 2023, the Tax Cuts and Jobs Act of 2017 requires taxpayers to capitalize research and development expenditures and amortize domestic expenditures over five years and foreign expenditures over fifteen years.
Shipping and Handling Costs We record shipping and handling costs related to revenue transactions within cost of sales as a period cost. Contract Costs We recognize the incremental direct costs of obtaining a contract, which consist of sales commissions, when control over the products they relate to transfers to the customer.
Amounts billed to the customer for shipping and handling costs, including tariff charges, is recorded as revenue when the relevant product is recognized as revenue. 46 Contract Costs We recognize the incremental direct costs of obtaining a contract, which consist of sales commissions, when control over the products they relate to transfers to the customer.
Cash Flows Fiscal 2024 As of June 29, 2024, our consolidated balance of cash and cash equivalents decreased by $422.3 million, to $436.7 million from $859.0 million as of July 1, 2023.
Cash Flows Fiscal Year 2025 As of June 28, 2025, our consolidated balance of cash and cash equivalents increased by $84.0 million, to $520.7 million from $436.7 million as of June 29, 2024.
We seek to use our core optical and photonic technology and our volume manufacturing capability to expand into attractive emerging markets that benefit from advantages that optical or photonics-based solutions provide. Prior to fiscal year 2024, we operated in two reportable segments consisting of Optical Communications (“OpComms”) and Commercial Lasers (“Lasers”).
We seek to use our core optical and photonic technologies and our volume manufacturing capability to expand into attractive emerging markets that benefit from advantages that optical or photonics-based solutions provide. We have two reportable segments, Cloud & Networking and Industrial Tech.
Restructuring and Related Charges We have initiated various strategic restructuring events primarily intended to reduce costs, consolidate our operations, rationalize the manufacturing of our products and align our business in response to market conditions. We also took certain actions in connection with the integration of NeoPhotonics. During fiscal 2024, we recorded restructuring and related charges of $72.6 million.
Restructuring and Related Charges We have initiated various strategic restructuring events primarily intended to reduce costs, consolidate our operations, rationalize the manufacturing of our products and align our business in response to market conditions and as a result of recent acquisitions.
Segment profit includes operating expenses directly managed by operating segments, including research and development, and direct sales and marketing expenses. Segment profit does not include stock-based compensation, acquisition or integration related costs, amortization and impairment of acquisition-related intangible assets, restructuring and related charges, and certain other charges.
Segment profit does not include stock-based compensation, acquisition or integration related costs, amortization and impairment of acquisition-related intangible assets, restructuring and related charges, and certain other charges. Additionally, we do not allocate certain marketing and general and administrative expenses, as these expenses are not directly attributable to our operating segments.
If the closing price of our stock exceeds $90.40 (130% of the conversion price of $69.54) for 20 of the last 30 trading days of any future quarter, the 2029 Notes would become convertible at the option of the holders during the subsequent fiscal quarter and the debt component would be reclassified to current liabilities. 55 As of June 29, 2024, the net carrying amount of our 2028 Notes (as defined below) of $856.6 million, which have an aggregate principal balance of $861.0 million maturing in 2028, is presented in non-current liabilities in our condensed consolidated balance sheets.
If the closing price of our stock exceeds $90.40 (130% of the conversion price of $69.54) for 20 of the last 30 trading days of any future quarter, the 2029 Notes would become convertible at the option of the holders during the subsequent fiscal quarter and the debt component would be reclassified to current liabilities.
Provision for Income Taxes Years Ended (in millions) June 29, 2024 July 1, 2023 July 2, 2022 Income tax provision $ 140.8 $ 29.2 $ 36.2 Our provision for income taxes for fiscal 2024 differs from the 21% U.S. statutory rate primarily due to the income tax expense from current valuation allowance change as it is not more-likely-than-not that certain deferred tax assets will be realizable in the future, earnings of our foreign subsidiaries being taxed at rates that differ from the U.S. statutory rate and non-deductible stock-based compensation.
Provision for Income Taxes Years Ended (in millions) June 28, 2025 June 29, 2024 July 1, 2023 Income tax (benefit) provision $ (198.0) $ 140.8 $ 29.2 Our provision for income taxes for fiscal year 2025 differs from the 21% U.S. statutory rate primarily due to the income tax benefit associated with the release of a valuation allowance on our UK deferred tax assets, earnings of our foreign subsidiaries being taxed at rates that differ from the U.S. statutory rate, partially offset by the income tax expense from U.S. income inclusions from Subpart F and GILTI, non-deductible stock-based compensation and changes in unrecognized tax benefits.
In the industrial manufacturing end-market, our lasers are incorporated into our customers’ manufacturing machine tools used for the precision processing of materials in a range of industries including semiconductor device and microelectronics fabrication, electric vehicle and battery production, metal cutting and welding, and advanced manufacturing.
In the consumer market, our laser light sources are integrated into customers’ 3D sensing cameras, primarily used in mobile devices. In the industrial manufacturing market, our lasers are embedded in machine tools used for precision material processing across diverse industries, including semiconductor and microelectronics fabrication, electric vehicle and battery production, metal cutting and welding, and advanced manufacturing.
As of June 29, 2024, we expect to receive sublease income of approximately $0.8 million over the next year. Refer to “Note 8. Leases” to the consolidated financial statements.
As of June 28, 2025, we expect to receive sublease income of approximately $0.9 million over the next year. Refer to “Note 8. Leases” to the consolidated financial statements. 56 (2) The amount of pension plan contributions represents planned contributions to our defined benefit plans.
The decrease in cash and cash equivalents was due to cash used in financing activities of $332.7 million and cash used in investing activities of $114.3 million, partially offset by cash provided by operating activities of $24.7 million during the year ended June 29, 2024.
The increase in cash and cash equivalents was due to cash from operating activities of $126.3 million and cash from financing activities of $41.8 million, partially offset by and cash used in investing activities of $84.1 million during the year ended June 28, 2025.
The CODM regularly reviews operating results to make decisions about resources to be allocated to the segments and to assess their performance.
The two operating segments were primarily determined based on how our Chief Operating Decision Maker (“CODM”) views and evaluates our operations. The CODM regularly reviews operating results to make decisions about resources to be allocated to the segments and to assess their performance.
Indebtedness As of June 29, 2024, the net carrying amount of our 2029 N otes (as defined below) of $599.4 million, which have an aggregate principal balance of $603.7 million maturing in 2029, is presented in non-current liabilities in our condensed consolidated balance sheets.
A s of June 28, 2025, the net carrying amount of our 2028 Notes of $857.7 million, which have an aggregate principal balance of $861.0 million maturing in 2028, is presented in non-current liabilities in our condensed consolidated balance sheets.
Industrial Tech segment profit decreased by $127.6 million or 83.6%, during fiscal 2024 as compared to fiscal 2023 primarily due to lower segment revenue and a less profitable mix of products, including lower sales of higher margin imaging and sensing products due to increasing competition and share normalization, which negatively impacted segment profit b y $76.3 million.
Industrial Tech segment profit decreased by $13.0 million, or 51.8%, during fiscal year 2025 as compared to fiscal year 2024 primarily due to lower revenue, mainly from lower sales of imaging and sensing products due to increasing competition and share normalization .
Overview We are an industry-leading provider of optical and photonic products defined by revenue and market share, essential to range of cloud, artificial intelligence and machine learning (“AI/ML”), telecommunications, consumer, and industrial end-market applications. We believe the global markets in which Lumentum participates have fundamentally robust, long-term trends that will increase the need for our photonics products and technologies.
Overview We are a leading provider of optical and photonic products and are recognized as an industry leader based on revenue and market share. Our products are essential to a range of cloud, artificial intelligence and machine learning (“AI/ML”), telecommunications, consumer, and industrial end-market applications.
Unrecognized Tax Benefits As of June 29, 2024, our other non-current liabilities also include $83.0 million of unrecognized tax benefit for uncertain tax positions.
Unrecognized Tax Benefits As of June 28, 2025, our other non-current liabilities also include $55.6 million of unrecognized tax benefit for uncertain tax positions. We are unable to reliably estimate the timing of future payments related to uncertain tax positions.
The advent of AI/ML has caused a dramatic surge in the growing demands on data networking in cloud data centers and accelerated the usage of optical components and modules. We expect that the accelerating shift to digital and virtual approaches to many aspects of work and life will continue into the future.
Lumentum’s products and technology enable the scaling of these optical networks and data centers to higher capacities. AI/ML has caused a dramatic surge in the growing demands on data networking in cloud data centers and accelerated the usage of optical components and modules.
In addition, if our customers are unable to procure needed semiconductor components, their demand for our products will decrease. Due to the global supply chain constraints, we had to incur incremental supply and procurement costs in order to increase our ability to fulfill demands from our customers.
From time to time, we experience shortages of the types of components we and our customers require in our products, and we have had to incur incremental supply and procurement costs in order to increase our ability to fulfill demands from our customers.
Cash used in investing activities of $114.3 million during the year ended June 29, 2024 was primarily attributable to the acquisition of Cloud Light in the amount of $700.9 million, net of cash acquired, capital expenditures of $133.0 million and an intangible asset acquisition of $4.0 million, offset by net proceeds from short-term investments of $722.8 million and proceeds from sales of property and equipment of $0.8 million. 58 Cash used in financing activities of $332.7 million during the year ended June 29, 2024, was attributable to $323.1 million of repayment of the principal amount of 2024 Notes upon maturity, and tax payments related to the net share settlement of restricted stock units of $24.0 million, offset by $14.4 million of proceeds from employee stock plans.
Cash from financing activities of $41.8 million during the year ended June 28, 2025, was attributable to $76.5 million of proceeds from Japan term loans and $16.1 million of proceeds from employee stock plans, offset by tax payments related to the net share settlement of restricted stock units of $41.7 million, $8.1 million of principal payments on term loans and payment for an intangible asset acquisition holdback of $1.0 million. 58
Other Income, Net The components of other income, net are as follows for the years presented ( in millions ): Years Ended June 29, 2024 July 1, 2023 July 2, 2022 Foreign exchange gains, net $ 0.8 $ 7.0 $ 6.1 Interest and investment income 61.3 40.8 6.1 Other income (expense), net — 1.0 (0.2) Other income, net $ 62.1 $ 48.8 $ 12.0 53 Other income, net in fiscal 2024 increased by $13.3 million from fiscal 2023 primarily due to $20.5 million of increase in interest and investment income driven by an increase in interest rates on our fixed income securities, offset by $6.2 million of lower foreign exchange gains, reflecting a more stable U.S. dollar.
Other Income, Net The components of other income, net are as follows for the years presented ( in millions ): Years Ended June 28, 2025 June 29, 2024 July 1, 2023 Foreign exchange gains (losses), net $ (4.2) $ 0.8 $ 7.0 Interest and investment income 34.4 61.3 40.8 Other income (expense), net — — 1.0 Other income, net $ 30.2 $ 62.1 $ 48.8 Other income, net in fiscal year 2025 decreased by $31.9 million as compared to fiscal year 2024 primarily due to $26.9 million of decrease in interest and investment income driven by lower short term investment balances, as we used cash for the Cloud Light acquisition as well as the repayment of the 2024 Notes in March 2024.
Additionally, in fiscal 2024 we recorded $13.3 million of higher inventory excess and obsolescence charges primarily due to U.S. export restrictions whereby we are no longer able to sell certain products to one of our customers, and customer demand changes as a result of product transitions. Furthermore, in fiscal 2024, we recorded $12.4 million of higher integration related costs.
The increase was driven by a $20.8 million reduction in excess and obsolete inventory charges during fiscal year 2025, primarily as a result of the U.S. trade restrictions imposed during fiscal year 2024 whereby we were no longer able to sell certain products to one of our customers.
Cash used in investing activities of $874.0 million during the year ended July 1, 2023 was primarily attributable to the acquisition of NeoPhotonics and IPG telecom transmission product lines in the amount of $861.6 million, net of cash acquired and capital expenditures of $128.5 million, partially offset by net proceeds from short-term investments of $115.7 million.
Cash used in investing activities of $84.1 million during the year ended June 28, 2025 was primarily attributable to capital expenditures of $231.0 million , offset by net proceeds from short-term investments of $98.8 million, $47.8 million of proceeds from sale of facility, net of cash transferred and selling costs, and proceeds from sales of property and equipment of $0.3 million.
We believe the world is becoming more reliant on ever-increasing amounts of data flowing through optical networks and data centers. Lumentum’s products and technology enable the scaling of cloud data centers and communications networks and to higher capacities.
We believe the global markets in which Lumentum participates have fundamentally robust, long-term trends that will increase the need for our photonics products and technologies. We believe the world is becoming more reliant on ever-increasing amounts of data flowing through optical networks and data centers.
Segment Profit Years Ended June 29, 2024 July 1, 2023 July 2, 2022 Cloud & Networking $ 124.5 $ 313.2 $ 266.9 Industrial Tech 25.1 152.7 373.5 Cloud & Networking segment profit decreased by $188.7 million, or 60.2%, during fiscal 2024 as compared to fiscal 2023 primarily due to lower segment revenue and lower sales from telecom products, which negatively impacted segment profit by $215.4 million, offset by $23.2 million of segment profit from Cloud Light.
We expect these factors to result in variability of our gross margin, and our gross margin may be subject to increasing downward pressure due to these factors. 52 Segment Profit Years Ended June 28, 2025 June 29, 2024 July 1, 2023 Cloud & Networking $ 264.5 $ 124.5 $ 313.2 Industrial Tech 12.1 25.1 152.7 Cloud & Networking segment profit increased by $140.0 million , or 112.4% , during fiscal year 2025 as compared to fiscal year 2024 primarily due to higher sales of our products for both cloud and AI/ML applications.
As customers manage their inventory down, our revenue has declined and our margins are adversely impacted as we are not able to fully recover 43 costs, such as underutilized manufacturing capacity, associated with the forecasted demand and we may incur excess and obsolescence charges from unsold inventory.
Our revenue fluctuated in response to these changes in demand and our margins were adversely impacted as we were not been able to fully recover costs, such as underutilized manufacturing capacity.
Despite signs of a weaker macroeconomic environment, we plan to continue to invest in R&D and new products that we believe will further differentiate us in the marketplace. Selling, General and Administrative (“SG&A”) SG&A expense decreased by $38.1 million, or 10.9%, during fiscal 2024 as compared to fiscal 2023.
We plan to continue to invest in R&D and new products that we believe will further differentiate us in the marketplace.
Adoption of our products in the industrial end-market is driven by the needs of customers to advance semiconductor and microelectronics industry roadmaps, and by Industry 4.0/5.0 trends, including increasing manufacturing precision and flexibility and reducing waste and environmental impact. Demand for our products in the industrial end-market is driven by end-customer investments in manufacturing capacity.
Adoption of our Industrial Tech products is driven by the need to advance semiconductor and microelectronics technology roadmaps and by Industry 4.0 and 5.0 trends that emphasize greater manufacturing precision, flexibility, and sustainability. Cloud Light Acquisition On November 7, 2023 (the “Closing date”), we completed the acquisition of Cloud Light.
Demand for our Cloud & Networking products is driven by the continual growth in network capacity required for cloud computing and services, including for AI/ML, streaming video and video conferencing, wireless and mobile devices, and internet of things (“IoT”).
Demand for our products is fueled by the ongoing expansion of network capacity required to support cloud and services, AI/ML processing, streaming video, video conferencing, wireless and mobile connectivity, and the internet of things (“IoT”). 43 Industrial Tech Our Industrial Tech products include short-pulse solid-state lasers, kilowatt-class fiber lasers, diode lasers, and gas lasers, serving a wide range of end-markets applications.
Interest expense in fiscal 2024 decreased by $1.7 million, or 4.8%, from fiscal 2023, primarily due to the repayment of our 2024 Notes (as defined below) in March 2024 upon maturity, partially offset by incremental interest expense from our 2029 Notes (as defined below) issued in June 2023 .
I nterest expense in fiscal year 2025 decreased by $11.6 million, or 34.3%, as compared to fiscal year 2024, primarily due to the repayment in full of our 0.25% convertible senior notes due in 2024 (the “2024 Notes”) upon maturity in March 2024.
The decrease in Industrial Tech net revenue is primarily due to higher market competition, which reflects share normalization in the market, as well as reduction in demand associated with a build-up of inventory and resulting inventory management actions by our customers.
The decrease in Industrial Tech net revenue is primarily due to a decline in unit sales of our imaging and sensing products due to higher market competition in the consumer end-market for these products, which was partially offset by a $17.5 million increase in our laser products due to higher market demand.
Restructuring and Related Charges” to the consolidated financial statements.
Debt” to the consolidated financial statements for more information.
Removed
During the fiscal first quarter of 2024, our chief operating decision maker (“CODM”) implemented changes in how he organizes the business, allocates resources, and assesses performance. We changed our organizational structure to better align with trends in our markets and our customer and product mix. Our new operating segments are Cloud & Networking and Industrial Tech.
Added
Our CODM allocates resources to the segments based on their business prospects, competitive factors, segment net revenue and segment profit. Segment profit includes operating expenses directly managed by operating segments, including research and development, and direct sales and marketing expenses.
Removed
The Cloud & Networking segment includes the Telecom & Datacom product lines that were previously part of the OpComms segment. The Industrial Tech segment includes previous Lasers segment and the Industrial & Consumer product lines that were previously part of the OpComms segment. The two operating segments were primarily determined based on how the CODM views and evaluates our operations.
Added
Cloud & Networking Our Cloud & Networking products comprise a comprehensive portfolio of optical and photonic chips, components, modules, and subsystems supplied to cloud data center operators, AI/ML infrastructure providers, and network equipment manufacturer customers who are building cloud data center and network infrastructures.
Removed
In conjunction with this change, our CODM now evaluates each segment’s performance and allocates resources based on segment revenue and segment profit, instead of gross profit, as our CODM believes segment profit is a more comprehensive profitability measure for each operating segment.
Added
Our products enable high-capacity optical links for cloud computing, AI/ML workloads, and data center interconnect (“DCI”) applications, as well as for communications service provider networks. Our offerings support access (local), metro (intracity), long-haul (intercity and global), and submarine (undersea) network infrastructure.
Removed
Additionally, we do not allocate corporate marketing and strategic marketing expenses and general and administrative expenses, as these expenses are not directly attributable to our operating segments. Comparative prior period segment information has been recast to conform to the new segment structure and segment profitability measure.
Added
Supply Chain and Inventory Management Our supply chain is complex, and we need to manage supply of certain components required to build our products while confronted with fluctuating demand from our customers.
Removed
The change in our operating segments had no impact on our previously reported consolidated results of operations, financial condition, or cash flows. 42 Cloud & Networking Our Cloud & Networking products include a comprehensive portfolio of optical and photonic components, modules, and subsystems supplied to network operator and network equipment manufacturer customers building cloud data center infrastructure, including products for artificial intelligence and machine learning (“AI/ML”) and data center interconnect (“DCI”) applications, and communications service provider networks, including products for access (local), metro (intracity), long-haul (city-to-city and worldwide), and submarine (undersea) network infrastructure.
Added
In addition, through fiscal year 2024, we experienced significant fluctuations in demand as customers delayed projected shipments or built up inventory in response to supply shortages and then brought down inventories as supply chain constraints eased.
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Industrial Tech Our Industrial Tech products include solid-state lasers, kilowatt-class fiber lasers, ultrafast lasers, diode lasers, and gas lasers, which address applications in numerous end-markets.
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However, during fiscal year 2025, network equipment manufacturers continued to normalize inventory levels and we saw increasing demand from AI and cloud customers as they continue to expand their data centers. Due to worldwide operations, we and our customers are also subject to risks relating to the global trade environment.
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In the consumer end-market, our laser light sources are integrated into our customers’ 3D sensing cameras, which are used in mobile devices, payment kiosks, and other consumer electronics devices to enable applications including biometric identification, computational photography and virtual and augmented reality.
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The Company is actively monitoring and assessing the global trade environment, particularly with respect to recent changes and proposed changes in tariff regulations and trade restrictions. The ongoing uncertainty surrounding trading policies, including the potential for additional tariffs, restrictions related to our customers and retaliatory measures by non-U.S. governments, continues to create a volatile environment that could disrupt our operations.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeDollar and foreign currencies, we recorded foreign exchange gains of $0.8 million in fiscal 2024, foreign exchange gains of $7.0 million in fiscal 2023 and foreign exchange losses of $6.1 million in fiscal 2022 in the consolidated statements of operations. Although we sell primarily in the U.S.
Biggest changeDollar and foreign currencies, we recorded foreign exchange loss of $4.2 million in fiscal year 2025, foreign exchange gains of $0.8 million in fiscal year 2024 and foreign exchange losses of $7.0 million in fiscal year 2023 in the consolidated statements of operations. Although we sell primarily in the U.S.
The value of our investment portfolio could also be impacted if we hold debt instruments which were issued by any institutions that fail or become illiquid. Our ability to obtain raw materials for our supply chain and collections of cash from sales may be unduly impacted if any of our vendors or customers are affected by illiquidity events. 60
The value of our investment portfolio could also be impacted if we hold debt instruments which were issued by any institutions that fail or become illiquid. Our ability to obtain raw materials for our supply chain and collections of cash from sales may be unduly impacted if any of our vendors or customers are affected by illiquidity events. 59
Our fixed-income portfolio is subject to fluctuations in interest rates, which could affect our results of operations.
Our fix ed-income portfolio is subject to fluctuations in interest rates, which could affect our results of operations.
Based on our investment portfolio balance as of June 29, 2024, a hypothetical increase or decrease in interest rates of 1% (100 basis points) would have resulted in a decrease or an increase in the fair value of our portfolio of approximately $2.4 million, and a hypothetical increase or decrease of 0.50% (50 basis points) would have resulted in a decrease or an increase in the fair value of our portfolio of approximately $1.2 million .
Based on our investment portfolio balance as of June 28, 2025, a hypothetical increase or decrease in interest rates of 1% (100 basis points) would have resulted in a decrease or an increase in the fair value of our portfolio of approximately $3.4 million, and a hypothetical increase or decrease of 0.50% (50 basis points) would have resulted in a decrease or an increase in the fair value of our portfolio of approximately $1.7 million.
Interest Rate Fluctuation Risk As of June 29, 2024, we had cash, cash equivalents, and short-term investments of $887.0 million . Cash equivalents and short-term investments are primarily comprised of money market funds, treasuries, agencies, high quality investment grade fixed income securities, certificates of deposit, and commercial paper.
Interest Rate Fluctuation Risk As of June 28, 2025, we had cash, cash equivalents, and short-term investments of $877.1 million. Cash equivalents and short-term investments are primarily comprised of money market funds, treasuries, agencies, high quality investment grade fixed income securities, certificates of deposit, and commercial paper.
Our investment policy and strategy is focused on the preservation of capital and supporting our liquid ity requirements. We do not enter into investments for trading or speculative purposes. As of June 29, 2024, the weighted-average life of our investment portfolio was approximately six months.
Our investment policy and strategy is focused on the preservation of capital and supporting our liquid ity requirements. We do not enter into investments for trading or speculative purposes. As of June 28, 2025, the weighted-average life of our investment portfolio was approxim ately eleven months.
Bank Liquidity Risk As of June 29, 2024, we had approximately $196.9 million of unrestricted cash (excluding cash equivalents) in operating accounts that are held with domestic and international financial institutions.
Bank Liquidity Risk As of June 28, 2025, we had approximately $349.5 million of unrestricted cash (excluding cash equivalents) in operating accounts that are held with domestic and international financial institutions.

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