Lumentum Holdings Inc. · NASDAQ:LITE
Lumentum — Investor Day (March 2023)
84 slides from Lumentum's investor day presentation, Mar 7, 2023
Slide 1: Lumentum Investor Technology Event
LITE 2023 LUMENTUM INVESTOR TECHNOLOGY EVENT MARCH 7, 2023
Slide 2: Forward-Looking Statements and Financial Presentation
FORWARD-LOOKING STATEMENTS AND FINANCIAL PRESENTATION This presentation contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These include statements regarding our expectations for our markets, cus
Slide 3: Today's Speakers
TODAY’S SPEAKERS ALAN LOWE WAJID ALI CHRIS COLDREN KATHY TA President and CEO EVP and CFO SVP, Chief Strategy VP, Investor Relations and Corp. Dev. Officer WUPEN YUEN DOUG ALTEEN NICOLAS HERRIAU JASON REINHARDT ALEX SCHOENFELDER SVP and GM SVP and GM VP and GM EVP and GM SVP and GM Telecom Transmiss
Slide 4: Scaling Photonics to New Heights
SCALING PHOTONICS TO NEW HEIGHTS ALAN LOWE President and CEO © 2023 Lumentum Operations LLC 4
Slide 5: Key Messages
KEY MESSAGES CONTINUED ▪ New era in optical networking, enabled by difficult-to-replicate photonic TECHNOLOGY integration technology LEADERSHIP ▪ Large core markets driven by long-term, secular trends EMERGING ▪ Edge network capacity inflection and AI in the data center create new, GROWTH high growt
Slide 6: Secular Drivers Accelerate Total Market Growth
SECULAR DRIVERS ACCELERATE TOTAL MARKET GROWTH NETWORKING $14B TAM IMAGING $1B TAM ADVANCED $10B TAM AND DATA CENTER 10% CAGR AND SENSING 15% CAGR MANUFACTURING 6% CAGR Q2 FY23 REVENUE MIX 76% 13% 11% OUR #1 in Networking Photonics and #1 in VCSEL Production #1 in Fiber Laser POSITION Data Center La
Slide 7: Unrelenting Network Data Capacity Growth
UNRELENTING NETWORK DATA CAPACITY GROWTH 450 Data capacity 400 growing at ~40% CAGR Network Data Capacity 350 300 [Terabit/s] 250 200 150 100 50 0 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 Year Source: LightCounting Optical Component Forecast Oct 2022 © 2023 Lumentum Operation
Slide 8: Physical Data Capacity Limit Creates Technology Inflection
PHYSICAL DATA CAPACITY LIMIT CREATES TECHNOLOGY INFLECTION TECHNOLOGY ERA EDFA & DWDM COHERENT 20 Further scaling requires more parallel channels 16 Gap to Shannon Limit [dB] 12 Requires photonic integration in 8 order to achieve 4 0 1996 2000 2004 2008 2012 2016 2020 2024 Sources: Omdia Webinar “Pl
Slide 9: Well Positioned to Continue Scaling Through Integration
WELL POSITIONED TO CONTINUE SCALING THROUGH INTEGRATION T-SFP+ OTN T-SFP+ OSFP/QSFP-DD ELECTRONICS Coherent Transceiver Modules WSS Modules AND SOFTWARE Amplifier Modules Line Cards Laser Systems Illuminator Modules Nano-ITLA Integrated Coherent Sub-Assemblies COMPONENTS TOSAs Telecom Pump Lasers In
Slide 10: End-to-End Networking and Data Center Leadership
END-TO-END NETWORKING AND DATA CENTER LEADERSHIP SUB-SEA LONG-HAUL & METRO DATA CENTER ACCESS & 5G HIGH-RELIABILITY PUMP COHERENT COMPONENTS & MODULES DML & EML TRANSMITTERS TUNABLE ACCESS LASER & AMPLIFIER ZR+ MODULES VCSEL TRANSMITTERS MODULES COMPONENTS ROADMs & AMPLIFIERS CW LASERS TRANSMIT & RE
Slide 11: New Applications in Automotive, Industrial, and Consumer
NEW APPLICATIONS IN AUTOMOTIVE, INDUSTRIAL, AND CONSUMER SECURITY AUTOMOTIVE WAREHOUSE & LOGISTICS Authentication, Access Control LiDAR and Occupant Monitoring Automated Guided Vehicles, Robotics AR/VR MICROELECTRONICS INDUSTRIAL Consumer and Industrial Applications Solar Cell and Display Manufactur
Slide 12: Globally Recognized Leader in ESG
GLOBALLY RECOGNIZED LEADER IN ESG KEY ESG GOALS ▪ Net-zero GHG emissions from our global operations by 2030 (Scope 1 and 2) ▪ Reduce GHG intensity by 25% by FY24 from FY21 baseline ▪ Reduce our emissions from air travel by 20% annually Second annual CSR Report, published Sept 2022 Commitment to SBTi
Slide 13: Scaling Photonics to New Heights
SCALING PHOTONICS TO NEW HEIGHTS Higher Speed Transmission | Wupen Yuen Higher Bandwidth Transport | Doug Alteen Higher Performance Datacom | Nicolas Herriau Higher Fidelity Imaging and Sensing | Jason Reinhardt Higher Precision Lasers | Alex Schoenfelder © 2023 Lumentum Operations LLC 13
Slide 14: Higher Speed: Telecom Transmission
TELECOM TRANSMISSION HIGHER SPEED WUPEN YUEN SVP and GM Telecom Transmission © 2023 Lumentum Operations LLC 14
Slide 15: Infinera CEO Testimonial
“ Our long-standing relationship with Lumentum as a strategic supplier is based on their proven track record of technology excellence and exceptional support. Our development collaboration has spanned multiple optical transmission technologies, components, and products. We continue to work closely w
Slide 16: End-to-End Networking and Data Center Leadership
END-TO-END NETWORKING AND DATA CENTER LEADERSHIP SUB-SEA LONG-HAUL & METRO DATA CENTER ACCESS & 5G HIGH-RELIABILITY PUMP COHERENT COMPONENTS & MODULES DML & EML TRANSMITTERS TUNABLE ACCESS LASER & AMPLIFIER ZR+ MODULES VCSEL TRANSMITTERS MODULES COMPONENTS ROADMs & AMPLIFIERS CW LASERS TRANSMIT & RE
Slide 17: Long-Haul and Metro Market Shifting to Higher Speeds
LONG-HAUL AND METRO MARKET SHIFTING TO HIGHER SPEEDS 400G+ market growing at 2027 ~20% 2022 CAGR 2022 - 2027 48% 52% 15% 85% Under 400G 400G+ Under 400G 400G+ High-Speed Market Growth Plays to Lumentum’s Strengths Source: LightCounting Optical Component Forecast Oct 2022 © 2023 Lumentum Operations L
Slide 18: Photonic Integration in Long-Haul & Metro Drives Advantage
PHOTONIC INTEGRATION IN LONG-HAUL & METRO DRIVES ADVANTAGE ELECTRONICS AND SOFTWARE 400ZR+ 400G CFP2 COMPONENTS NARROW-LINEWIDTH COHERENT COHERENT TROSA TUNABLE LASER MODULATOR RECEIVER CHIPS GAIN CHIP TIA DBR LASER DRIVER MODULATOR PLC RECEIVER Highest Performance Enables Longest Reach; Integration
Slide 19: Tunable and ZR Transceiver Adoption at Network Edge
TUNABLE AND ZR TRANSCEIVER ADOPTION AT NETWORK EDGE >30% ▪ Cable & Wireless Access: MARKET 10G & 25G tunable transceivers are increasing CAGR capacity at the network edge as requirements escalate ▪ Data Center Interconnect: Lumentum’s components and modules support relentless data traffic growth in
Slide 20: Photonic Integration in Network Edge Drives Advantage
PHOTONIC INTEGRATION IN NETWORK EDGE DRIVES ADVANTAGE ELECTRONICS AND SOFTWARE 10/25G 400ZR TUNABLE SFP+ COMPONENTS 10/25G TUNABLE NARROW-LINEWIDTH COHERENT OPTICAL TRANSMITTER TUNABLE LASER SUBASSEMBLY CHIPS DBR-MZM GAIN TIA SILICON DRIVER DSP CHIP PHOTONICS Chip-Level Integration Enables Small Foo
Slide 21: Reaching the Data Capacity Limit per Optical Bandwidth
REACHING THE DATA CAPACITY LIMIT PER OPTICAL BANDWIDTH TECHNOLOGY Optical Fundamental limit of ERA EDFA & DWDM COHERENT Bandwidth spectral efficiency 20 10G NRZ w/HD RS-FEC 16 Gap to Shannon Limit [dB] 10G NRZ w/HD EFEC 12 40G Optical DPSK 8 100G QPSK w/ 1st Gen SD-FEC 200G 16QAM w/ 2nd Gen SD-FEC 4
Slide 22: Lumentum Demonstrates World's First C+L-Band Laser
LUMENTUM DEMONSTRATES WORLD’S FIRST C+L-BAND LASER Total Capacity @ Total Optical Bandwidth 800G / Channel 4.8THz C-Band 25.6 T 4.8THz L-Band 25.6 T 6THz XC-Band 32.0 T 6THz XL-Band 32.0 T 9.6THz C+L-Band (future) 51.2 T 12THz XC+XL-Band (future) 64.0 T 9.6THz C+L-Band 1524 Wavelength (nm) 1626 C+L-
Slide 23: The Next Era in Data Capacity Scaling: CSDM
THE NEXT ERA IN DATA CAPACITY SCALING: CSDM Carrier and Spatial Division Multiplexing CARRIER DIVISION MULTIPLEXING SPATIAL DIVISION MULTIPLEXING SINGLE DUAL MULTI- SINGLE CARRIER CARRIER CARRIER FIBER PAIR & MULTI- DUAL FIBER BAND PAIRS MULTI-FIBER PAIRS Roadmap Moves to More Parallel Channels and
Slide 24: Lumentum's Photonic Integration for Continued Scaling
LUMENTUM'S PHOTONIC INTEGRATION FOR CONTINUED SCALING TODAY 2X to 4X DATA CAPACITY Laser Mod Laser Mod Laser Mod TRANSCEIVER DSP DSP ROADMAP Rx Rx Rx DUAL LASER, MOD, RX 400G / 64 GBaud DATA RATE / 1.6T / 128 GBaud SPEED 800G / 128 GBaud 2.4T / 200 GBaud 1.2T / 200 GBaud ▪ At 128 - 200 GBaud, reachi
Slide 25: Vertical Integration Strategy for Pluggables
LUMENTUM'S VERTICAL INTEGRATION STRATEGY FOR PLUGGABLES InP PHOTONIC ULTRA-NARROW INTEGRATED CIRCUITS LINEWIDTH TUNABLE LASERS COHERENT SILICON PHOTONIC DSPs INTEGRATED CIRCUITS HIGH SPEED RF ICs Enabled by Whole-System Engineering and World-Class Manufacturing © 2023 Lumentum Operations LLC 25
Slide 26: Key Messages
KEY MESSAGES MARKETS ▪ 85% of long-haul & metro market to require 400G or faster by 2027 SHIFTING TO HIGHER ▪ Network edge and DCI moving into our served market as speeds SPEEDS increase, driving 30% market CAGR ▪ Approaching data capacity limit in the C-band, wider optical bandwidth is the path for
Slide 27: Higher Bandwidth: Telecom Transport
TELECOM TRANSPORT HIGHER BANDWIDTH DOUG ALTEEN SVP and GM Telecom Transport © 2023 Lumentum Operations LLC 27
Slide 28: Ciena Testimonial
“ Our customers require networking solutions that not only meet their increased bandwidth demands, but also deliver lower cost, space, and power efficiencies. Ciena’s continued innovation and collaboration with companies like Lumentum are critical to deliver on those needs. ” © 2023 Lumentum Operati
Slide 29: End-to-End Networking and Data Center Leadership
END-TO-END NETWORKING AND DATA CENTER LEADERSHIP SUB-SEA LONG-HAUL & METRO DATA CENTER ACCESS & 5G HIGH-RELIABILITY COHERENT COMPONENTS & MODULES DML & EML TRANSMITTERS TUNABLE ACCESS PUMP LASER & ZR+ MODULES VCSEL TRANSMITTERS MODULES AMPLIFIER ROADMs & AMPLIFIERS CW LASERS PASSIVE COMPONENTS PUMP
Slide 30: Photonic Integration Drives Competitive Advantage
PHOTONIC INTEGRATION DRIVES COMPETITIVE ADVANTAGE ROADM Line Cards SUBSYSTEMS Amplifier Line Cards Line Subsystems ROADMs Multicast Switches Erbium Doped Fiber Amplifiers MODULES Athermal Arrayed Wave Guides Optical Channel Monitors Passive Modules Satellite Pumps Telecom Pumps High Reliability Subm
Slide 31: ROADM Market to Double in Next 5 Years
ROADM MARKET TO DOUBLE IN NEXT 5 YEARS AS NETWORKS SCALE >15% ▪ Functional and Component Integration: CAGR Enables high-port-count, C+L band extension and multi-fiber architectures CSDM ▪ Lumentum Value Proposition: Functional integration of ROADMs, Amplifiers and Optical Channel Monitors on Super T
Slide 32: Lumentum's ROADM Technology Enables Network Scaling
LUMENTUM'S ROADM TECHNOLOGY ENABLES NETWORK SCALING $/PORT (LOG SCALE) ROADM-on-a-Blade ▪ Higher port densities has led to lower cost per port with each generation Single ROADM Twin ROADM ▪ Seamless integration into Network Equipment Manufacturer systems has enabled a sustained competitive 2008 2010
Slide 33: Lumentum's ROADM Leadership with Each Generation
LUMENTUM'S ROADM LEADERSHIP WITH EACH GENERATION Twin Twin 16x24 Twin 8x24 1x32 Twin 1x20 Twin OFC 2023 1x9 Continued R&D Innovation Enables Significant Differentiation © 2023 Lumentum Operations LLC 33
Slide 34: Transport Extending to C+L Band to Continue Scaling
TRANSPORT EXTENDING TO C+L BAND TO CONTINUE SCALING Scaling Must Be Cost-Effective © 2023 Lumentum Operations LLC 34
Slide 35: Integrated C+L Band Enables 2X Data Capacity
LUMENTUM'S INTEGRATED C+L BAND ENABLES 2X DATA CAPACITY TODAY 2X DATA CAPACITY ROADM ROADMAP C-BAND INTEGRATED C+L BAND AMPLIFIED BANDWIDTH 4.8 THz 9.6 THz Integrated ROADMs and Amplifiers Enable Data Capacity Expansion © 2023 Lumentum Operations LLC 35
Slide 36: Transport Roadmap Continues Scaling with CSDM
TRANSPORT ROADMAP CONTINUES SCALING WITH CSDM SDM OPERATES WITH SPATIAL DIVISION MULTIPLEXING CONVENTIONAL LONG-HAUL CABLE SINGLE FIBER PAIR DUAL FIBER PAIRS MULTI FIBER 8 TO 256 FIBER PAIRS PER CABLE PAIRS Entering Spatial Division Multiplexing Era in Transport © 2023 Lumentum Operations LLC 36
Slide 37: SDM Delivers a Multiplier on ROADM Network Capacity
SDM DELIVERS A MULTIPLIER ON ROADM NETWORK CAPACITY TODAY 2X DATA CAPACITY 4X DATA CAPACITY ROADM ROADMAP C-BAND INTEGRATED C+L BAND 2X FIBER PAIRS + INTEGRATED C+L AMPLIFIED BANDWIDTH 4.8 THz 9.6 THz 19.2 THz Photonic and Electronic Functional Integration to Enable Cost-Effective Scaling to 20 THz
Slide 38: Sub-Sea Cable Already Employing SDM
SUB-SEA CABLE ALREADY EMPLOYING SDM 24 FIBER PAIR 20 FIBER PAIR 16 FIBER PAIR 12 FIBER PAIR HIGH FIBER COUNT CABLE MULTI-CORE FIBER CABLE Supporting New Deployments with Ultra-Dense, High-Reliability Components © 2023 Lumentum Operations LLC 38
Slide 39: Technology Leadership Extending to New Markets
TECHNOLOGY LEADERSHIP EXTENDING TO NEW MARKETS DATA CENTER OPTICS FOR SPACE OPTICAL SWITCHING COMMUNICATIONS Providing Leading Optical Transport Solutions in Partnership with Customers © 2023 Lumentum Operations LLC 39
Slide 40: Key Messages
KEY MESSAGES CSDM ▪ Scaling from C-Band to C+L Band to multiples of C+L will provide MULTIPLIES technology and product leadership opportunity for Lumentum in next- NETWORK generation ROADMs CAPACITY ▪ CSDM enables density savings for bandwidth growth SCALING ▪ Functional integration of photonics, el
Slide 41: Higher Performance: Datacom
DATACOM HIGHER PERFORMANCE NICOLAS HERRIAU VP and GM Datacom © 2023 Lumentum Operations LLC 41
Slide 42: NVIDIA Testimonial
“ Lumentum is a key partner for the development of more efficient laser products that support NVIDIA’s roadmap for photonic interconnects in data center accelerated computing solutions. ” CRAIG THOMPSON Vice President Networking Group, NVIDIA © 2023 Lumentum Operations LLC 42
Slide 43: End-to-End Networking and Data Center Leadership
END-TO-END NETWORKING AND DATA CENTER LEADERSHIP SUB-SEA LONG-HAUL & METRO DATA CENTER ACCESS & 5G HIGH-RELIABILITY COHERENT COMPONENTS & MODULES DML & EML TUNABLE ACCESS PUMP LASER & TRANSMITTERS MODULES ZR+ MODULES AMPLIFIER VCSEL TRANSMITTERS ROADMs & AMPLIFIERS TRANSMIT & COMPONENTS CW LASERS PU
Slide 44: Data Center Growing and AI Rapidly Emerging
DATA CENTER GROWING AND AI RAPIDLY EMERGING 10000 NVIDIA DGX SuperPOD™ AI Compute Cluster 1.6TbE 1000 400GbE 800GbE 100GbE 200GbE 100 Link Speed (b/s) 50GbE 40GbE 25GbE 10 10GbE 5GbE 2.5GbE 1GbE 1 100Mb/s Ethernet 0.1 10Mb/s Ethernet Source: Nvidia 0.01 *NVIDIA DGX SuperPOD is a trademark of NVIDIA
Slide 45: Expanding Portfolio for Data Center Applications
EXPANDING PORTFOLIO FOR DATA CENTER APPLICATIONS INTRA-DATA CENTER LINKS OPTICAL REPLACING COPPER NEW AI COMPUTE CLUSTER ▪ COST AND POWER-EFFICIENT 800G ▪ HIGH PERFORMANCE FOR SHORT ▪ HIGH POWER WHILE MAINTAINING LOW ▪ PERFORMANCE LEADERSHIP INTERCONNECT AND AOC APPLICATIONS NOISE LEVEL AND POWER CO
Slide 46: Higher Speed and Power Efficiency Delivered by Lasers
HIGHER SPEED AND POWER EFFICIENCY DELIVERED BY LASERS 1.6 800 Tb 400 Gb Gb 200 Gb 8 x 200Gb PAM4 4 x 200Gb PAM4 16 x 100Gb PAM4 100 8 x 100Gb PAM4 4 x 100Gb PAM4 Gb 8 x 50Gb PAM4 4 x 50Gb PAM4 8 x 25Gb NRZ 4 x 25Gb NRZ Each Generation Optimized Through Better Laser Performance © 2023 Lumentum Operat
Slide 47: AI Demands High Power, Highly Integrated Laser Solutions
AI DEMANDS HIGH POWER, HIGHLY INTEGRATED LASER SOLUTIONS ETHERNET AI COMPUTE TRANSCEIVER SILICON PHOTONICS ELS ENGINE SILICON PHOTONICS LASERS Mod Mod ARCHITECTURE LASER CHANNEL GPU SWITCH EVOLUTION ASIC ARRAY ROUTER ASIC ELECTRONICS ELECTRONICS DSP Rx Rx DATA RATE 400G → 800G → 1.6T 1.2T → 2.4T ▪ D
Slide 48: Operational Advantages in Serving Data Center Market
OPERATIONAL ADVANTAGES IN SERVING DATA CENTER MARKET HIGH-VOLUME AUTOMATED PROVEN QUALITY MANUFACTURING FABRICATION AND TEST AND RELIABILITY 1.7 BILLION VCSELS & VCSEL ARRAYS High-Volume Fabrication SHIPPED WITH ZERO FIELD FAILURES ▪ Leading volume manufacturer ▪ Wafer-level testing ▪ Industry-leadi
Slide 49: Key Messages
KEY MESSAGES ▪ Data center needs driving double-digit laser transmitter market CAGR DRIVING COST AND POWER ▪ Speed and interface evolution demands high-performance laser EFFICIENCY IN transmitters for needed power efficiency DATA CENTERS ▪ New opportunity for VCSELs in short-reach interconnects ▪ Ne
Slide 50: Higher Fidelity: Imaging and Sensing
IMAGING AND SENSING HIGHER FIDELITY JASON REINHARDT EVP and GM Imaging and Sensing © 2023 Lumentum Operations LLC 50
Slide 51: Hesai Testimonial
“ We are pleased to be collaborating with Lumentum—the global leader in VCSELs for consumer electronics—on our hybrid solid- state LiDAR AT128 for ADAS applications, which contains an all VCSEL-based design to achieve high affordability, automotive grade reliability, and consistency ” requirements.
Slide 52: Our Journey in Consumer 3D Sensing Continues
OUR JOURNEY IN CONSUMER 3D SENSING CONTINUES NEW APPLICATIONS GAMING PCs AND LAPTOPS SMARTPHONES VIRTUAL REALITY PAYMENT AUTHENTICATION 2010 2012 2017 Advanced VCSEL Designs Industry Leading Fabrication SECURITY & ACCESS CONTROL Scale Manufacturing Capabilities Unlocking Greater Precision and Higher
Slide 53: Paving the Way for Expansion into New Growth Markets
PAVING THE WAY FOR EXPANSION INTO NEW GROWTH MARKETS AUTOMOTIVE INDUSTRIAL MEDICAL & LIFE SCIENCES COMMERCIAL SECURITY ▪ Automotive LiDAR ▪ Quality and process management ▪ Medical diagnostics ▪ Access control ▪ In-cabin monitoring ▪ Manufacturing automation ▪ Sample analysis ▪ Cargo inspection ▪ En
Slide 54: Automotive LiDAR Demands Performance at the Right Cost
AUTOMOTIVE LIDAR DEMANDS PERFORMANCE AT THE RIGHT COST LIDAR SENSOR SHIPMENT FORECAST (INDUSTRY) 30Mu CHINESE EVs MEETING AUTOMOTIVE LIDAR REQUIREMENTS ▪ 20-to-300-meter range multi-junction VCSELs & coherent FMCW photonics REST OF WORLD ▪ High-efficiency photonics ▪ Low cost given mobile and teleco
Slide 55: Broad Ecosystem Enables Strategy to Win in Automotive
BROAD ECOSYSTEM ENABLES STRATEGY TO WIN IN AUTOMOTIVE Comprehensive Toolkit to Address Needs Across All Levels of LiDAR Supply Chain *Note: Selected customer examples © 2023 Lumentum Operations LLC 55
Slide 56: Accelerating Market Transition to Machine Vision
ACCELERATING MARKET TRANSITION TO MACHINE VISION COMPACT PACKAGING Optical Subassemblies AND QUALITY CONTROL Transmission Modules DETECTION OF Detectors LIGHT SIGNAL Waveguides Lenses DELIVERY OF MEMS LIGHT SIGNAL LCoS Lasers GENERATION OF VCSELS COMPLEX LIGHT SIGNAL Drivers Uniquely Positioned to D
Slide 57: Key Messages
KEY MESSAGES ▪ Rapid growth and traction in new growth areas beyond consumer CONSUMER APPLICATIONS ▪ Applications such as Automotive LiDAR, AR/VR, Authentication, and JUST THE Industrial Sensing require advanced optical techniques to be effective BEGINNING ▪ We expect current addressable market to d
Slide 58: Higher Precision: Lasers
LASERS HIGHER PRECISION ALEX SCHOENFELDER SVP and GM Lasers © 2023 Lumentum Operations LLC 58
Slide 59: Amada Testimonial
“ We are very proud to have worked closely with Lumentum on the joint development of our latest Turn-Key Fiber Laser–a single module with excellent beam quality and high precision, key features which continue to differentiate us from others in the growing metal cutting market. ” TAKAAKI YAMANASHI Di
Slide 60: Key Served Segments in $10B Commercial Lasers Market
KEY SERVED SEGMENTS IN $10B COMMERCIAL LASERS MARKET INDUSTRIAL MICROELECTRONICS LUMENTUM OEM LASER SYSTEMS CUSTOMER MACHINE TOOLS © 2023 Lumentum Operations LLC 60
Slide 61: New Opportunities in Solid-State and Ultrafast Lasers
NEW OPPORTUNITIES IN SOLID-STATE AND ULTRAFAST LASERS Ultrafast Lasers ▪ Semiconductors ▪ EVs ▪ Displays ▪ Solar cells Pulsed Solid-State Lasers ▪ Semiconductors ▪ Microelectronics ▪ Additive manufacturing Pulsed Solid-State Lasers ▪ Semiconductors ▪ Microelectronics kW Fiber Lasers ▪ Additive manuf
Slide 62: New Materials and Processes for Industrial Applications
NEW MATERIALS AND PROCESSES FOR INDUSTRIAL APPLICATIONS CUTTING AND WELDING KEY FEATURES ADDITIVE MANUFACTURING ▪ Turn-key and OEM fiber lasers ▪ Up to 12 kW optical power ▪ Differentiated beam quality ▪ Vertically integrated with pumps and fiber ▪ Quality and reliability leadership INDUSTRY TRENDS
Slide 63: Better Beam Quality = A Sharper Tool
BETTER BEAM QUALITY = A SHARPER TOOL Lumentum’s high performance, high precision beam quality is a key differentiator for Amada’s Locus Beam Control (LBC) technology KEY FACTORS “High intensity, small spot rotating ▪ Applications require intense, smaller focus spots in large spot envelope” ▪ Long te
Slide 64: Microelectronics Require Micron-Level Laser Precision
MICROELECTRONICS REQUIRE MICRON-LEVEL LASER PRECISION KEY APPLICATIONS ▪ High speed antenna manufacturing ▪ Display manufacturing ▪ Semiconductor chip separation, packaging and interconnect INDUSTRY TRENDS ▪ Feature size reduction ▪ Reduced device power consumption ▪ Enhanced device performance ▪ Co
Slide 65: Ultrafast Lasers Deliver Precision to Microelectronics
ULTRAFAST LASERS DELIVER PRECISION TO MICROELECTRONICS INDUSTRY NEED LUMENTUM’S VALUE PROPOSITION High productivity High UV power, excellent beam quality 24/7 manufacturing Industry-leading reliability Extreme process stability No degradation of beam quality or power Application tailoring Proprietar
Slide 66: Key Messages
KEY MESSAGES ▪ Advanced manufacturing and microelectronics fabrication markets are evolving to embrace “clean and green” techniques MARKET SHIFTS ▪ OEMs are requiring higher precision, accuracy, power savings and PLAY TO OUR productivity improvements, all areas where Lumentum excels STRENGTHS ▪ Inve
Slide 67: Investing for Higher Growth
INVESTING FOR HIGHER GROWTH WAJID ALI EVP and CFO © 2023 Lumentum Operations LLC 67
Slide 68: Key Takeaways
KEY TAKEAWAYS ▪ Revenue mix shift to infrastructure markets, driven by secular trends ▪ Additional acquisition synergies drive higher EPS growth and profitability ▪ Expect Non-GAAP EPS to expand faster than revenue ▪ Well capitalized for future organic and inorganic growth © 2023 Lumentum Operations
Slide 69: Revenue Mix Shift to Networking, Data Center, and Lasers
REVENUE MIX SHIFT TO NETWORKING, DATA CENTER, AND LASERS Consumer Networking & Consumer Networking & Data Center Data Center Lasers FY23 FY22 ~70% (Est.) ~90% Lasers FY22 Lumentum Revenue FY23E Lumentum Revenue $1.71B ~$1.9B (consensus) Infrastructure Markets to Deliver Secular Growth with Less Cycl
Slide 70: Transformative Acquisition Strategy and Outcomes
TRANSFORMATIVE ACQUISITION STRATEGY AND OUTCOMES REVENUE [$B] Non-GAAP EPS [$] $6.05 11% 25% $5.84 $4.95 CAGR $1.91 CAGR $5.33 Aug 2022 FY16 – FY23E FY16 – FY23E $1.74 $1.71 NeoPhotonics $1.68 ZR/ZR+ Coherent $1.57 $3.79 Components $3.34 Aug 2022 $1.25 IPG Product Lines* DSP Design Team $1.00 $0.90
Slide 71: Cumulative $1B R&D Investment Over Last 5 Years
CUMULATIVE $1B R&D INVESTMENT OVER LAST 5 YEARS $257 Non-GAAP R&D Spending [$M] Key R&D Focus Areas $194 $198 $183 ▪ High-speed, integrated coherent components $170 ▪ Advanced ROADMs ▪ Photonics for AR/VR ▪ ZR/ZR+ modules ▪ Coherent DSPs ▪ Edge access modules ▪ Photonics for AI in data centers ▪ Las
Slide 72: Operating Strategy to Optimize Profitability
OPERATING STRATEGY TO OPTIMIZE PROFITABILITY EXPAND STRENGTHEN IMPROVE GROSS MARGIN COMPETITIVE ADVANTAGE COST STRUCTURE ▪ New and differentiated ▪ Invest in internal ▪ Streamline SG&A to products capabilities for add leverage differentiated technologies ▪ Materials cost such as InP and ROADMs ▪ Bus
Slide 73: Value Creation Through Operating Cost Synergies
VALUE CREATION THROUGH OPERATING COST SYNERGIES EXPECTED FY23 RUN RATE SYNERGIES IN NEXT SYNERGIES TWO YEARS ▪ R&D with scale OPERATING ▪ Development cost savings $20M $30M EXPENSES ▪ Consolidation of SG&A COST OF ▪ Volume savings with external procurement GOODS ▪ Increased in-house procurement $10M
Slide 74: Execution to Drive +500bps Operating Margin Expansion
EXECUTION TO DRIVE +500bps OPERATING MARGIN EXPANSION Non-GAAP Model 26 – 28% 23 – 25% Revenue Drivers 21.9% ▪ 400G+ Coherent Components ▪ ZR/ZR+ Modules ▪ Tunable Access Modules ▪ ROADMs ▪ Automotive LiDAR ▪ Data Center Lasers Synergies & Optimization ▪ Streamline SG&A ▪ Manufacturing footprint con
Slide 75: Investment and Capital Allocation Priorities
INVESTMENT AND CAPITAL ALLOCATION PRIORITIES INVESTMENT IN ▪ Portfolio expansion for growth and profitability ORGANIC GROWTH ▪ RoIC-based investment decisions INORGANIC ▪ Adjacent and complimentary to core competencies GROWTH ▪ Accretion to the financial model MAINTAIN ▪ Maintain financial flexibili
Slide 76: Target Financial Model
TARGET FINANCIAL MODEL Non-GAAP Model FY23 CONSENSUS MID-TERM LONG-TERM ESTIMATES TARGET MODEL TARGET MODEL REVENUE $1.9B $2.0 – $2.3B > $2.5B GROSS MARGIN 45.6% 44 – 46% 46 – 48% OPERATING EXPENSES 23.8% 21 – 23% 20 – 22% OPERATING MARGIN 21.9% 23 – 25% 26 – 28% Non-GAAP EPS Expected to Expand Fast
Slide 77: Lumentum Financial Roadmap
LUMENTUM FINANCIAL ROADMAP SYNERGY EARNINGS EXPANSION DISCIPLINED CAPITAL SAVINGS FASTER THAN REVENUE ALLOCATION ▪ Disciplined R&D Non-GAAP OpM % ▪ $80M synergy savings investment expected within 2 years ▪ Inorganic growth ▪ +500 bps operating opportunities margin expansion over next few years ▪ Con
Slide 78: Scaling Photonics to New Heights
SCALING PHOTONICS TO NEW HEIGHTS ALAN LOWE President and CEO © 2023 Lumentum Operations LLC 78
Slide 79: Key Messages
KEY MESSAGES CONTINUED ▪ New era in optical networking, enabled by difficult-to-replicate photonic TECHNOLOGY integration technology LEADERSHIP ▪ Large core markets driven by long-term, secular trends EMERGING ▪ Edge network capacity inflection and AI in the data center create new, GROWTH high growt
Slide 80: Q&A Session
Q&A SESSION ALAN LOWE WAJID ALI CHRIS COLDREN KATHY TA President and CEO EVP and CFO SVP, Chief Strategy VP, Investor Relations and Corp. Dev. Officer WUPEN YUEN DOUG ALTEEN NICOLAS HERRIAU JASON REINHARDT ALEX SCHOENFELDER SVP and GM SVP and GM VP and GM EVP and GM SVP and GM Telecom Transmission T
Slide 81: © 2023 Lumentum Operations LLC
© 2023 Lumentum Operations LLC 81
Slide 82: Appendix
APPENDIX © 2023 Lumentum Operations LLC 82
Slide 83: Reconciliation of GAAP to Non-GAAP Measures (EPS)
RECONCILIATION OF GAAP TO NON-GAAP MEASURES (EPS) FY16 FY17 FY18 FY19 FY20 FY21 FY22 Net income on GAAP basis $ 9.3 $ (102.5) $ 248.1 $ (36.4) $ 135.5 $ 397.3 $ 198.9 Stock-based compensation 26.9 32.7 46.8 70.7 73.2 92.9 103.1 Inventory and fixed asset write down due to product line exists - - 7.0
Slide 84: Reconciliation of GAAP to Non-GAAP Measures (R&D)
RECONCILIATION OF GAAP TO NON-GAAP MEASURES (R&D) FY16 FY17 FY18 FY19 FY20 FY21 FY22 Research and development on GAAP basis $ 141.1 $ 148.3 $ 156.8 $ 184.6 $ 198.6 $ 214.5 $ 220.7 Stock-based compensation (9.0) (11.6) (14.2) (13.8) (15.9) (19.5) (22.1) Expenses related to COVID-19 outbreak - - - - (