Live: Lumentum Announces Q2 Earnings Tonight After 416% Rally

Lumentum is holding onto gains, but shares are off their highs after releasing earnings. As of 4:50 p.m. ET, shares are up about 8.7%.

In our preview, we said to pay close attention to whether Lumentum would highlight CPO orders and they have said they’ve started receiving large orders in that segment. The market hunt for CPO stocks is likely one of the next big trends in AI.

LITE | Lumentum Q2’26 Earnings Highlights:

• Adj. EPS: $1.67 (Est. $1.41) [✅]; [UP] +297.6% YoY
• Revenue: $665.5M [⚠️]; [UP] +65.5% YoY
• Adj. Gross Margin: 42.5% [✅]; [UP] +1020 bps YoY
• Net Income: $78.2M [✅]; [UP] +228.5% YoY

Q2’26 Outlook:

• Revenue: $780M to $830M (Est. N/A) [✅]
  • Lumentum expects over 85% year-over-year revenue growth driven by strong demand in optical circuit switches (OCS) and co-packaged optics (CPO).
  • The company has a backlog exceeding $400 million in OCS and has received a multi-hundred-million-dollar order for CPO, deliverable in the first half of calendar 2027.

Q2 Segment Performance:

• Components Revenue: $443.7M [✅]; [UP] +68.3% YoY
• Systems Revenue: $221.8M [✅]; [UP] +60.1% YoY

Other Key Q2 Metrics:

• Adj. Operating Income: $167.7M  [✅]; [UP] +426.5% YoY
• Adj. Operating Expenses: $45.0M [✅]; [UP] +25.6% YoY
• R&D Expenses: $80.1M[✅]; [UP] +7.9% YoY
• Effective Tax Rate: 18.3% (vs. 18.6% YoY)
• Cash and Cash Equivalents: $657.7M
• Inventories: $570.4M
• Long-term Debt: $47.1M

CEO Commentary:

• Michael Hurlston: “Lumentum delivered a standout second quarter, with over 65 percent year-over-year revenue growth and non-GAAP operating margin expansion above 1,700 basis points. Revenue hit the high end of our guidance range, while profitability and EPS expanded well beyond prior guidance, demonstrating the leverage of our business model.”

Here’s Lumentum’s guidance:

“Lumentum expects the following for the third quarter of scal year 2026: Net revenue in the range of $780 million to $830 million Non-GAAP operating margin of 30.0% to 31.0% Non-GAAP diluted earnings per share of $2.15 to $2.35 

Wall Street was expecting EPS of $1.60 and revenue of $706 million, so this guidance is a massive beat.

Shares are now up 13%.

Wall Street likes what it sees after Lumentum’s Q4 beat, shares are now up 11%.

The market is closed and Lumentum’s earnings are out. The initial reaction is up 5%.

• Revenue: $665.5 million
• Adjusted EPS: $1.67

As a reminder, here’s what Wall Street expected:

• Revenue: $652 milion
• Adjusted EPS: $1.41

Lumentum noted in their last conference call that much of their recent sales momentum is coming before major catalysts like the rise of co-packaged optics.

Yesterday, popular Substack Global Technology Research crunched the numbers on the co-packaged optics opportunity for Teradyne and it was absolutely massive. Lumentum provides the external laser source for NVIDIA’s CPO switch, so they’re another company expected to see massive tailwinds from the rise of the technology in the next 18 months.

Be on the lookout for what management says about the market tonight, it could drive a lot of post-earnings activity.

Lumentum is one of the few ‘safe harbors’ in an otherwise brutal market sell off today. Shares of the company are up 2.75% in late trading while most technology stocks are getting rocked.

Software stocks are facing the most pressure with Salesforce down 8% and ServiceNow down 7.2%.

However, chip stocks have also seen a sell-off. NVIDIA is down 4.5% while Broadcom is down 5.8%.

Networking stocks in general have performed the best today. Lumentum has benefitted from headlines that NVIDIA is pushing its timeline for deploying co-packaged optics up into 2027. That would be a powerful earnings catalyst for the company.