Lumentum reported Q4 2024 revenue of $308.3 million, representing a year-over-year decline of 16.9% and a quarter-over-quarter decline of 15.9%. Despite cost containment, the company recorded a substantial operating loss of $96.3 million and a net loss of $252.5 million, driven by aggressive operating expenses relative to revenue and a substantial tax expense that contributed to the negative bottom line. Gross margin was a modest 10.4%, reflecting continued pricing pressure and mix shift within the Optical Communications and Lasers segments. Free cash flow was modest at $10.9 million, while operating cash flow was $35.5 million, underscoring a cash-generative business but with a fragile earnings base.
The balance sheet shows ample liquidity (cash and short-term investments of $887 million) but a heavy debt load (total debt of $2.56 billion; long-term debt of $2.55 billion) producing an elevated debt-to-capitalization ratio of 0.728 and an interest coverage near negative territory (-17.8x). Management commentary, where available, signals ongoing macro-driven demand volatility in telecom/datacom and laser markets, with a focus on cost control and portfolio optimization. The company’s valuation metrics remain depressed given negative earnings, though liquidity and operating cash generation provide some cushion while the business navigates a cyclical recovery path.
Key questions for investors center on (1) the trajectory of OpComms and Laser end-market demand, (2) the pace of margin recovery through product mix and price realization, (3) the effectiveness of balance-sheet optimization, and (4) the sustainability of free cash flow in a high-debt framework.