Simon Leopold

Simon Leopold inquired about the accelerating Optical Circuit Switch (OCS) market, seeking details on market trends, exit rates, and customer diversification. He also asked for quantification of the impact of recent price increases on Lumentum's growth.

Answer

Michael Hurlston, President and CEO, confirmed the OCS market's acceleration, noting a backlog exceeding $400 million, primarily for shipment in the first half of fiscal 2027, and mentioned increasing demand from multiple customers. He stated that price increases are impacting both top-line revenue and gross margin, with more significant effects expected in the March quarter. Wajid Ali, Executive Vice President and CFO, added that price increases are contributing to improved gross margins alongside other factors like cost reduction and yield improvements.

Simon Leopold inquired about the accelerating Optical Circuit Switch (OCS) market, seeking more color on its exit rate and customer diversification. He also asked for quantification of the impact of recent price increases on Lumentum's growth and margins.

Answer

President and CEO Michael Hurlston confirmed the OCS market is developing better than expected, with backlog exceeding $400 million from multiple customers, primarily shipping in fiscal H1 2027. Executive Vice President and CFO Wajid Ali noted price increases are modestly impacting revenue but more significantly benefiting gross margins, alongside other cost optimization efforts.

Simon Leopold asked about Lumentum's Optical Circuit Switch (OCS) opportunity, specifically confirming the target of $100 million by the December 2026 quarter and how the market is evolving. He then requested a rank order of the biggest dollar increase contributors sequentially for the December quarter across DataCom transceivers, telecom devices, and DataCom chipsets.

Answer

President and CEO Michael Hurlston confirmed increased confidence in the $100 million/quarter OCS target by December 2026, citing high customer engagement and growing use cases. For the December quarter's growth, he stated it is broad-based across all segments, but transceivers are expected to be the biggest dollar contributor, finally showing sustained growth after previous 'fits and starts.'

Simon Leopold inquired about the evolution of Lumentum's Optical Circuit Switch (OCS) opportunity, specifically asking for confirmation on a target of $100 million by the December 2026 quarter. He also asked for a rank order of the biggest dollar increase contributors to sequential revenue growth in the December quarter forecast.

Answer

President and CEO Michael Hurlston confirmed increased confidence in reaching the $100 million per quarter target for OCS by December 2026, citing high customer engagement and growing use cases. For sequential revenue growth in the December quarter, he stated it is 'broad-based' across all segments, but specifically highlighted transceivers as the largest contributor, coming off previous 'fits and starts' in production.

Simon Leopold inquired about the revenue trajectory for Optical Circuit Switches (OCS), which began shipping earlier than expected, and the competitive positioning of Lumentum's high-powered lasers for Co-Packaged Optics (CPO).

Answer

President and CEO Michael Hurlston explained that the OCS ramp will have key inflection points in calendar 2026 and is currently limited by manufacturing capacity. Regarding CPO, he expressed confidence in maintaining a competitive moat due to the laser's unique power and reliability, noting they believe they are currently a sole-source supplier.

Simon Leopold of Raymond James questioned the specific assumptions behind the 100-basis-point tariff headwind, including the extent of manufacturing remaining in China. He also asked for Lumentum's latest outlook on its role and potential contribution from co-packaged optics (CPO).

Answer

CFO Wajid Ali explained the tariff headwind stems from increased component costs and noted that production is actively moving from China to the company's facility in Thailand, which should diminish the impact over time. Wupen Yuen, President of Cloud and Networking, stated that CPO is a longer-term opportunity, with meaningful revenue not expected until the second half of calendar 2026, and that pluggable modules will remain the primary growth driver in the near term.

Simon Leopold asked for Lumentum's perspective on the long-term prospects for co-packaged optics (CPO) and for more detail on the recovery in telecom demand, questioning if it's merely inventory normalization or a more fundamental rebound.

Answer

SVP and Chief Strategy Officer Chris Coldren positioned co-packaged optics as a long-term opportunity for Lumentum's high-power lasers, enabling data center scaling rather than cannibalizing transceiver sales. President and CEO Alan Lowe stated that the telecom inventory issue is now resolved, with current shipments matching end-market demand. He highlighted that the growth is being driven by strong demand for data center interconnect (DCI) and long-haul transport solutions, which are increasingly used to connect geographically dispersed data centers.

Simon Leopold from Raymond James inquired about any changes to the expected cadence for the Cloud Light business and sought perspective on the market evolution and timing for 1.6T devices.

Answer

President and CEO Alan Lowe confirmed that the Cloud Light business is performing as expected, with no significant changes to the previously discussed cadence. For 1.6T devices, Lowe noted strong customer interest and stated Lumentum will participate at both the component (200G EMLs) and transceiver levels, expecting a significant market ramp by the end of calendar 2025.

Simon Leopold asked for clarification on the revenue contribution from AI projects, both currently and for the full year/longer term. He also inquired about the portion of systems revenue growth attributable to F5's recent price hikes.

Answer

François Locoh-Donou, President and CEO, stated that AI revenues are not yet broken out but noted that direct AI use cases, which were in the single-digit millions quarterly last year, are now healthily in the double-digit millions, with significant growth potential in runtime security. Cooper Werner, EVP and CFO, explained that the mid-single-digit price increase introduced in January 2025 is having its biggest impact on the systems business (net new sales) and is factored into the outlook, with a more muted but healthy pickup on the software side due to multi-year agreements.

Simon Leopold asked for a quantification of AI-related revenue as a percentage of total revenue, current and projected for the full year and longer term. He also asked what portion of systems revenue growth could be attributed to F5's recent price increases.

Answer

François Locoh-Donou, President and CEO of F5, stated that AI revenue from direct use cases was in the single-digit millions quarterly last year and is now 'healthily in the double-digit millions' this quarter, but it's too early to break out further. He expects continued growth as more use cases emerge, particularly in runtime security, which he believes will be a multi-billion dollar market. Cooper Werner, EVP and CFO, attributed the biggest impact of price increases to the systems business (mid-single-digit increase introduced in January 2025), with a muted but healthy pickup in software due to multi-year agreements.

Simon Leopold asked about the impact of the U.S. Federal government shutdown on F5's Q1 outlook and the mix of software versus hardware growth embedded in the full-year 0-4% guidance. He also sought clarification on whether the BIG-IP breach affects both software and hardware virtual editions.

Answer

François Locoh-Donou, President and CEO, confirmed that the guidance assumes some disruption in the U.S. Federal segment for Q1 due to the shutdown, with hopes for normalization later. Cooper Werner, EVP and CFO, stated that F5 is not guiding mix for the full year yet, given the recent incident, but will update as demand normalizes. François Locoh-Donou confirmed that the BIG-IP breach affects both software and hardware equally.

Simon Leopold asked about the impact of the U.S. government shutdown on the December quarter outlook for F5. He also sought clarification on the software vs. hardware growth baked into the full-year 0%-4% guidance and whether the BIG-IP breach affected both software (virtual editions) and hardware equally.

Answer

François Locoh-Donou (President and CEO, F5) confirmed that F5's guidance assumes some disruption in the U.S. Federal segment, especially in Q1, due to the government shutdown, expecting delays in projects and approvals. Cooper Werner (EVP and CFO, F5) stated that F5 is not guiding mix at this point due to the recency of the incident, but expects demand to normalize in the second half. François Locoh-Donou clarified that the BIG-IP breach affects both software (virtual editions) and hardware equally.

Simon Leopold asked about the strong performance in the historically lumpy service provider vertical and whether it indicated a new trend. He also inquired about the longer-term outlook for services revenue, noting its apparent disconnect from strong hardware sales.

Answer

CEO François Locoh-Donou advised that the service provider business remains lumpy and that one strong quarter doesn't signal a fundamental trend change. CFO Cooper Werner explained that services revenue growth lags product sales and is expected to re-accelerate. He pointed to 10% growth in total deferred revenue as a leading indicator of future services strength.

Simon Leopold sought clarification on the updated revenue growth cadence for the first half of fiscal '25, which appeared to be raised from 'flat' to 'low single-digit growth', and asked how verticals performed relative to expectations.

Answer

SVP of Finance and incoming CFO Cooper Werner confirmed the first-half FY25 outlook was raised to low single-digit growth, driven by strength in renewal expansions and an improved systems revenue forecast. EVP and CFO Frank Pelzer stated that the enterprise vertical was the source of outperformance in the quarter, exceeding expectations, while U.S. Federal was largely in line and the service provider vertical remained weak.

Simon Leopold from Raymond James & Associates asked for a timeline on when the two new hyperscalers adopting Ciena's Scale-across architecture would begin contributing revenue, and for a longer-term outlook on the cadence of Scale-across projects. He also requested a breakdown of the 10% revenue customers for Q4.

Answer

CEO Gary Smith stated that revenue from all three hyperscalers for Scale-across is expected to begin in 2026, with the main ramp-up occurring in 2027 and through 2028, driven by massive fiber infrastructure commitments. CFO Marc Graff disclosed that Q4 had three 10%+ customers: AT&T and two global cloud providers, collectively accounting for just under 44% of Q4 revenue. For the full year, AT&T and one cloud provider made up about 28% of revenue.

Simon Leopold from Raymond James & Associates asked for a timeline on when the two new hyperscalers adopting Ciena's Scale-across architecture would begin contributing revenue, and for a longer-term outlook on the cadence of Scale-across projects. He also requested a breakdown of the 10% revenue customers for Q4.

Answer

CEO Gary Smith stated that revenue from all three hyperscalers for Scale-across is expected to begin in 2026, with the main ramp-up occurring in 2027 and through 2028, driven by massive fiber infrastructure commitments. CFO Marc Graff disclosed that Q4 had three 10%+ customers: AT&T and two global cloud providers, collectively accounting for just under 44% of Q4 revenue. For the full year, AT&T and one cloud provider made up about 28% of revenue.

Simon Leopold of Raymond James Financial asked for a breakdown of Ciena's top customers, including the specific revenue percentages for the two largest customers and the total for the top five, and questioned the long-term sustainability of cloud-driven growth.

Answer

CFO Jim Moylan disclosed that the largest customer, a cloud provider, accounted for 13.4% of revenue, while the second largest, AT&T, was 10.4%. The top five customers combined represented 45% of revenue. President and CEO Gary Smith added that cloud growth is sustainable due to a broadening base of both applications, like GPU clustering, and the number of cloud providers investing heavily in their networks beyond just the top four hyperscalers.

Simon Leopold of Raymond James sought a better understanding of Ciena's supply chain reengineering, its exposure to Mexico, and a quantification of the risk if current tariffs remain in place.

Answer

CFO Jim Moylan explained that Ciena's supply chain is designed for resilience, with manufacturing in Mexico, Thailand, Canada, and India, allowing for flexibility. He stated it would not be useful to quantify exposure due to the dynamic situation. Executive Adviser Scott McFeely added that Ciena's direct control over components and ownership of test assets enables this flexibility to move production globally.

Simon Leopold inquired about the trends differentiating direct cloud sales from Managed Optical Fiber Network (MOFN) deals, and asked about expectations for customer concentration in fiscal 2025.

Answer

CFO Jim Moylan and CEO Gary Smith clarified that while cloud providers prefer to build their own networks directly, the MOFN trend is increasing because cloud providers are expanding so rapidly they must use service providers to augment their capacity builds, especially in regions with regulatory restrictions. Regarding customer concentration, Jim Moylan stated that he expects a similar pattern, with four key customers (two cloud, two service provider) potentially reaching the 10% threshold in any given quarter, though the specific names may vary.

Simon Leopold asked for more detail on the scale of the Managed Optical Fiber Network (MOFN) opportunity and for commentary on Ciena's broadband prospects, especially in light of a competitor's recent exclusivity announcement with a Tier 1 U.S. operator.

Answer

CEO Gary Smith estimated that MOFN deals, where service providers build networks for cloud providers, now represent about 10% to 15% of Ciena's total service provider business. Executive Adviser Scott McFeely addressed broadband by stating Ciena's strategy targets a broad market opportunity, not a single customer, highlighting their innovative virtualized OLT architecture and growing customer base of 65 wins, though he acknowledged short-term headwinds from service provider spending dynamics.

Simon Leopold with Raymond James inquired about NetApp's strategy and opportunities for securing business with Sovereign or NeoClouds, and how the company perceives the competitive landscape for AI opportunities within this specific market segment.

Answer

CEO George Kurian stated that NetApp has been part of many Sovereign clouds globally for years and has expanded offerings with the AFX solution to participate in broader footprints within Sovereign AI clouds. He emphasized NetApp's advantage in serving enterprise clients with AI workloads due to differentiated capabilities in security, multi-tenancy, data protection, and hybrid landscapes.

Simon Leopold inquired about NetApp's strategy and opportunities with Sovereign or NeoClouds (non-hyperscale providers) and the competitive landscape in these applications and broader AI opportunities.

Answer

George Kurian (CEO) stated NetApp has long been involved with Sovereign clouds globally, mentioning Sovereign AI wins and expanded offerings like AFX for broader footprints. He emphasized NetApp's competitive advantages in security, multi-tenancy, data protection, and hybrid landscapes for serving enterprise AI workloads within these providers.

Simon Leopold from Raymond James asked for insight into NetApp's longer-term AI product strategy and the readiness of its portfolio to support enterprise AI initiatives, particularly regarding moving up the value chain.

Answer

CEO George Kurian outlined a multi-faceted AI strategy focused on: 1) high-performance storage for training and inferencing, 2) cloud-native storage services, 3) advanced data management capabilities for search, organization, and vectorization, and 4) a robust ecosystem with partners like NVIDIA and hyperscalers. He indicated that more innovations in these areas would be unveiled at the upcoming NetApp Insight conference.

Simon Leopold from Raymond James Financial asked for more insight into NetApp's long-term AI product strategy and the readiness of its portfolio to support enterprise AI initiatives, including potential new products.

Answer

CEO George Kurian outlined a four-part AI strategy focused on: 1) high-performance storage, 2) cloud-equivalent storage capabilities, 3) advanced data management tools for search, organization, and vectorization, and 4) expanding the ecosystem with partners like NVIDIA and hyperscalers. He indicated that more innovations in these areas would be announced at the upcoming NetApp Insight conference.

Simon Leopold of Raymond James & Associates asked about business linearity during the quarter and into May, specifically if concerns eased when tariffs were delayed. He also questioned the company's expectations regarding the Section 232 reviews on semiconductors.

Answer

CEO George Kurian described Q4 linearity as typical, noting they had planned around the Easter holiday in Europe. He clarified that the company's caution was not related to linearity but to changes in the deal pipeline, where larger deals were being broken up or required more approvals due to macro uncertainty. He declined to predict the outcome of the Section 232 review, stating that NetApp currently operates under a semiconductor exemption.

Simon Leopold of Raymond James Financial, Inc. asked about the linearity of business within the quarter and into May, specifically if customer behavior changed when tariffs were delayed. He also inquired about expectations for the Section 232 review on semiconductors.

Answer

CEO George Kurian described the quarter's linearity as typical for a Q4, though the company had to planfully work around the Easter holiday in Europe. He stated the caution in the outlook was not due to linearity issues but rather a broader view of the pipeline, where larger deals are sometimes broken into smaller ones or require more approvals due to macro uncertainty. He declined to speculate on the outcome of the semiconductor review, noting NetApp currently operates under an exemption.

Simon Leopold of Raymond James Financial, Inc. asked about business linearity during the quarter and into May, specifically if customer behavior moderated after tariffs were delayed. He also questioned the company's expectations regarding the Section 232 reviews on semiconductors.

Answer

CEO George Kurian described Q4 linearity as typical, noting the company had planned around the Easter holiday in Europe. He clarified that the caution in the outlook was not related to linearity but to changes in the deal pipeline, such as larger deals being broken into smaller transactions or requiring more approvals due to macro uncertainty. He declined to speculate on the Section 232 review, stating NetApp operates under a semiconductor exemption.

Simon Leopold inquired about the potential risk from tariffs, whether any impact was included in the guidance, and how NetApp is positioned to mitigate such risks.

Answer

CEO George Kurian stated that NetApp's global supply chain is highly flexible and its dependency on China is now 'immaterial.' While the company has a manufacturing location in Mexico, it has the agility to move production if necessary. He confirmed that no potential tariff impact has been factored into the Q4 guidance and noted that broad-based tariffs would likely affect the entire industry.

Simon Leopold inquired about the hardware-software mix affecting product gross margins and asked about any observable patterns in customers adopting AI.

Answer

CFO Mike Berry clarified that the mix of flash versus non-flash products is the primary driver of product gross margin, not the hardware-software split. CEO George Kurian noted that AI wins were broad-based but showed notable momentum in the public sector, manufacturing, financial services, and healthcare industries.

Simon Leopold asked to unpack the elements contributing to the roughly $5 billion incremental AI revenue for the full year, specifically how much is due to component availability, new orders, or earlier fulfillment of existing orders.

Answer

COO Jeff Clarke attributed the incremental AI revenue to a combination of $12.3 billion in new orders, a growing backlog, and an unmatched supply chain's ability to secure materials. He also highlighted customer readiness (buildings, power, direct liquid cooling) and Dell's sales force winning new opportunities across NeoCloud, sovereign, and enterprise segments as key drivers, leading to variability in quarterly shipments.

Simon Leopold asked to unpack the elements contributing to the roughly $5 billion incremental AI revenue for the full year, specifically how much is driven by Dell's ability to secure key components, new orders, or existing orders occurring earlier.

Answer

Jeff Clarke (COO, Dell Technologies) explained that the incremental AI revenue is driven by a combination of $12.3 billion in new orders, a growing backlog, and Dell's supply chain's ability to secure and align materials with customer availability. He noted that customer readiness (buildings, power, direct liquid cooling) and acceptance of delivery are key factors, leading to variability in shipments (e.g., $5 billion in one quarter, $9 billion in another). The alignment of orders, GB200/GB300 business, and delivery capability in Q4 is expected to drive the high shipment rate.

Simon Leopold from Raymond James asked for quantification of Dell's progress in the enterprise AI vertical and whether NVIDIA's reported sequential growth in its Hopper business was related to this enterprise traction.

Answer

Jeff Clarke, Vice Chairman and COO, reported that Q2 saw a significant increase in enterprise AI demand, marking the highest revenue and number of customers to date in that vertical, with the buyer base growing for eight consecutive quarters. He confirmed that enterprise customers are indeed buying air-cooled Hopper and RTX 6000-based systems for their existing data centers, which he called very encouraging and likely related to NVIDIA's commentary.

Simon Leopold of Raymond James asked for a breakdown of the trends in ISG operating margin. He noted that the year-over-year margin improvement was less significant this quarter compared to the last and asked if any factors like inventory write-downs on older GPUs affected the results.

Answer

CFO Yvonne McGill explained that the quarter-over-quarter decline in ISG margin rate is due to normal seasonality following a record Q4. The Q1 rate was slightly below expectations due to a lower mix of high-margin traditional servers from North America and more large, competitive deals. She confirmed there were no inventory write-downs. Despite the mix impact, the ISG operating income rate still improved 170 basis points year-over-year, and she expects margins to expand through the year.

Simon Leopold asked for details on Dell's revenue exposure to the U.S. federal government and the company's outlook for this segment, given the political noise around potential budget and spending cuts.

Answer

CFO Yvonne McGill stated that while the U.S. is its largest market, she could not parse out specific federal government figures. COO and Vice Chairman Jeffrey Clarke added that Dell has successfully navigated segment-specific demand suppression in the past and believes the U.S. government's need for technology, particularly AI, will ensure demand materializes over time. McGill also noted Dell can help drive efficiencies in any environment.

Simon Leopold from Raymond James sought clarification on whether the OpEx decline guidance was year-over-year or sequential, and asked about Dell's global manufacturing footprint in the context of potential tariffs.

Answer

Executive Yvonne McGill confirmed the mid-single-digit OpEx decline guidance was on a year-over-year basis. Jeffrey Clarke added that Dell has a resilient global supply chain and is well-versed in navigating geopolitical and tariff requirements across the many countries it operates in, indicating preparedness to manage any changes.

Simon Leopold asked for more detail on the storage trend related to AI, specifically the expected degree and timing of the benefit, given the previously mentioned lag behind compute.

Answer

COO Jeffrey Clarke described the AI storage opportunity as 'vast' and 'large,' driven by the need to feed data-hungry large language models. He highlighted unstructured data as the fastest-growing category and pointed to Dell's investments in high-performance solutions like PowerScale and the upcoming Project Lightning parallel file system as key to capturing this demand from both large and enterprise customers.

Simon Leopold asked about the motivations driving the current campus refresh, given the strong campus business in 2023. He also inquired about the performance of international governments, state, and local governments in picking up slack from federal challenges.

Answer

Chuck Robbins, Chairman and CEO, clarified that the size of the installed base flushed in 2023 is likely overestimated, with billions of dollars of pre-Cat 9K end-of-support equipment still driving the campus refresh. For government, he noted strong public sector performance globally, particularly in Europe (UK, Germany) due to defense and geopolitical investments, anticipating continued strength due to the push for sovereignty. Mark Patterson, CFO, added that while all three geographies saw public sector growth, the greatest strength was outside the U.S., in EMEA and APJC.

Simon Leopold sought to understand the motivation behind the current campus refresh, given the strong performance in 2023 and a relatively young embedded base. He also asked for details on the contributions from international governments to public sector growth, particularly in light of US federal challenges.

Answer

Chairman and CEO Chuck Robbins clarified that the size of the campus install base flushed in 2023 is likely overestimated, with billions of dollars in pre-Cat 9K end-of-support equipment still needing upgrades. CFO Mark Patterson added that all three geographies saw public sector growth, with the greatest strength coming from outside the U.S., particularly EMEA and APJC, in the mid to upper teens, driven by defense and geopolitical investments.

Simon Leopold of Raymond James Financial, Inc. asked about the risk of order pull-forwards from federal and enterprise customers due to budget or tariff concerns, and questioned the long-term mix of AI orders between systems and optics.

Answer

CEO Chuck Robbins stated he has heard no instances of customers pulling orders forward. CFO Mark Patterson supported this, citing normal order linearity, activation times, and requested ship dates. On the AI mix, Robbins said he does not foresee a meaningful shift from the current two-thirds systems, one-third optics composition.

Simon Leopold from Raymond James requested historical context on campus refresh cycles to gauge the potential of the next one and asked about the expected tariff impact after a regulatory pause ends on July 9.

Answer

CEO Chuck Robbins acknowledged that the 2017 refresh is a difficult comparison and stated the upcoming cycle will be driven by deeply embedding security into the network to support agentic AI. CFO Scott Herren confirmed that the Q4 guidance already assumes the tariff pause ends and reciprocal tariffs resume, thereby protecting the downside in their forecast.

Simon Leopold of Raymond James requested a historical perspective on campus refresh cycles to understand the potential of the upcoming one and asked about the expected impact of tariffs after a regulatory pause ends on July 9.

Answer

CEO Chuck Robbins acknowledged that the 2017 refresh is a difficult comparison due to a simultaneous subscription model shift, but stated the next refresh will be driven by embedding security deep into the network to support agentic AI. CFO Scott Herren confirmed that the Q4 guidance already assumes the tariff pause ends and reverts to reciprocal tariffs on July 9.

Simon Leopold of Raymond James asked for an update on the traction of the partnership with NVIDIA and whether the new AI server is a direct result. He also requested an update on progress in introducing new customers to Splunk and the pipeline for closing those deals.

Answer

CEO Chuck Robbins described the NVIDIA partnership as still in its early stages, with solutions like Hyperfabric shipping in early 2025. He confirmed the new AI server and AI pods are based on NVIDIA GPUs. Regarding Splunk, Robbins noted that with an average 9-month sales cycle, it's still early days since the March acquisition. However, he highlighted positive signs, including adding 1,500 customers to the prospect list and hundreds of Cisco partners building Splunk practices.

Simon Leopold asked about the broader outlook for the CATV business, specifically the potential to achieve over $300 million in revenue in 2026 given its lumpy nature. He also inquired about the expected growth in 400G and 800G data center products for Q4, the imminence of 800G qualifications, and the timing for 1.6T product availability.

Answer

CFO and Chief Strategy Officer Stefan Murray confirmed that $300 million plus in CATV revenue for 2026 is achievable, driven by new products like software in addition to amplifiers. CEO Thompson Lin noted that Q4 CATV revenue would moderate to $50 million-$55 million, implying significant data center growth. Stefan Murray stated that meaningful 800G shipments are expected in Q4, with most data center growth coming from 400G, and 1.6T revenue anticipated later next year. Thompson Lin added that 800G single mode transceivers could contribute $4 million-$8 million in Q4, with 1.6T samples expected by year-end or early next year, and volume manufacturing by June-July next year. Stefan Murray reiterated that the new factory capacity supports both 800G and 1.6T production.

Simon Leopold asked about the broader outlook for Applied Optoelectronics' CATV market, specifically assessing the potential to achieve over $300 million in revenue in 2026 given the current run rate and the lumpy nature of the business. He also inquired about the expected growth drivers for data center revenue in Q4, particularly the contribution from 400G and 800G products, and the timing for 1.6T product revenue.

Answer

Dr. Stefan Murray (CFO and Chief Strategy Officer, Applied Optoelectronics) confirmed that $300 million plus in CATV revenue for 2026 is achievable, driven by new products including software. Dr. Thompson Lin (Founder, Chairman, and CEO, Applied Optoelectronics) clarified that Q4 data center growth would largely come from 400G, with meaningful but smaller contributions from 800G. Dr. Lin also stated that 1.6T samples would be delivered by year-end or early next year, with volume manufacturing expected around June-July next year, and Dr. Murray added that the new production lines can manufacture both 800G and 1.6T.

Simon Leopold of Raymond James Financial, Inc. asked about the level of vertical integration in the data center business, specifically regarding the use of EMLs versus silicon photonics and the trajectory of insourcing as a lever for improving gross margins. He also questioned the CATV segment's production capacity and the visibility into channel inventory to assess potential risks.

Answer

CFO and CSO Dr. Stefan Murry explained that AOI utilizes both EMLs (sourced internally and externally) and silicon photonics, as customers require source diversity. CEO Dr. Thompson Lin added that the primary driver for future gross margin improvement will be the transition from 2-inch to 3-inch and eventually 4-inch wafers, which offers more significant cost savings than insourcing alone. Regarding CATV, Dr. Murry stated that significant cost reductions and higher-margin software sales are expected to improve margins. He also affirmed that AOI has clear visibility into channel inventory and is comfortable with current levels due to broad-based demand.

Simon Leopold inquired about Applied Optoelectronics' visibility into channel inventory for its CATV products, the potential risks of an inventory buildup due to tariffs, the expected revenue ramp for 800G products in the second half of 2025, and whether any products manufactured in China are currently shipped to the U.S.

Answer

CFO and CSO Dr. Stefan Murray explained that the company has direct insight into CATV inventory levels through reports from its MSO partner, noting the current buildup is intentional to mitigate tariff risks. CEO Dr. Thompson Lin added that this inventory is expected to be fully consumed by Q3. Regarding 800G, Dr. Murray confirmed a production capacity ramp to approximately 100,000 units per month by year-end, with revenue deliveries lagging slightly. He also clarified that while some manufacturing steps occur in China, the final country of origin for tariff purposes on U.S.-bound products is not China.

Simon Leopold asked for clarification on the evolving trends of Arista's Blue Box solutions, including whether they are reaching a broader customer base and the specific assumptions for Blue Box trends incorporated into the 2026 margin guidance.

Answer

Jayshree Ullal, CEO and Chairperson, stated that Blue Box trends are expected to remain concentrated among a handful of operationally skilled customers, such as specialty cloud providers and titans, rather than becoming mainstream. She confirmed that the lower margins associated with Blue Box solutions (due to the absence of the EOS layer) are already factored into the 2026 guidance, contributing to a profitable and high-growing business.

Simon Leopold asked about the evolving trends of Arista Networks' Blue Box solutions, including a potentially broader customer base, and how these trends are factored into the 2026 margin guidance.

Answer

Jayshree Ullal, Arista Networks' CEO and Chairperson, expects Blue Box trends in 2026 to remain with a handful of customers (specialty cloud providers or titans) due to the required operational skills. She acknowledged that lower margins for Blue Box (without the EOS layer) are factored into the 2026 guidance and that the combination of Blue Box and EOS branded boxes will contribute to a profitable and growing business.

Simon Leopold of Raymond James asked for insight into the shifting customer concentration, weighing the significant spending from top customers against the broadening base of neo-clouds and enterprises.

Answer

Chairperson & CEO Jayshree Ullal confirmed that Arista's two largest customers will likely maintain over 10% concentration due to AI investments. However, she stressed the business is becoming more balanced, as the aggregate contribution from the growing number of enterprise and neo-cloud customers is now also a very significant driver of revenue.

Simon Leopold asked for more detail on the cognitive adjacencies segment (campus and routing), which represents 18% of revenue, and its growth expectations for 2025.

Answer

CEO Jayshree Ullal stated that the adjacencies business is expected to exceed $1 billion in 2025, surpassing its previous $750 million goal. She highlighted a more complete routing portfolio driving enterprise and service provider wins. On the campus side, Arista is benefiting from competitor fatigue and is gaining traction with customers who already use Arista in the data center. CFO Chantelle Breithaupt added that improved lead times and a new partner program are also boosting campus growth.

Simon Leopold requested a broader update on the competitive landscape for AI networking, asking about the positioning of Arista relative to white box solutions, Cisco, Juniper, and Nokia.

Answer

CEO Jayshree Ullal divided the market into two parts. For back-end networking connecting directly to GPUs, she said Arista's share is new and incremental. For front-end networking, she described Arista as the 'gold standard' due to its superior leaf-spine architecture, software, and scale. She noted instances where customers are swapping out competitors' equipment for Arista's in AI applications.

Simon Leopold of Raymond James Financial, Inc. requested more clarity on the longer-term financial expectations for the Meta partnership, specifically its contribution in Q3 and beyond.

Answer

CEO Charles Giancarlo reiterated the forecast of one to two exabytes this year with the potential for double-digit exabytes next year. CFO Tarek Robbiati added that while they are confident in the one-to-two exabyte range for the current fiscal year, possibly more, the revenue contribution is not expected to be material to Pure's overall results in FY26. He noted they will provide further updates on the ramp in coming quarters.

Simon Leopold of Raymond James asked for a comparison of the Meta project with other engagements to better understand the lengthy timeline, questioning if it was due to customization or long test cycles.

Answer

CEO Charles Giancarlo clarified the timeline is dictated by Meta's comprehensive 18-to-24-month design cycle for its entire next-generation data center, not just Pure's storage component. CTO Rob Lee added that it is a 'co-engineering exercise' and that the project has advanced to 'production validation testing,' a key milestone before the anticipated shipments.

Simon Leopold of Raymond James & Associates, Inc. asked for an update on how the enterprise adoption of AI initiatives could affect Pure Storage's business and the potential timing of that impact.

Answer

CEO Charles Giancarlo and CTO Rob Lee described a multi-faceted opportunity. They highlighted an upcoming announcement for large-scale training at GTC, the emerging inference opportunity, and the key role of Pure Fusion in creating an 'enterprise data cloud' to make production data more accessible for AI workflows, which they see as the biggest opportunity.

Simon Leopold asked for details about the recent CoreWeave announcement, seeking to understand the nature of the win, the specific use case, and the overall opportunity, while confirming it was separate from the major hyperscaler win.

Answer

CTO Rob Lee explained that Pure expanded its partnership with CoreWeave, a leading GPU cloud provider, through a strategic investment and a commercial agreement to make Pure's technology a standard option in CoreWeave's cloud. CEO Charles Giancarlo clarified that CoreWeave was the previously announced, unnamed double-digit GPU cloud win from several quarters ago. Lee confirmed CoreWeave is not the top-4 hyperscaler.

Simon Leopold asked for clarification on which product segments are expected to be down sequentially in the Q1 2026 guidance and requested more details on the sales pipeline and revenue trajectory for the Optical Circuit Switch (OCS) product line.

Answer

CEO Jim Anderson stated that the data center and communications segment is projected to grow sequentially, while the industrial-related markets are expected to be down, partly due to the divestiture of the A&D business and a cautious view on the macroeconomy. Regarding OCS, Anderson described the customer pipeline as "very healthy" with "very strong" engagement, noting that the company is actively adding capacity to meet anticipated demand.

Simon Leopold inquired about the current demand trends for 800G data center products and whether the company is seeing signs of excess customer inventory. He also asked for clarification on the revenue mix between different technologies like VCSELs, EMLs, and silicon photonics to address a perception that Coherent is overly dependent on VCSELs.

Answer

CEO James Anderson confirmed that 800G demand was strong and as expected, with the data center business growing 54% year-over-year. He stated that the company sees no obvious pockets of customer inventory, as products are deployed quickly after shipment. Anderson clarified that EML-based transceivers account for over half of transceiver revenue, with the majority of those using internally manufactured EMLs, correcting the perception of over-reliance on VCSELs.

Simon Leopold from Raymond James inquired about Coherent's perspective on co-packaged optics (CPO) and its potential business impact, and also asked for quantification of any customer or vertical concentration, particularly from AI or web-scale clients.

Answer

CEO James Anderson explained that Coherent views CPO as a net accelerator for the data center optical TAM, especially for scale-up applications. He emphasized that Coherent is well-positioned to participate through its broad portfolio of ingredient technologies, not just pluggable transceivers. On concentration, Anderson stated that datacom revenue is well-diversified across multiple hyperscaler customers and that the number of customers ramping 800-gig transceivers continues to expand.

Simon Leopold inquired about the company's capital structure priorities, weighing deleveraging against investments, and asked if the datacom strength was driven purely by 800G products or if legacy products also contributed.

Answer

CFO Sherri Luther identified organic growth investments and debt reduction as the top two priorities for capital allocation, highlighting the $118 million debt paydown in Q1 which reduced the net debt leverage ratio to 2.4x. CEO James Anderson confirmed that while the 800G transceiver ramp was a major factor in datacom's 16% sequential growth, there was also nice sequential growth in 400G and below products, and the 800G customer base has significantly broadened.

Simon Leopold questioned the reasons for the customer count decline in the Computer Backup business, the role of alliance partners like Veeam and Fastly in the AI strategy, and the company's internal investment priorities between Sales & Marketing and R&D.

Answer

CEO Gleb Budman attributed the backup decline to a secular trend in the consumer space but noted opportunity on the business side with new features. He added that alliance partners are shifting towards GPU providers who need storage solutions. CFO Marc Suidan stated that R&D spending is scaling efficiently, while the focus for Sales & Marketing is on improving productivity, evidenced by record B2 net new ARR.

Simon Leopold sought to quantify the AI customer segment's contribution to B2 stored data and asked for context on the new Canadian data center, including total locations and foreign exchange exposure.

Answer

CEO Gleb Budman stated that data from AI customers has grown tenfold and they represent 3 of the top 10 customers, making it a meaningful segment. He also explained that the new Canada data center is their fourth region and was launched with an anchor partner to de-risk the investment. CFO Marc Suidan confirmed minimal foreign exchange risk as most Canadian billings are in USD.

Simon Leopold asked about the primary sales bottlenecks and gating factors for Super Micro's fiscal 2026 revenue guidance, questioning why the September quarter outlook wasn't stronger given the full-year forecast of $33 billion.

Answer

CEO Charles Liang explained that while capital constraints from a prior 10-K delay are resolved, some component availability from partners like NVIDIA remains a factor to monitor. He confirmed that some customers are waiting for newer technologies like the B300 and GB300 platforms, and noted the company's new Data Center Building Block Solution (DCBBS) will help accelerate growth throughout the year.

Simon Leopold from Raymond James Financial asked for a free cash flow breakout between RemainCo and the CCS segment and inquired if potential tariffs had caused any customer pull-forward behavior.

Answer

CFO Kyle Lorentzen stated that a cash flow split would not be provided, but confirmed CCS will be a strong cash contributor in the second half. CEO Charles Treadway addressed the tariff question, explaining that due to a flexible global manufacturing footprint, USMCA exemptions for Mexico, and a tariff exemption for Ruckus products, there was no significant customer pull-forward activity.

Simon Leopold of Raymond James asked for a breakout of the free cash flow forecast between RemainCo and the divested CCS segment, and inquired whether the threat of tariffs led to any customer order pull-forwards.

Answer

EVP & CFO Kyle Lorentzen said a free cash flow breakout was not available but confirmed CCS would be a cash contributor. President & CEO Charles Treadway addressed tariffs, stating that while there might have been some minor pull-in for Ruckus, the impact was minimal due to their flexible manufacturing, USMCA compliance, and existing tariff exemptions.

Simon Leopold from Raymond James sought clarification on the $10-15 million Q2 tariff headwind, asking to quantify the steel and aluminum portion and to understand the company's ability to pass on costs through price hikes. He also asked about the revenue timing for unified amplifiers and whether CommScope is gaining share in RPDs.

Answer

CFO Kyle Lorentzen described the $10-15 million tariff impact as manageable and complex, declining to break out the steel and aluminum component specifically. He confirmed that pricing is part of the mitigation strategy, alongside leveraging their global footprint and supplier relationships. CEO Chuck Treadway clarified that revenue from unified amplifiers is expected in 2026, not 2025, and stated that RPD market share is relatively flat, with wins depending on the timing of customer network upgrades.

Simon Leopold sought to understand the customer mix within the data center business, specifically the split between hyperscalers and traditional enterprises, and asked about the materiality of amplifiers within the ANS segment.

Answer

CFO Kyle Lorentzen stated that while specific numbers aren't disclosed, the data center business is more heavily weighted towards hyperscalers, though growth comes from both customer types. Regarding ANS, President and CEO Chuck Treadway noted they expect to gain share in RPD nodes. Lorentzen added that amplifiers constitute roughly 40-50% of ANS revenue and the FDX amplifier ramp in 2025 will be substantial.

Simon Leopold requested clarification on the ANS segment's FDX rollout timeline for nodes versus amplifiers and asked if operators are delaying plans for a unified amplifier. He also requested an updated metric for the percentage of CCS revenue from data centers.

Answer

President and CEO Chuck Treadway clarified that FDX node shipments are increasing in Q4, with amplifier shipments starting small in Q4 before a significant ramp in 2025. He added that the company does not see customers delaying upgrades for a unified solution. CFO Kyle Lorentzen stated that data center revenue remains approximately 15-20% of the CCS segment.

Simon Leopold from Raymond James Financial inquired about the revenue contribution from customers outside of Comcast and Charter to quantify the "rest of world" strength. He also asked for management's perspective on the 2026 growth trajectory, noting a more optimistic tone.

Answer

CFO Walter Jankovic confirmed that "rest of world" revenue was significantly stronger than 50% on a total company basis and noted a major customer was no longer over 10%. CEO Nimrod Ben-Natan and CFO Jankovic attributed the 2026 optimism to tailwinds like Unified DOCSIS 4.0 readiness, recent customer wins ramping up, and the potential positive impact of the OBBBA tax benefit on customer CapEx.

Simon Leopold asked whether Harmonic's 2025 outlook is driven more by broad market trends or by market share shifts, and also inquired about the spending patterns of the company's two largest customers.

Answer

CEO Nimrod Ben-Natan stated the outlook reflects a market-wide trend, not a loss of market share, asserting Harmonic's dominant position with over 90% of the virtual CMTS market and over 60% of the remote device market. He added that while he could not comment on specific customer dynamics, each has different network initiatives and Harmonic's products are just one part of their overall CapEx. CFO Walter Jankovic noted that upcoming Dell'Oro reports should confirm their strong market share.

Simon Leopold of Raymond James & Associates, Inc. asked about the customer concentration mix implied for Q4 and the longer term. He also questioned whether Comcast's deployment would be unencumbered by the Unified delay and requested an update on customer behavior and pipeline in the Video segment.

Answer

CFO Walter Jankovic stated that the concentration from the top two customers is expected to decrease in Q4 and beyond as other customers grow. CEO Nimrod Ben-Natan declined to comment on specific customers but reiterated that at some point in 2025, deployments will become dependent on the availability of FDX amplifiers. Regarding the Video segment, he noted no material change, with the strategy focused on refresh opportunities driven by efficiency needs and on growing Tier 1 streaming customers.

Simon Leopold of Raymond James asked how CEO Justin Hotard's priorities have evolved after his first 100 days and sought an update on potential cost-cutting or headcount reduction initiatives, referencing recent press reports.

Answer

President & CEO Justin Hotard stated his priorities now focus on co-innovation with customers, partnering within the tech ecosystem, and driving more predictability and productivity. Regarding cost-cutting, he noted that Nokia is still executing its 2023 restructuring program and that his future focus will be on continuous productivity as a discipline rather than large, one-off programs.

Simon Leopold from Raymond James asked how CEO Justin Hotard's priorities have evolved after 100 days in the role and requested an update on any cost-cutting or headcount reduction initiatives.

Answer

President & CEO Justin Hotard highlighted his evolved focus on co-innovation with customers, deeper ecosystem partnerships, and driving more predictability and productivity. He stated that Nokia is still executing its 2023 restructuring program and the future focus will be on continuous productivity improvements rather than large, new programs.

Simon Leopold asked new CEO Justin Hotard to contrast his views with his predecessors, detail his biggest surprises, and provide an update on traction with hyperscale customers, particularly in switching.

Answer

President and CEO Justin Hotard said he was pleasantly surprised by Nokia's technology base and employee passion. He emphasized his focus on disciplined capital allocation for material growth and efficiency. He clarified that hyperscale is the key driver within the enterprise segment, primarily in optical networking via Infinera, and acknowledged that gaining traction in IP networking switching with these customers has a longer cycle.

Asked the new CEO about his views compared to his predecessors and his biggest surprises since joining, and also requested more detail on Nokia's traction with hyperscale customers, particularly in switching.

Answer

The new CEO was pleasantly surprised by the company's technology base and employee passion. His focus is on driving efficiencies and making material investments in growth areas. Regarding hyperscalers, the main traction is currently in optical networking via the Infinera acquisition. While there is early activity in IP Networks (switching), it has a longer sales cycle.

Simon Leopold asked for a shorter-term outlook on trends with hyperscaler customers beyond the 2028 target and followed up by asking what telco customers are saying about the impact of AI on their business.

Answer

CEO Pekka Lundmark identified hyperscalers as a top growth opportunity, citing recent deals with Microsoft and Nscale and the future benefits of the Infinera acquisition. He noted that while Nokia is a challenger, the market is accelerating, but deferred tangible short-term targets to the upcoming Capital Markets Day. Regarding AI, he explained that telcos are using it for network management and customer service, and are strategically evaluating their role in the edge compute market, a space where Nokia is positioned to work with telcos, hyperscalers, and enterprises.

Simon Leopold asked for an update on the full-year adjusted EBITDA target of 26-28%, questioned the company's strategic thinking on its Taiwan-centric manufacturing given tariff risks, and inquired about the impact of recent foreign exchange rate movements.

Answer

Executive Dhrupad Trivedi reaffirmed confidence in achieving the 26% to 28% adjusted EBITDA margin target for the year by managing OpEx. Regarding manufacturing, he confirmed they are actively working with partners to build a more resilient and flexible global footprint, an initiative that was already in progress for disaster recovery. On currency, Trivedi noted that Japan is the only market where sales are in local currency (yen), creating a revenue translation risk, but the company hedges its receivables to mitigate exposure.

Simon Leopold asked about potential changes in HPE's customer mix, specifically whether a greater focus on cloud builders or weakness in the profitable federal market was negatively impacting margins.

Answer

CEO Antonio Neri responded that HPE targets service providers who value its IP, like direct liquid cooling, but emphasized a particular focus on the large enterprise market where AI adoption offers a better margin profile and leverages its channel. He described the sovereign business as strong and the traditional compute refresh as solid, positioning the upcoming Gen12 platform as a key growth driver.

Simon Leopold sought to verify and understand the rationale behind the Q1 outlook for traditional servers to be flattish to slightly up sequentially, noting that this guidance appears to defy typical seasonality.

Answer

CFO Marie Myers confirmed the guidance was correct, explaining that a lower sequential contribution from AI systems is expected in Q1 due to the lumpy nature of that business. She stated that momentum in traditional servers remains strong, with the Gen11 refresh cycle continuing. CEO Antonio Neri added that over a third of the AI backlog is for the next-generation Blackwell platform, which takes time to convert to revenue, contributing to the uneven quarterly recognition.

Simon Leopold of Raymond James asked about trends in the traditional server market and the potential risk of cannibalization from AI-accelerated platforms, given HPE's reported strong growth and order patterns for traditional servers.

Answer

CEO Antonio Neri stated that HPE has seen "no signs of cannibalization" of the traditional server market. He explained that customer segments and workloads are distinct, as enterprise customers see no TCO benefit in moving legacy workloads to more expensive accelerated compute platforms that are needed for AI-specific tasks.

Simon Leopold from Barclays inquired if there has been any pickup in private cloud repatriation and asked for more detail on the go-to-market hiring strategy, specifically regarding technical versus generalist sales roles.

Answer

CEO Rajiv Ramaswami stated he does not see a systematic trend of cloud repatriation, but rather a more measured approach from customers about what they move to the public cloud initially. On hiring, he described a balanced approach, requiring both generalist sellers and a higher ratio of technical engineers for larger accounts, supplemented by specialist teams for newer portfolio products like Kubernetes and AI.

Inquired about the full-year forecast, asking for an explanation of the implied fourth-quarter results and the reasons for the expected sequential improvement from Q3 to Q4.

Answer

The company confirmed that the guidance implies a sequential revenue improvement in Q4 to around $51 million. This growth is expected to be driven by sequential enterprise growth and some growth in the Point-to-Multipoint (PMP) business. The overall full-year forecast is lower than previous expectations due to weakness in defense and a slower ramp in the 6 GHz PMP space.

Asked for confirmation that the second-half outlook remains unchanged from previous guidance despite first-half softness, seeking the key drivers for this confidence. Also inquired about customer concentration, specifically if there were any 10% customers in Q1 and what the expectation is for the full year.

Answer

The company confirmed the second-half expectation is similar to prior guidance, attributing this to projects pushed from the first half, RFP wins, and new line system deployments. They are not adding the pushed projects on top of the existing back-half plan. Regarding customer concentration, there were no 10% customers in Q1, though some were close, and ICPs remain strong in the top 10.

Asked for clarification on direct sales to hyperscalers, the mix of vertical performance contributing to the full-year growth outlook, and which competitors Infinera has been displacing to gain share.

Answer

Direct sales to hyperscalers were about one-third of product revenue in 2023. The full-year growth will be driven by continued strength in hyperscale, wholesale, and subsea, while some Tier 1 service provider wins won't scale until 2025. The company declined to comment on specific competitors being displaced.

Sought clarification on whether Q1 2024 revenue is expected to decline by a double-digit percentage sequentially. He also asked why Juniper is confident its campus networking business will grow in 2024 when market research firms expect a market decline.

Answer

Management confirmed that a double-digit sequential revenue decline is expected in Q1 2024, consistent with historical seasonality. Confidence in the campus business growth stems from their differentiated AIOps solutions that lower TCO, their small share in a large market providing ample room for growth, and their focus on the cloud-managed segment which is growing faster than the overall market.