Executive Summary

Q4 FY2025 delivered broad-based strength in cloud and AI infrastructure, with revenue of $480.7M and non-GAAP EPS of $0.88, both above the high end of revised guidance and ahead of Wall Street consensus; non-GAAP operating margin expanded to 15.0% on favorable mix and better utilization .
Cloud & Networking rose 16% q/q and 66% y/y to $424.1M, driven by record EML chip shipments, pump lasers, narrow linewidth lasers for ZR/ZR+ modules, and 800G modules; OCS recognized first revenue with two hyperscalers, and the company secured its largest-ever purchase commitment for ultra-high-power lasers supporting CPO .
Q1 FY2026 guidance points to net revenue of $510–$540M, non-GAAP operating margin of 16.0–17.5%, and non-GAAP EPS of $0.95–$1.10; management reiterated a path to surpass $600M in quarterly revenue by June 2026 or earlier (accelerated from prior plans) .
Catalysts: upside vs consensus, earlier realization of $500M quarterly revenue, initial OCS revenue and strong CPO order visibility, and continued AI/datacenter component shortages supporting pricing/mix .

What Went Well and What Went Wrong

What Went Well

Record EML chip shipments and strong sequential growth in 800G modules, narrow linewidth lasers, pump lasers, and coherent components; CEO: “We executed exceptionally well... drove our Q4 revenue above the high end of the upwardly revised guidance... particular strength in components... and 800G modules” .
OCS momentum: first revenue with two hyperscalers and a third committed for calendar 2026; management expects OCS to be “significantly above corporate margin averages” and potentially a “multi-$100M” contributor over time .
CPO visibility: largest single purchase commitment for ultra-high-power lasers and investment to expand U.S. manufacturing capacity; NVIDIA highlighted close collaboration on advanced networking for AI infrastructure .

What Went Wrong

Industrial Tech declined 6% q/q (to $56.6M), despite a 6% y/y increase; segment remains lower margin, though profitability improved via cost actions; management expects gradual margin improvement over “the next handful of quarters” .
Capacity constraints and NPI drag: components (e.g., narrow linewidth lasers for ZR/ZR+) remain supply-constrained; CFO cited ~150bps quarterly margin headwind from NPI costs ahead of revenue recognition, which should ease as ramps mature .
GAAP volatility: large GAAP tax benefit (-$224.7M) produced GAAP EPS of $2.96 vs non-GAAP $0.88; investors should focus on non-GAAP operating performance and margin trajectory .

Financial Results

Metric	Q2 FY2025	Q3 FY2025	Q4 FY2025	Q4 FY2024
Revenue ($USD Millions)	$402.2	$425.2	$480.7	$308.3
GAAP Diluted EPS ($)	($0.88)	($0.64)	$2.96	($3.72)
Non-GAAP Diluted EPS ($)	$0.42	$0.57	$0.88	($0.13)
Non-GAAP Gross Margin (%)	32.3%	35.2%	37.8%	27.8%
Non-GAAP Operating Margin (%)	7.9%	10.8%	15.0%	(5.1%)
Adjusted EBITDA ($USD Millions)	$57.6	$71.0	$98.7	$10.9
Cash + ST Investments ($USD Millions)	$896.7	$866.7	$877.1	—

Segment revenue breakdown:

Segment ($USD Millions)	Q3 FY2025	Q4 FY2025	Q4 FY2024
Cloud & Networking	$365.2	$424.1	$254.7
Industrial Tech	$60.0	$56.6	$53.6
Total	$425.2	$480.7	$308.3

Key operating KPIs:

KPI	Q4 FY2025
Non-GAAP OpEx ($USD Millions)	$109.3
Non-GAAP R&D ($USD Millions)	$67.6
Non-GAAP SG&A ($USD Millions)	$41.7
CapEx ($USD Millions)	$59
Inventory ($USD Millions)	$470.1
Cloud & Networking Segment Profit (%)	23.6%
Industrial Tech Segment Profit (%)	6%

Why results beat: mix shift toward high-value datacom components (EMLs, coherent lasers), improved utilization, and initial OCS contributions drove gross margin and operating margin expansion sequentially and y/y .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue ($USD Millions)	Q4 FY2025	$440–$470	$465–$475	Raised
Non-GAAP Operating Margin (%)	Q4 FY2025	13.0–14.0%	14.0–15.0%	Raised
Non-GAAP Diluted EPS ($)	Q4 FY2025	$0.70–$0.80	$0.78–$0.85	Raised
Revenue ($USD Millions)	Q1 FY2026	—	$510–$540	New
Non-GAAP Operating Margin (%)	Q1 FY2026	—	16.0–17.5%	New
Non-GAAP Diluted EPS ($)	Q1 FY2026	—	$0.95–$1.10	New
Long-term revenue milestone	Timing	$500M by end CY2025	$500M next quarter (Q1 FY26) ; $600M by June 2026 or earlier	Accelerated

Earnings Call Themes & Trends

Topic	Previous Mentions (Q-2 FY25)	Previous Mentions (Q-1 FY25)	Current Period (Q4 FY25)	Trend
AI/datacenter components (EMLs, lasers)	Strong cloud demand; path to $500M quarterly revenue by end CY2025	Strength in Cloud & Networking; Q4 guide lifted	Record EML shipments; capacity sold out; layering 200G per lane; supply-constrained across components	Strengthening; supply-limited
OCS (optical circuit switch)	Not highlighted	Not highlighted	First revenue to two hyperscalers; third committed; accretive margins; capacity build-out in Thailand	Ramping; accretive
CPO (co-packaged optics)	Not highlighted	Not highlighted	Largest-ever UHP laser order; expanded U.S. manufacturing; partnership highlighted by NVIDIA	Accelerating investment
Tariffs/macro	Macro volatility cited in risk factors	Similar risk language	Products currently exempt under new guidance; minimal impact in Q4; cautious stance given fluidity	Managed; minimal impact
Modules vs components mix	Modules present but lower margin; focus on cloud	Cloud module business growing	Modules up 50% q/q; but strategic focus remains on high-value components; module margins ~30% at best	Balanced; components-led
Segment profitability actions	Restructuring; cost control	Ongoing improvements	Industrial Tech profitability improved on cost actions despite lower revenue	Improving margins

Management Commentary

CEO: “We executed exceptionally well... drove our Q4 revenue above the high end of the upwardly revised guidance... strength in components... and 800G modules. We expect continued strong demand... giving us confidence in surpassing $600 million in quarterly revenue by June 2026 or earlier” .
On OCS: “Our leadership in optical performance... allowed us to capture volume opportunities earlier... accelerating the expansion of our in-house OCS manufacturing capacity” .
On CPO: “We just received the largest single purchase commitment in company history for our ultra-high-power lasers... expect significant revenue ramp in CPO by 2026” .
CFO on margins: “Non-GAAP gross margin was 37.8%, up 260 bps q/q and 1,000 bps y/y... operating margin 15%, up 420 bps q/q” .

Q&A Highlights

OCS ramp trajectory: Initial shipments ahead of prior expectations; meaningful revenue expected in 2026; capacity in Thailand scaling; OCS is margin-accretive above corporate averages .
CPO competitive moat: Reliability and unique power levels leveraging submarine/pump laser expertise; currently sole-sourced with significant orders in hand .
EML capacity and pricing: Transition from 3-inch to 4-inch wafers and planned capacity increases; constrained supply supports pricing discussions not yet embedded in the 40% GM, $600M revenue model—potential upside .
Tariffs: Products deemed exempt under recent guidelines; minimal impact realized in Q4; vigilance maintained given fluid regulatory environment .
ZR/ZR+ strategy: Focus on selling narrow linewidth lasers/components into DCI vs lower-margin modules; demand forecast ~30% annual volume growth, with emerging interest in 800ZR .

Estimates Context

Q4 actuals beat S&P Global consensus on revenue and EPS; Q3 also beat. For Q1 FY2026, actuals again exceeded consensus.

Metric	Q3 FY2025	Q4 FY2025	Q1 FY2026
Revenue Consensus Mean ($USD Millions)	418.2*	469.9*	526.5*
Revenue Actual ($USD Millions)	$425.2	$480.7	$533.8 [GetEstimates]
Primary EPS Consensus Mean ($)	0.50*	0.81*	1.03*
Primary EPS Actual ($)	0.57	0.88	1.10 [GetEstimates]
Primary EPS - # of Estimates	16*	16*	18*
Revenue - # of Estimates	14*	15*	17*

Q4 FY2025: Revenue and EPS were above consensus; non-GAAP operating margin of 15.0% exceeded internal guidance as well. Bold beats on both headline metrics.
Implication: Street models should reflect higher cloud component volumes/margins and earlier realization of the $500M quarterly milestone (Q1 FY26), with OCS/CPO layering in CY2026 .
Values retrieved from S&P Global.*

Key Takeaways for Investors

Components-led cycle: Strong demand and constrained supply in EMLs, narrow linewidth lasers, and coherent components support pricing and mix, underpinning margin expansion (non-GAAP GM 37.8%; Op margin 15.0%) .
Structural growth drivers: Initial OCS revenue and largest-ever CPO laser commitment add multi-year, high-margin optionality beyond transceivers and lasers .
Accelerated milestones: $500M quarterly revenue arrives in Q1 FY26; path to $600M by June 2026 or earlier increases confidence in scale and operating leverage .
Portfolio discipline: Cloud modules growing but kept selective given ~30% margin asymptote; focus remains on accretive components, OCS, and CPO to lift corporate margins toward ~40% at $600M run rate .
Watch capacity ramps: Wafer transitions (3”→4”, future 6” substrates) and factory expansions (Thailand, U.S.) are critical to meeting demand and easing supply constraints .
Risk management: Tariff exposure currently minimal due to product exemptions; GAAP results volatile (tax); evaluate performance on non-GAAP trajectory and cash/CapEx commitments ($59M in Q4) .
Near-term trading setup: Narrative favors AI/datacenter optical buildouts, with consensus underestimating component scarcity and OCS accretion; sustained sequential revenue/margin improvement likely to drive estimate revisions and sentiment .

Appendix: Additional Data Points

Cash and short-term investments rose to $877.1M (+$10.4M q/q) despite inventory build to support cloud demand .
Non-GAAP adjustments include SBC, amortization of intangibles, restructuring, FX, and a long-term non-GAAP tax rate (16.5%)—investors should normalize to non-GAAP for operational comparability .

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