AI Takeaway
Lumentum (LITE) delivered a dramatic Q1 FY2026 turnaround, swinging to $226.6M net income from a $187.4M loss a year ago, driven by a 159.5% surge in gross profit and a massive financing-driven cash build of $2.6B.
EPS (Basic)
$1.99
++410.94% YoY
Operating Income
$174.5M
++562.86% YoY
Filed · Source: SEC EDGAR 10-Q filing
Gross profit jumped 159.5% YoY to $778.6M from $300.0M, indicating a significant improvement in product mix, pricing power, or cost structure. This recovery drove operating income from -$171.7M to $245.5M, a swing of over $417M.
Source: Source: 10-Q Income Statement Data
Cash & equivalents surged 406.9% YoY to $2.62B, largely fueled by $2.19B in financing cash flows — a 5,101.4% increase — suggesting a major capital raise, debt refinancing, or equity issuance during the quarter.
Source: Source: 10-Q Cash Flow Statement Data
Long-term debt collapsed 98.3% YoY from $2.56B to just $43.2M, a dramatic deleveraging that substantially reduces interest burden and financial risk, likely funded by the large financing inflows observed in the period.
Source: Source: 10-Q Balance Sheet Data
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Upgrade to unlockCurrent liabilities exploded nearly 10x YoY to $3.87B, pushing the current ratio down to just 1.14. While current assets of $4.40B technically cover these obligations, the margin of safety is slim and any deterioration in operating cash flows could create liquidity stress.
Source: Source: 10-Q Balance Sheet Data
Unlock 4 more detailed risk analysis
Upgrade to unlockReported EPS of $2.37 versus the $2.33 analyst consensus — a +1.6% beat for Q3 FY2026.
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Gross Profit | $357M | $122.5M | +191.43% |
Operating Income | $174.5M | $-37.7M | +562.86% |
Net Income | $144.2M | $-44.1M | +426.98% |
EPS (Basic) | $1.99 | $-0.64 | +410.94% |
EPS (Diluted) | $1.50 | $-0.64 | +334.38% |
R&D Expense | $90.6M | $75.9M | +19.37% |
SG&A Expense | $90.8M | $112M | -18.93% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Total Assets | $7.03B | $3.98B | +76.80% |
Current Assets | $4.4B | $1.67B | +163.64% |
Total Liabilities | $4.05B | $3.1B | +30.98% |
Current Liabilities | $3.87B | $353M | +994.99% |
Stockholders' Equity | $2.97B | $879.5M | +238.08% |
Cash & Equivalents | $2.62B | $516.4M | +406.93% |
Long-Term Debt | $43.2M | $2.56B | -98.31% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Operating Cash FlowYTD | $388.4M | $62.3M | +523.43% |
Investing Cash FlowYTD | $-481.1M | $-24.7M | -1847.77% |
Financing Cash FlowYTD | $2.19B | $42.1M | +5101.43% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
ROE | 4.8% | — | — |
ROA | 2.1% | — | — |
Current Ratio | $1.137 | — | — |
Debt to Equity | $1.364 | — | — |
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Lumentum reported Q1 FY2026 diluted EPS of $2.59, a dramatic improvement from -$2.72 in the same quarter last year. Net income came in at $226.6M versus a loss of $187.4M a year ago, representing a full earnings turnaround. Consensus estimate comparisons are not available in the filing data, but the scale of the improvement is substantial.
The headline story is a massive profitability recovery: gross profit surged 159.5% to $778.6M and net income swung to $226.6M from a -$187.4M loss. Simultaneously, long-term debt was nearly wiped out (down 98.3% to $43.2M) and cash balances jumped to $2.62B, largely from $2.19B in financing activities. The main caution is a 10x spike in current liabilities to $3.87B, leaving the current ratio at a thin 1.14.
Lumentum's balance sheet transformed significantly: total assets grew 76.8% to $7.03B, stockholders' equity surged 238.1% to $2.97B, and long-term debt fell 98.3% to just $43.2M. However, current liabilities exploded 995% to $3.87B, compressing the current ratio to 1.14 and creating a near-term liquidity watch point despite the $2.62B cash balance.
Gross profit jumped 159.5% YoY to $778.6M from $300.0M, though the filing text is not available to specify the exact drivers. The magnitude of the increase suggests a combination of higher revenue, improved product mix toward higher-margin offerings, and potentially better manufacturing cost absorption. This gross profit recovery was the primary engine behind the swing to positive operating income of $245.5M.
The most pressing near-term risk is the 995% surge in current liabilities to $3.87B, which has pushed the current ratio down to just 1.14 — meaning liquidity headroom is limited. Additionally, $481.1M in investing outflows signals heavy capital deployment whose returns are yet to be proven. The gap between basic EPS ($3.18) and diluted EPS ($2.59) also points to meaningful share dilution risk from convertible instruments.