Lumentum Overview -...

Lumentum Overview Chris Coldren VP Strategy and Corporate Development

May 2016

© 2016 Lumentum Operations LLC 2

Forward Looking Statement and Financial Presentation

This presentation contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements include any anticipation or guidance as to future financial performance, including future revenue, operating margin, and earnings per share, anticipated sales trends and growth opportunities for our products, trends in and size of the markets in which we operate, as well as our strategies and financial performance. These forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those projected. All forward-looking statements involve risks and uncertainties that could cause actual events and terms to differ materially from those set forth herein, including those related to our business and growth opportunities. For more information on these risks, please refer to the "Risk Factors" section included in the Company’s Quarterly Report on Form 10-Q for the third fiscal quarter ended April 2, 2016. In addition, the results contained in this presentation are valid only as of today’s date except where otherwise noted. The forward-looking statements contained in this presentation are made as of the date hereof and the Company assumes no obligation to update such statements, except as required by applicable law. Unless otherwise stated, all financial results and projections are on a non-GAAP basis. Our GAAP results, details about our non-GAAP financial measures, and a reconciliation between GAAP and non-GAAP results can be found in our fiscal third quarter 2016 earnings press release which is available on our web site, www.lumentum.com, under the investors section. Financial guidance for fiscal fourth quarter 2016 is provided per our earnings call on May 4, 2016 and is not being updated or confirmed as of any other date.

http://www.lumentum.com/

Photonics accelerating the scale and speed of cloud, networking, and advanced manufacturing

spin-off from JDSU 8/1/2015

employees ~2,000

FQ3 revenue (+16% Y/Y) $230.4M

patents >1,000

FQ3 operating margin 8.8%

By the Numbers


Broad portfolio Leading the 100G transition

High-growth applications

Emerging volume applications

TELECOM DATACOM COMMERCIAL LASERS

3D SENSING

Market Focus

MARKET SIZE $4B $2B $3B $0.1B

REVENUE MIX 62% 18% 19%* 1%

KEY STRENGTHS

• #1 market position, • 100G and ROADMs • Customer intimacy

• 100G technology • Scale & technology

from telecom

• Materials processing • Scale & technology

from telecom

• Quality, reliability • Scale & technology

from telecom

Source: Ovum, Strategies Unlimited , Lumentum CY15 results * Includes industrial diodes which are not part of Lasers segment reporting. Segments results can be found in Lumentum’s SEC filings.


Common Operation for All Product Lines

Lithium Niobate (LiNbO3) Silica/Silicon (SiO2/Si) Indium Phosphide (InP)

Leveraging technology advances and volume across all markets/products – more rapid innovation and higher efficiency

Modules and Subsystems

Sub-Assemblies and Components

Internal Wafer Fabrication

Gallium Arsenide (GaAs)

Optical Transceivers ROADM Module Super Transport Blade Solid State Laser Fiber Laser Engine

Industrial Diode Lasers Optical Communications Components


Rapid emergence of 100G in long haul and metro

Optical Communications Market Trends

CDC

FLEX SPECTRUM

NG Metro

Internet and cloud datacenters driving enormous traffic

Hyperscale datacenters poised for 100G transition

Next generation network architectures have high ROADM content

WEB 2.0

Web 2.0 providers build their own data centers

Sourcing direct from optical component vendors

Source: Cisco VNI and Cloud Index

-

100,000

200,000

300,000

400,000

500,000

600,000

700,000

2014 2015 2016 2017 2018 2019 2020

100G

Por

ts

Long HaulMetro

CAGR ≥30%

Source: Ovum

-

50

100

150

200

2014 2015 2016 2017 2018 2019

EB

of d

ata

Fixed Internet Managed IP Mobile data

Mobile + Internet Traffic

0

2000

4000

6000

8000

10000

12000

2014 2015 2016 2017 2018 2019

EB

of d

ata

Cloud data center Traditional data center

Datacenter Traffic


Telecom Growth Catalysts

Next gen ROADM upgrade cycle poised to start

In Volume Production Emerging

Thousands of N.A. metro nodes to upgrade over coming years – more in China as well.

Multiple Super Transport Blades per node for next gen architectures

Receiver

Modulator

Laser CFP2-ACO

+ Integration

Super Transport Blades In Volume Production

100G upgrade cycle driving components and eventually modules

$0$200$400$600$800

$1,000$1,200$1,400$1,600$1,800$2,000

2014 2015 2016 2017 2018 2019 2020Source: Ovum

100G Telecom Components and Modules Market ($M)

CAGR ≥15%


Datacom Growth Catalyst

Datacom 100G upgrade cycle drives growth, and in particular longer reach 500m -10km in QSFP28 form factor transceivers

40G QSFP+

In Production

Now

100G QSFP28

Datacenter longer reach transceiver market ($M)

Source: LightCounting

$-

$250

$500

$750

$1,000

2014 2015 2016 2017 2018 2019 2020 2021

40G QSFP+

100G QSFP28


Macro-machining – conversion of CO2 to fiber lasers

Commercial Lasers Growth Catalysts

Source: Strategies Unlimited

Applications:

Cutting ~78% Welding ~14%

Other ~8%

Source: Strategies Unlimited

15% CAGR >1B Smartphones

and Tablets in 2014

13% CAGR (Gartner)

Fiber Laser Market

Micro-machining – new applications

Macro Materials Processing is ~$1.5B

market today

Micro Materials Processing is ~$0.6B

market today


3D Sensing Growth Catalysts

Gaming Mobile Computing Virtual reality, Automotive Mobile Devices

Gaming was the early adopter of 3D sensing

Applications include facial recognition, 3D scanning, 3D printing, depth measurement and eye tracking

Embedding 3D sensing in mobile computing products has begun with all major manufacturers

New applications emerging for hand and body tracking


Telecom market – 100G in the core 100G metro expansion – 100G component leadership cost-effective CFP2- ACO – TrueFlex® ROADMs winning in next generation networks

Datacom market

– Hyperscale data centers – leadership in 100G transition – Enterprise and client side – 100G continues to grow

Lasers market – Fiber laser strength driven by continued conversion from CO2

– Ultrafast emerging opportunity driven by new applications

Next-generation 3D sensing – Moving to PC and mobile applications

Opportunity Summary

A technology and market leader enabling Cloud, Networking, and advanced manufacturing Growth catalysts across

major product lines Profitable business

model with operating leverage

Appendix – Q3 Supplementary Earnings Slides


Q3 FY16 Results (GAAP)

$ millions except for EPS, % of revenue

Part of Viavi – carveout financials

Lumentum 13 weeks Lumentum 14 weeks

Q3 FY15 Q2 FY16 Q3 FY16

Revenue $198.7 $218.3 $230.4

Gross Margin 57.1 28.7% 68.1 31.2% 62.8 27.3%

Operating Expenses 67.9 34.2% 61.9 28.4% 65.1 28.3%

Operating income (10.8) (5.4)% 6.2 2.8% (2.3) (1)%

EPS (diluted) $0.21 $0.05 $(0.13)

Shares-M (diluted) 58.8 59.2 59.2


Q3 FY16 Results (Non-GAAP)


Part of Viavi – carveout financials

Lumentum 13 weeks Lumentum 14 weeks

Q3 FY15 Q2 FY16 Q3 FY16

Revenue $198.7 $218.3 $230.4

Gross Margin 60.7 30.5% 71.3 32.7% 74.2 32.2%

Operating Expenses 55.4 27.9% 51.7 23.7% 53.9 23.4%

Operating income 5.3 2.7% 19.6 9.0% 20.3 8.8%

EPS (diluted) $0.11 $0.31 $0.32

Shares-M (diluted) 58.8 60.7 61.5


Q3 FY16 Highlights

Revenue was $230.4M up approximately 6% sequentially and 16% year over year – Telecom was up approximately 2% Q/Q and 17% Y/Y – Datacom was up approximately 30% Q/Q and 19% Y/Y – Laser revenue up approximately 2% Q/Q and 5% Y/Y – Industrial & Consumer down approximately 9% Q/Q and up 27% Y/Y

Datacom achieved a record revenue of $45.5M and growth was driven by 100G products which were up approximately 140% sequentially

Continued strength on TrueFlex ROADMs, which were up 30% sequentially

Gross Margin down 50bps due to typical third quarter seasonally higher ASP erosion

(~6%) in Optical Communications products

Lasers Gross Margin expanded to 46.7%

Cash position of $157M compared with $162M last quarter, and down primarily due to timing certain cash disbursements

Debt-free

(Non-GAAP - except balance sheet items)


Q3 FY16 Segment Results (Non-GAAP)

$ millions, % of revenue

Part of Viavi – carveout financials Lumentum 13 weeks Lumentum 14 weeks

Q3 FY15 Q2 FY16 Q3 FY16

Revenue $198.7 $218.3 $230.4

Optical Communications 167.2 185.8 197.2 Telecom 119.7 137.9 140.0

Datacom 38.3 35.0 45.5

Industrial & Consumer1 9.2 12.9 11.7

Commercial Lasers 31.5 32.5 33.2

Gross Margin 30.5% 32.7% 32.2%

Optical Communications 28.2% 30.7% 29.8%

Commercial Lasers 43.2% 43.7% 46.7%

1. Industrial & Consumer contains 3D sensing revenues as well as diode lasers sold into industrial applications.


Balance Sheet

Selected Items - $ millions Q2 FY16

Q3 FY16

Cash and Cash Equivalents $161.9 $157.2

Working Capital(1) 159.4 157.1

Property, Plant & Equipment, net 151.4 168.1

Total Assets 682.0 704.9

Total Liabilities 175.3 192.4

Shareholder’s Equity(2) 506.7 512.5

(1) Current assets excluding cash minus current liabilities (2) Includes convertible preferred stock of $35.8M


Q4 FY16 Guidance (Non-GAAP)


14 weeks

Q3 FY16 Actual

13 weeks

Q4 FY16 Estimate

Revenue $230.4M $232M - $242M

Operating Margin 8.8% 8.5 – 10.0%

EPS (diluted) $0.32 $0.32 – $0.38

Financial guidance for fiscal fourth quarter 2016 is provided per our earnings call on May 4, 2016 and is not being updated or confirmed as of any other date.


Investor Relations Calendar

Event Dates

J.P. Morgan Technology, Media and Telecom Conference May 23, 2016

B. Riley & Co. Investor Conference May 26, 2016

Stifel Technology, Internet & Media Conference June 7, 2016

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