Lumentum at BofA Securities Conference: Strategic Growth and Challenges

On Wednesday, 04 June 2025, Lumentum Holdings Inc (NASDAQ:LITE) shared its strategic insights at the BofA Securities 2025 Global Technology Conference. The company outlined its plans to enhance revenue and earnings, while also addressing challenges like tariff uncertainties. CEO Michael Hultzton emphasized a shift towards streamlining operations and focusing on promising technologies, despite competitive pressures.

Key Takeaways

• Lumentum expects to achieve a $500 million quarter by September, with aspirations for $600 million, though visibility is limited due to tariff uncertainties.
• The company is streamlining projects to improve execution and is reallocating resources to focus on Optical Circuit Switching (OCS) and co-packaged optics.
• Lumentum aims to enhance gross margins from the mid-30s to low 40s through internal component utilization and operational efficiencies.
• The module business is targeted to exceed $1 billion, focusing on margin discipline and avoiding overexpansion.
• US customers are increasingly seeking domestic suppliers, presenting growth opportunities for Lumentum.

Financial Results

• Revenue guidance has been increased to the very high end of previous expectations.
• Lumentum anticipates a $500 million quarter by September, with a $600 million quarter as a target, albeit with limited visibility.
• Current gross margins are in the mid-30s, with a goal to reach the low 40s.
• The telecom business currently generates $230-240 million, a decrease from the mid-$300 million range.

Operational Updates

• Lumentum is reducing project numbers, including exiting the metrology business, to enhance execution.
• Resources are being redeployed to OCS, with a 50% reduction in module business projects to improve success rates.
• The company plans to increase production at its Thailand factory to boost margins.
• Efforts are underway to resolve product transition issues following the Cloud Light transaction.

Future Outlook

• Growth in 2026 is expected from the module business in the first half and OCS and co-packaged optics in the second half.
• Lumentum anticipates deploying 50 to 200 OCS units weekly, with ASPs nearing $100,000, in early 2026.
• Module business aims to surpass $1 billion without becoming overly large.
• EML laser capacity is set to increase by 50% over the next 4-5 quarters.
• Incremental growth of $50-70 million is expected in the telecom business over the coming quarters.

Q&A Highlights

• US hyperscalers show intent to purchase from domestic suppliers, though supply constraints are a limiting factor.
• The total addressable market for OCS is shifting from electrical to optical, with 10-15% moving to optical.
• Co-packaged optics deployment is anticipated to be driven by NVIDIA’s turnkey rack solutions, with major US hyperscalers expected to participate.
• Lumentum sees a potential 5-6% margin improvement by utilizing internal components for modules.

Readers interested in more detailed insights are encouraged to refer to the full transcript below.

Full transcript - BofA Securities 2025 Global Technology Conference:

Vivek Arya, Analyst: To have the team from Lumentum join us, Michael Hultzton, CEO. And I’ll go through same fireside format, my questions, but please feel free to raise your hand if you would like to bring up anything. Michael, warm welcome, really appreciate you joining us. And thank you for the positive pre announcement yesterday.

Michael Hultzton, CEO, Lumentum: Thank you.

Vivek Arya, Analyst: Yeah, always good to get something exciting before our fireside.

Michael Hultzton, CEO, Lumentum: We just wanted to keep your blood blood pressure high. That’s all. Okay. Keep guiding your

Vivek Arya, Analyst: toes a little That I think that there’s a lot going on too.

Michael Hultzton, CEO, Lumentum: Okay. Good,

Vivek Arya, Analyst: good, good. But maybe talk us through what led to that upgrade during the quarter, where are you seeing the upside drivers? And the way I understand it, I think you raised guidance for June, right? Earnings guidance even stronger than that. And you expect to get to $500,000,000 a quarter earlier than you thought before.

But the $600,000,000 target you kept as was before. So maybe walk us through these dynamics.

Michael Hultzton, CEO, Lumentum: Yeah, I mean, I think first in the quarter, we’re seeing just broad based strength across the business. It’s not driven by any one thing, but it really is something that we we can’t ignore. So we are obviously we feel like our our our new guidance is at the very high end of our revenue or old revenue guidance at the midpoint. That falls through on both the operating income line and EPS. Right?

So we feel like we needed to say something. And probably more importantly, how that starts to cascade. As you correctly called out, the $500,000,000 quarter comes in to our September. And then the 600,000,000 quarter, which has gotten a lot of discussion in our in our one on ones today, you know, that’s mostly because we just don’t have the visibility. We we feel like we’ve got a ton of growth drivers that you and others have have written about that really set us up super well.

As we think about 2026, you know, we have our module business that I think you understand better than anybody that now is starting to really take effect. In the first half of twenty twenty six, we have OCS that we feel good about that a lot of people, I think, underappreciate our opportunity and our positioning there. And then in the back half of twenty twenty six, we have co packaged optics. So we sort of have this set of dominoes that we think line up, you know, on a almost on a six month cadence. And, again, in the short term, it really became difficult for us to ignore.

We’ve got to go out and say something because this business is performing a lot better than we expected. I think for the $600,000,000 quarter, look, we we just don’t know. Tariffs, there’s a lot of uncertainty. If the business plays out like we expect, we we probably will do better than the expectation that we’ve set out, but just too early to call.

Vivek Arya, Analyst: Got it. Very good. So Michael, four months into this new role as as CEO, but you have been in industry before, right, Synaptics, Finisar before that, and, you know, Broadcom, right, before that. What have been your first impressions like? Because this optical industry, you know, has has been an interesting one over time.

Right? There’s a you know, in Moore’s Law, we have, like, doubling of benefits every one to two years and optics, get 10x the benefit, but then the industry has had trouble maintaining profitability over long periods of time. So talk us through what your first impressions have been.

Michael Hultzton, CEO, Lumentum: Yeah, look, think Lumentum is an incredibly technically driven company. It really is super, right? The technology drivers that we have inside the company are second to none. We have an end to end portfolio that I think gives us a tremendous amount of confidence. We can play in submarine networks.

We can play in data center interconnect. We can obviously play inside the data center. So we do have a really, really complete portfolio. I think the one change, significant change that’s been made in the first four months is let’s do addition by subtraction. I think that there was so much opportunity coming at the company that we start our you know, as my mother said, your your eyes are bigger than your stomach.

We were really taking on a lot, and that was leading to some execution challenges. And we became our own worst enemy in a sense. And so what I’ve done in partnership with Wajid here is really streamline the number of projects, really streamline the set of activities that we’re we’re trying to take on. And that has led to a lot better execution, which in turn has led to today, the positive announcement. So I think we we took some things off the table.

We we had an announcement we talked about in our last earnings call that we one of our big kind of initiatives that we talked about was a metrology business. We stopped that. We redeployed resources to OCS. Inside the module business, we took the number of projects that we wanted to to focus on. We took that down by about 50% to give us the best chance of success.

And we’re starting to see the fruits. Look, it’s early, but we really feel like simplifying the company has been is the path forward. I think as we play this thing out over the next few years, I have a system. You know, we run the system. I learned the system at Broadcom, employed the system at Finisar.

Unfortunately, we we sold the company in a short period of time. Really put that Finisar that system in place in Synaptics. And Wajid and I are now deploying that system again here, which gives us great transparency across the businesses and will allow us to control OpEx, allow us to really focus on the gross margin line, which we want to improve greatly while we have this big revenue tailwind. Right? So we think that that will start to kick in the second half of this year and in 2026 and beyond.

And I think that system will really, really serve us well. Right, absolutely. And one interesting aspect, Michael, is

Vivek Arya, Analyst: that a few years ago, I remember Lumentum had gross margins in the fifties. Right? Like very kind of pure play best of breed component. And then I think there were a bunch of acquisitions. And like you said, the aperture got expanded and margins got into the 30s.

Where is Lumentum now strategically? Do you see a realistic path, obviously not year or two years, but longer term to kind of get back to its roots of focusing on kind of specialized areas and getting margins up?

Michael Hultzton, CEO, Lumentum: Yeah. I mean, I think that that point in time was driven largely by Apple. Right? So we had the face ID product, and I I competed against that at Finisar. Right?

And we saw really great execution from Momentum to capture that opportunity and really be sole sourced at Apple for the better part of two and a half years. That led to margins on that piece of the business at 70% plus. And so that carried the the company up over 50% as you’re as you’re correctly calling out. But frankly, that was a blip. And and what I mean, I think the previous administration did so many things right, but one thing that that wasn’t done was use that tailwind to clean up parts of the portfolio.

And we have a big tailwind right now. We really do in terms of our our demand and our growth drivers. We are not gonna let that opportunity pass us by. We’re gonna really focus on operationalizing under underperforming parts of the business, focus on getting our gross margins up. To your question, I think we definitely have line of sight to margins in the forties.

So we’re not happy with margins in the mid thirties. We’re inching those up. I think if you look at the guide, we we get up into the higher thirties. We’re not happy there. Right?

So I think with all of the different levers that we have, pricing levers to a certain extent, cost levers, We think we can get it up in the the low forties. And look, we’d like to do better than that. I mean, I think I’m not happy. I’d I’d like a return to fifties. Given our portfolio, it might be difficult.

Rajat is shooting arrows at me as I say that. But we we think that we we we have a lot of levers. And and I think that’s the dynamic too that’s changed, Vivek. In the optical industry, you asked before we began the chat, you know, coming into this industry, I see a lot of parallels to what we saw in the semiconductor industry in 2016, ’20 ’17, where the paradigm changed a bit and we had a little more balance between customer and supplier. The optics industry, I think, has been used to being dictated to by the by by the customers, handful of customers that are relatively slow moving.

And the customers have changed. They’re much faster moving these days. And I think we can write that balance and and get some better pricing and command a little more respect because what we’re delivering is amazingly complex. It’s no different than the semiconductor landscape. We should be able to change this margin paradigm, I

Vivek Arya, Analyst: think relatively quickly. Right. Now, the one place where a skeptic might push back is that, you know, unlike the semiconductor industry, your biggest competitor, right, if we just pick modules and optical transceivers, right, because that seems to be one of the biggest, you know, categories that you are participating in right now, that the biggest competitor is in China, Right? That they have access to a cost structure, you know, different margin expectations, etcetera, and incumbency in a lot of places. Then you have another really large competitor, right, in in The US as well.

They had an analyst day recently, and they said, you know, when it comes to optical transceivers, we are optimizing for share, right, not maximizing margins. So how do you expand margins given that competitive landscape?

Michael Hultzton, CEO, Lumentum: Yeah. I mean, look, as we said, one, the the the the strange and painful fact is that to be between us and Coherent, we do exactly zero business in China. Zero. Right? The Chinese hyperscalers have locked us out.

They do not want US content in their data centers. We believe that the same is true in The US, that having a domestic supplier makes a difference. I think we both command a slight premium, slight over the Chinese suppliers. And if we could supply, they would buy us the deck very much toward us and Coherent. Right?

Right now, to be fair to them, we simply can’t supply what they want. But I do think that in the asymptote, I think some of that threat comes down. The second point I make is the business is so big, we can pick and choose. Right? We don’t have to go after everything because we have a lot of other things going on.

I think props are similar to Coherent. They have a super broad based business. We have a very broad based business too. So I don’t need to chase every single module design, particularly short reach, lower price, more competitive areas. I can be a little bit more selective.

So the model that I think Wajid and I have worked out together is, look, we wanna we wanna grow this business. So we think where there’s a path to get this portion of the business up over a billion dollars, but I don’t want it to be a 3 and $4,000,000,000 business. I don’t because I think it’s always going to be a margin headwind. So we’ll manage it. We’ll manage the opportunities that we pursue, and we’ll keep keep our eye on that margin line.

And then again, the rest of the portfolio, the two thirds, 75% of the rest of it, we’re going to be very, very focused on keeping the margins up.

Vivek Arya, Analyst: Okay. This notion that US customers, the hyperscalers, right, or other customers such as Nvidia and others that they should buy more from US suppliers. I think that sounds good in theory, but are you actually seeing that in practice? Like, are they resonating with this idea you know, that they should be shifting, right, more of the purchases to, you know, your your competitor and and and yourself, you know, as opposed to a Chinese supplier?

Michael Hultzton, CEO, Lumentum: You know, definitely the intent is there. Right? And and I would say it’s hard to test the intent because we simply can’t supply. I see. So if if if Coherent and us could make a % of the demand, I I think we’d have a real test that that of of intent.

They are saying all the right things, and I do believe we get a premium. Right? And I believe Coherent gets a premium. So the intent seems to be matched with action, but the reality is that we’re a single digit low single digit player. Coherent maybe 20% of the overall market.

That leaves 70 plus percent for the Chinese, and you just simply we’re we’re just not able to fill the demand. Right? And so I think it’s hard to say at this point whether that’s true or not. We are ramping supply. I know Jim is ramping supply.

We’re going to get to a point I think where we’ll be able to better test that. Okay. We’ll come to the constraint side. The one other interesting thing that, you

Vivek Arya, Analyst: know, when we attended your your analyst event at at OFC was optical circuit, you know, switching. And that surprised me because somehow I was only under the I was under the impression that only Google had that as as part of their, I think, spine network, and it wasn’t really as widely adopted across other hyperscalers. So talk to us about what is that category? How large is it today? Where can it get to?

And what is the key role that Lumentum is playing

Michael Hultzton, CEO, Lumentum: in that? Yeah, I mean, I think you have it right. If you look at this particular point in time, it’s just Google. But I think what Google has proven with their network architecture is the fact that there’s significant power savings by going to an optical circuit switch, and there’s very significant cost savings. So what you see is the rest of the ecosystem blomming onto that.

And any new deployment is most definitely considering OCS in the spine. Right? So it’s a significant shift in TAM from electrical to optical. You know, we would calculate that out somewhere between 1015% of the TAM now moving gradually to optical, very much concentrated on greenfield. Right?

Any new deployment, it makes a ton of sense for them to go to an OCS for the two reasons that I mentioned. And then I think where OCS is deployed in places like Google, I think there’s a replacement because our solution is better. Right? We really think that we have technical advantages in terms of insertion loss. We have technical advantages in terms of cost quite frankly.

So those things together say, okay, we we can compete for an existing existing landscapes and most definitely we can compete in in greenfield. Right. So just to understand, this is a essentially a replacement for what would otherwise be a, you know, Broadcom, you know, based

Vivek Arya, Analyst: switch Ethernet switch. Right? And you think OCS has today the reliability and the cost structure to be competitive against a Broadcom class That’s right. In a spine situation.

Michael Hultzton, CEO, Lumentum: Yeah. You have the right, Vivek. Yeah. That’s right. It’s it’s spine.

You can argue, and we’ve seen this now some even discussed in the least. Right? So it’s definitely it will put pressure on the Broadcoms of the world. It’s early innings. Right?

It’s still early. And and really, I think it’s very difficult for us to say that we’d go into existing deployments where they’re able to go into every single day. But I think as you think about new deployments, this has such an advantage. Right? Kathy was talking about earlier.

Just think about the switches from electrical to optical. Right? That consumes power. Right? And if you can keep it in the optical domain as much as possible, that’s a huge benefit.

That alone is reason enough to deploy OCS. Right.

Vivek Arya, Analyst: And how do you differentiate your approach from Coherent’s approach? Cause I think they also described their OCS offering recently.

Michael Hultzton, CEO, Lumentum: Yeah, they are two different approaches, but in the end, I don’t think that that’s an issue. I mean, what is at issue is we have a significant time to market advantage on high radix, high port count. So you’re thinking about the current deployments mostly are 300 by 300, three 20 by three twenty, moving up 500, six hundred port. The more ports you have, the more effective this becomes. Right.

So the vector is more. Right? If you look at what Coherent offers, it’s a lower port count. It’s a 64 by 64. They will have opportunity with that.

No question. It’s not a spine replacement. There’s just simply not as many ports. It’s more of a specialized DCI type of application. We can compete for that and we will, but we don’t have a solution.

We’re behind them. They’re significantly behind us on a higher port count. The MEMS based on a technical basis, the MEMS based solution has a distinct advantage in terms of insertion loss because we’re using a mirror. They’re using a translucent list of liquid crystals. So there’s loss.

There’s necessary loss through that system. In a higher port count, that insertion loss makes a big difference. So there is a technical advantage we have. But at the end of the day, I’d say the big, big driver is the fact that we are first to market.

Vivek Arya, Analyst: Got it. So essentially the way to think about it that this is adder for first half of calendar twenty six that you have kind of line of sight to wins and this becoming a decent part of of the business at at that point. Yeah. That’s right.

Michael Hultzton, CEO, Lumentum: I mean, you know, we’re being asked to deploy, you know, 50, two hundred units a week at, you know, ASPs that we’re talking about, are nearing a hundred thousand dollars each. This is a big deal. It’s a big deal.

Vivek Arya, Analyst: And is it one customer? Is it multiple? Multiple. Multiple. Multiple customer.

Michael Hultzton, CEO, Lumentum: Yeah.

Vivek Arya, Analyst: Okay. And then the next thing you suggested was the move towards co packaged optics, where again, there’s been a lot of industry debate as to when we will see it, if we will see it. What I’m still surprised by is that I think the the vendor community, whether it’s yourselves, you know, NVIDIA has mentioned it, you know, coherent, right, Broadcom has been like, you know, so I have yet to hear a hyperscaler actually say that I need a co packaged optics. Right? So do you see enough pull by these customers?

Because they, I imagine, weighed against the operational benefits of just staying with the current pluggable. So do you have you heard from those customers whether they need it or is this a technology being pushed by the industry?

Michael Hultzton, CEO, Lumentum: No. I mean, I I think the hyperscalers are are most certainly talking about it, but I think where you’re going to see the volume is when people deploy the turnkey NVIDIA rack, and that’s gonna be a significant number of people. So all the hyperscalers ultimately will have a mix of NVIDIA racks in the in their in their data centers. And to the extent that that exists, NVIDIA seems very committed to CPO. We’ve seen numbers from them that are very significant.

And that that alone is creating they’re pushing, right, into the hyper calers, but you’ll see all of the the the big certainly, the big four US will deploy NVIDIA turnkey to some extent. They will have their own. They will have their own implementation even on an NVIDIA platform that some of them do their own configuration of the NVIDIA platform. Right. But to the extent that this turnkey exists, it will land in every single hyperscaler.

And then the hyperscaler separately are talking to us about, hey. This seems to make sense. Right? No no DSP, power savings, the result in power savings from that, that is something that I think is super attractive. So the conversations now on a separate implementation are also happening in the various hyperscalers.

Vivek Arya, Analyst: I see. And I would imagine this is incremental. Right? This is more scale up rather than scale out or where do you see the application?

Michael Hultzton, CEO, Lumentum: It’s scale out. So to be clear, is scale out. Right? It’s attached to the switch. It’s more scale out.

Know, Touching on a different concept, look, scale up is a huge. I mean, this is Right. We measure transceivers in hundreds of thousands. We’re measuring scale out in millions. Right?

Scale up is hundreds of millions, to be honest with you. And we’re all looking at that opportunity. We think we have great technical positioning for for for scale up, but that’s a ways out. This is all scale out. All scale out.

Okay.

Vivek Arya, Analyst: And any simple way to say that, if you had a chance to sell an optical transceiver versus a CPU, which I guess, because you’re not that big in the transceiver market, it’s not like you’re cannibalizing your business regardless, right?

Michael Hultzton, CEO, Lumentum: Yeah, mean, that’s the calculus for us. I mean, we have right now, right? We have exclusive position on CPO by virtue of the fact, which you appreciate probably more than most, it comes from our ramen pump heritage. Right? We have an extremely high market share bordering on triple digit of undersea pump lasers that have to have the reliability and power that I mean, if I plop something down in the middle of the ocean, I don’t want that to fail.

Right? And so we figured out how to get fits of basically zero. And so the Raman pump laser is the UHP for cocoagulated optics is a derivative of that. And so we believe we have a multi year advantage by virtue of the heritage on Raman pump lasers that is going to give us a moat. So from a market share perspective, we’re talking about low single digits on transceivers at multiple hundred dollars, right, versus a co packaged optics opportunity that’s in the tens of dollars.

I mean, the ASP is actually surprisingly high at very high market share. So the math works out probably on the top line, you know, roughly even. But on if you look at profit dollars, it’s super good

Vivek Arya, Analyst: for us. Right. Makes sense. On the transceiver side, where are you in terms of executing on the Cloud Lite transaction that you did? You think you are going to pass the product transition issue they had at their customer?

You mentioned low single digit kind of market share. When do you see that becoming double digit or more?

Michael Hultzton, CEO, Lumentum: Yeah, mean, back to a couple of points that I made. We definitely had some execution problems on our module business and we tried to take things off the plate in order to improve engineering execution, which we’re seeing fall through. Again, early innings, but we’re actually seeing improvement in terms of the execution. And we probably never wanna see this business unless we get to a state where we we talked about earlier that we can supply the world’s supply of transceivers and we see a balance in the gross margin equation. We probably never wanna run this business up too high.

Right? We again, we wanna be selective about the opportunities that we that we pull on. So we have a lot of margin room here, unfortunately. Right? We’re we’re operating this well below in a light, well below Eopto that you can Frankly, we’re operating well below Coherent.

We think we can get the business into the, you know, mid thirties gross margin. We have a lot of room right now to get there. And and I think we have levers because, again, you’ve written about this. We don’t use our own internal components today. So we’re planning to shift to our own internal components.

And as we do that, margins get better. Just the utilization of the factory, margins get better. We are learning, we’re producing in volumes that we never have before in our Thailand factory. Again, that learning margins get better. So we definitely have a track to get the margins up into the thirties next year.

Got it.

Vivek Arya, Analyst: The telecom business, where is that in kind of its stage of cyclical recovery?

Michael Hultzton, CEO, Lumentum: Yeah, mean, look, we’ve come down from historic highs, right? I mean, I think if you look at the math, we were probably doing mid 300s on the telecom business And now it’s, you know, 200, 2 hundred and 30, 2 hundred and 40 million dollars. So it’s come down significantly. Part of that is Huawei. Right?

So we had a big bite that’ll never return. But if you look at the current base, it’s actually growing surprisingly well. Right? Driven by, again, the hyperscalers. Right?

So our data center interconnect business, our pump laser business is not going to the operators anymore. It’s going to hyperscalers. So that business has done surprisingly well. It’s shown growth. We’re definitely on an upward trajectory.

We’ve come off the bottom. Will we ever get it back into the three fifty range? Probably not just given the delta that Huawei represents to the overall business, but we certainly will get it up in fifty, sixty, seventy million dollars more incrementally over the next couple of quarters.

Vivek Arya, Analyst: Got it. And then finally, we discussed the path towards higher gross margins. Talk to us about the operating leverage the model. How do you simultaneously stay competitive working in all these different dimensions, but still get operating margins right into the twenties at some point?

Michael Hultzton, CEO, Lumentum: Yeah. I mean, of the issues we have is I think on our engineering leverage. We definitely, again, are probably doing too many things. And so by cleaning the plate, I expect to actually operate the business much more efficiently while driving top line. I mean, we just we were taking on a lot of projects that definitely didn’t have ROI.

So we’re trying to institute a lot more discipline. And in so doing, I think you end up having a lot more leverage. The other thing is and Wajid has talked about this in a couple meetings earlier today. I think our kind of our g and a bloat, I would call it around the company, can be streamlined. I think there’s cost opportunity there.

We’re gonna start to work on that. We enter our annual planning process actually tomorrow, and we’ll see, you know, can we actually take some of the cost out of the business and trade it for r and d dollars that certainly are more productive from an ROI perspective. So we do think that we can operate the business plus or minus in the same OpEx envelope while ramping revenue pretty significantly. Got it.

Vivek Arya, Analyst: And then maybe one final question on EML lasers. Lumentum is a well recognized leader in that business. Where are you right now from a supply demand perspective? At what point do you think you will have enough capacity to kind of help feed your own transceiver business? And then let me ask that final part C of this, which is Coherent is also investing a lot in that business, Move to six inch, they think that gives them a cost advantage.

So where are you supply demand, your transceiver feeding your transceiver business and then there’s competition?

Michael Hultzton, CEO, Lumentum: Yeah, we’re behind. I mean, headline is we’ve added we’ve doubled the capacity. I think that figure was given out by by Wajid and Kathy a couple of times. Doubled our capacity over the last year, still way behind. We have a path to probably increase the capacity another 50% over the next four or five months four or five quarters.

So we still have plenty of headroom on the capacity. I still think we’re gonna be chasing demand. I mean, the EML demand, we were just reviewing emails in between breaks. Right? Just the number of opportunities that are coming in from other transceiver manufacturers are significant.

It’s really the volume seems to be exploding. Our transceivers are all CW. So interestingly enough, we’ve allocated all of our capacity to serving external customers and all of our capacity on EMLs. So one of the decisions that we talked about in the last earnings call was allocating a bit of the capacity to CW laser, getting our toe in the water. As we grow overall capacity, we’ll continue to increment EML, but we’ll probably grow CW a bit faster.

Mhmm. One, there’s an immense CW opportunity. That’s also very underfunded. We think we can do things on pricing to make that equation really work at our advantage. And then two, most importantly, is serve our own modules.

Right? So part of our margin challenge is that we’re using external components. We’d love to get that situation rectified, use our components in our own modules. And I think that’s a five or six percentage bump in margin that we didn’t fully appreciate. So that’s something that we’re we’re intently focused on, and we’ll execute, I think, in the first half of next year.

Right.

Vivek Arya, Analyst: Great. With that, Michael, thank you so much.

Michael Hultzton, CEO, Lumentum: Thank you. Pleasure to Super to have.

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