Core Dynamic:
"Availability currently matters more than pricing." Zero near-term order erosion; cost increases are passing through cleanly.
CW Lasers (Post-HieFo):
Transceiver revenue targeted for H1 FY28. Capacity is tight and they trail pure laser leaders, but making solid progress toward the 2027 ramp.
TIA & Drivers (FiberEdge):
Exceptional demand. Deepening hyperscaler integration with a dominant target of 50%+ market share for 1.6T FiberEdge by year's end ("designing to every module provider"). 1.6T qualifications are finishing ahead of schedule.
Backlog & Visibility:
Current FY is fully booked; next year is already >70% locked in. Management noted current capacity may fall short for FY28, especially in H2 (elite demand visibility).
The Numbers:
Q2 Beat: Revenue $341.9M vs. ~$329M expected | Adj. EPS $0.71 vs. $0.61
Massive Q3 Guide: Revenue $410M vs. ~$360M expected | Adj. EPS $1.05 vs. $0.73
That sequential revenue inflection speaks for itself.
Gigantic beat with an incredible read-through on the 1.6T optical ramp. Don't own it, but these were absolute monster earnings.
The Copper Fear is Dead: The copper ramp isn't diluting margins. Last quarter's 4.7-pt drop was purely timing. Signal Integrity is up 64.3% YoY, running at higher margins than a year ago.
Across-the-Board Beat:
Rev: $341.9M vs. $328M consensus (up 17% QoQ / 33% YoY).
Adj. EPS: $0.71 vs. $0.61 guided.
Adj. Gross Margin: 54.5% vs. 54.0%.
Every line beat, and the margin lines beat harder than revenue.
The October Guide (The Real Story):
Revenue: $410M (up 19.9% QoQ / 53.6% YoY).
Margins & EPS: Adj. Operating Margin jumps to 31.0% (up from 20.6% YoY). Adj. EPS hits $1.05. Adj. EBITDA margin at 32.8%.
The Operating Leverage Gap: Revenue up 20% sequentially on opex up just 9% ($112M opex vs. $127M operating income). Watch January: If opex catches up to revenue, 31% is a peak, not a new baseline.
Clean Cleanups & Macro Read-Through:
Divestitures Separated: Adj. gross margin excluding assets held for sale was 59.7% (5.2 pts above reported), and Q3 is guided at 63.9%. We can read the underlying margin expansion cleanly without the blend.
GAAP Watch: GAAP EPS ($1.59 on $160.1M net income) carries a big below-the-line item; core operating EPS is $0.71.
Macro Context: Optical interconnect was the only AI hardware layer with negative 90-day consensus revisions (-3%). A $410M guide against $267M a year ago completely shatters that narrative. One print doesn't reprice a whole layer, but it's the first hard counter-datapoint.
What I Still Can’t See:
The internal split of Signal Integrity between CopperEdge and FiberEdge, and exact hyperscaler concentration. 65.3% segment margin at +23.7% sequential growth proves copper isn't a drag, but it doesn't clarify if copper carries better-than-expected economics or if fiber simply outgrew it. Those two product futures have very different moats.
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