28 July 2022
NeoPhotonics’ Q2 revenue up 46% year-on-year to $95m
For second-quarter 2022, NeoPhotonics Corp of San Jose, CA, USA – a vertically integrated designer and manufacturer of silicon photonics and hybrid photonic integrated circuit (PIC)-based lasers, modules and subsystems for high-speed communications – has reported revenue of $95m, up 6% on $89.3m last quarter and up 46% on $65m a year ago (the second consecutive quarter with year-on-year growth of more than 45%). This was despite ongoing supply chain shortages (primarily of analog and power semiconductor chips) again constraining revenue by about $10m.
This was due particularly to 105% year-on-year growth for 400G-and-above products to $61m (64% of total revenue), up from $54m (61% of total revenue) last quarter. Revenue from 400ZR small-form-factor coherent DCO transceiver modules for data-center customers has now reached the level of low single-digit millions per quarter.
“In addition to 400ZR, we are ramping our 96Gbaud components and sampling 130Gbaud for even higher data-rate applications [800G and 1.6T links],” says chairman & CEO Tim Jenks. “These new component products, together with our ramping 400ZR and CFP2 400G module products, give us confidence in continued growth for the quarters ahead, despite the expected challenges with IC chip supply shortages,” he adds.
Three customers comprised greater than 10% of revenue, and the top five customers accounted for 83% collectively (up from 77% a year ago).
On a non-GAAP basis, gross margin was 35.2%, up from 31.2% last quarter (after meaningful yield improvements) and 21.7% a year ago (due to improved factory utilization).
Operating expense was $24.1m, cut by $0.9m from $25m last quarter due to lower R&D materials and operating costs for the firm’s site in Fremont, CA.
Compared with an operating loss of $10.3m (operating margin of -15.8% of revenue) a year ago and a profit of $2.8m (3.1% margin) last quarter, operating income has improved further to $9.4m (9.8% operating margin), based on the strength of the 400G product ramp.
Compared with a net loss of $11.5m ($0.22 per share) a year ago and net income of $2.8m ($0.05 per share) last quarter, net income per share improved further to $8.3m ($0.15 per share).
During the quarter, net inventory grew by $5.8m to $66m, as the firm increased 400ZR inventories to $20m to ensure ongoing module supply. Capital expenditure was $3m. Overall, cash and cash equivalents, short-term investments and restricted cash hence fell by $2m, from $107m to $105m.
“Our strong quarter with more than 46% year-over-year revenue growth, GAAP operating profit and significant growth from western customers, reflects our success in pivoting our business following the loss of revenue in 2020 due to Department of Commerce restrictions on certain Chinese customers,” says Jenks.
Demand remains strong, but NeoPhotonics expects supply chain constraints to continue to impact revenue through 2022.
“The Lumentum transaction, announced last November, remains on track, having been approved by our shareholders and received anti-trust clearance from US regulators,” notes Jenks. “We look forward to securing regulatory approval in China and closing the transaction.”