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May 15, 2024

VIA EDGAR SUBMISSION

Mindy Hooker and Anne McConnell

Securities and Exchange Commission

Division of Corporation Finance

Office of Manufacturing

100 F Street, N.E.

Washington, D.C. 20549

Attn. Mindy Hooker and Anne McConnell

Re: Lumentum Holdings Inc.

Form 10-K for the fiscal year ended July 1, 2023

Form 8-K filed on August 17, 2023

File No. 1-36861

Ladies and Gentlemen,

Lumentum Holdings Inc. (“Lumentum” or the “Company”) submits this letter in response to the comments contained in the correspondence of the Staff (the “Staff”) of the U.S. Securities and Exchange Commission (the “Commission”), dated March 1, 2024 (the “Comment Letter”), relating to the Form 10-K for the fiscal year ended July 1, 2023 (the “Form 10-K”) and Form 8-K filed on August 17, 2023 (the “Form 8-K").

For reference purposes, the text of the comments in the Comment Letter have been reproduced herein (in bold), with the Company’s response below each numbered comment.

Form 10-K for the fiscal year ended July 1, 2023

Management's Discussion and Analysis of Financial Condition and Results of Operations

Results of Operations

Net Revenue, page 52

1.We note, excluding acquisitions, net revenue declined in fiscal 2023 compared to fiscal 2022. We also note a substantial amount of the decline was related to a decrease in net revenue to Industrial and Consumer customers in the OpComms reportable segment, which declined over 50% relative to the prior year and negatively impacted total net revenue by ~16% relative to the prior year. Please revise future annual and quarter filings to more fully address the following items.

•You attribute the decline to "higher market competition and reflects share normalization in the market". More fully explain and discuss the specific factors that resulted in the decline and address if you expect such factors to continue to impact operating results.

• It appears the decline may be related to a reduction in sales to a significant customer. More fully address the factors that result in material changes in sales to significant customers and address any plans and expectations you have to address such factors.

•Net revenue trends have continued to significantly decline in fiscal 2024 and you attribute the decline to the same factor noted above, as well as, to inventory build ups resulting in inventory management actions by customers. More fully explain and discuss each factor that negatively impacted net revenue, for example, given the decline in net revenue, excluding acquisitions, in fiscal 2023, it is not clear when inventory build ups occurred or if/when you expect inventory management action by customers to be resolved.

Lumentum respectfully acknowledges the Staff’s comment regarding our disclosure in the Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) section of Form 10-K.

We advise the Staff that in FY18 Lumentum was able to obtain very high market share from a new large consumer that itself had dominant market share. Over time, this customer enabled other suppliers, which resulted in lower market share for Lumentum and lower market prices.  In the last twelve months, new market participants increased competition significantly, resulting in a further decrease of our market share and pricing. These decreases occurred over time and were not predictable with any certainty. We expect levels of competition to likely limit business with this customer going forward to <10% of Lumentum’s annual revenue, unless there is a favorable product or technology shift that would allow us to gain market share and/or increases product average selling prices.

Regarding the inventory build-up by certain customers, we do not have specific, direct knowledge that would allow us to confirm exactly when and by how much this occurred, nor the exact timeline of when it will be relieved.  Our customers generally do not disclose to us how much Lumentum inventory they have in stock.  Our comments are thus based on 1) qualitative conversations with our customers about their inventory levels and inventory reduction plans, each of whom may have different timelines, and 2) review of earnings reports and publicly available balance sheets of our customers.

Through the end of calendar 2022 (fiscal Q2’23), Lumentum, along with most of our industry, was still dealing with supply chain constraints that began with the COVID 19 pandemic, that led to extended lead times and an inability to meet customer delivery requests.  It was during the spring of calendar 2023 (Lumentum’s Q3’23) that our largest telecom customers began signaling that they may have excess inventory, and these customers began to signal inventory reduction plans as the supply shortages ended and lead times significantly decreased.  Therefore, in our Quarterly Report on Form 10-Q for the period ending April 1, 2023, filed with the Commission on May 9, 2023, we began disclosing the oversupply factor.

Specifically, the Overview section in the MD&A in our Form 10-Q for such period, we disclosed the following:

In addition, in response to component shortages, certain of our customers accumulated inventory that they are now managing down as supply conditions improve. Accordingly, ordering patterns are difficult to predict and have declined from recent periods. For example, in our fiscal 2023 third quarter, a network equipment manufacturer who represented more than 10 percent of our fiscal second quarter revenue informed us that due to their inventory management, they would not take the shipments we had originally projected for the quarter.

We have included similar disclosure, updated to reflect known trends at the time, in our Form 10-K for the fiscal year ended July 1, 2023 and our subsequent Quarterly Reports on Form 10-Q. Since our original disclosures, we also have seen our largest industrial customers also initiate inventory reduction plans which have reduced demand for our products.

Originally, we estimated such inventory reduction efforts by the industry to take around 6-9 months.  At this time such efforts appear to be moving slower than expected, given demand dynamics our customers are experiencing with their customers, and we expect such efforts could impact some of our customers’ demand through the end of calendar year 2024.

Most recently, in our Form 10-Q for the Quarter ended December 31, 2023, we disclosed the following:

In addition, in response to component shortages, certain of our customers accumulated inventory that they are now managing down as supply conditions improve. Accordingly, customer orders have declined in recent periods and certain customers have not taken the shipments we had originally projected due to their inventory management. As customers manage their inventory down, our revenue has declined and our margins are adversely impacted as we are not able to fully recover costs, such as underutilized manufacturing capacity, associated with the forecasted demand and we may incur excess and obsolescence charges from unsold inventory. We expect this trend to continue to impact our business during the calendar year 2024.

These issues are complex, and we disclose what we reasonably believe at the time of filing, but the environment has been dynamic.  We believe we have appropriately and timely disclosed the trends and factors impacting our results. However, in light of the Staff’s comment, we confirm that to the extent the supply situation at our customers changes or materially impacts our financial results, we will disclose such factors in detail in future filings.

Gross Margin, Page 54

2.We note you present Segment total gross profits and Segment total gross profit margins in the table on page 54. Although disclosing and discussing each reportable segments' profitability measure required by ASC 280 in MD&A is appropriate, presenting Segment total measures results in non-GAAP financial measures that may not comply with the requirements of Regulation G, Item 10(e) of Regulation SK, and the C&DIs related to non-GAAP financial measures. Please revise future filings to eliminate Segment total measures or tell us how you determined the measures are appropriate or how you intend to revise them to comply with Regulation G and Item 10(e) of Regulation S-K. Given the change in the segment profitability measure used by your CODM subsequent to year-end, this comment is also applicable to your presentation of Total Segment Profit in subsequent Form 10-Qs. Refer to Question 104.04 of the Division of Corporation Finance’s Compliance & Disclosure Interpretations on Non-GAAP Financial Measures.

Lumentum respectfully acknowledges the Staff’s comment regarding our presentation of Segment total gross profits and Segment total gross profit margins in Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) section of the Form 10-K.  We advise the Staff that, in light of the Staff’s comment, we will eliminate Segment totals in future filings within MD&A.

3.We note your disclosure on page 15 indicates you have seen negative impacts to gross margin due to increases in component costs, logistic costs, elevated inventory balances and inflationary and pricing pressure. To the extent these factors materially impacted gross margins during the periods presented, please revise MD&A in future annual and quarterly filings to quantify and discuss the impact these factors had on operating results.

Lumentum respectfully acknowledges the Staff’s comment regarding the disclosures within our risk factors regarding the impacts to gross margin.  However, we believe that the majority of the items disclosed by Lumentum in Item 1A page 15, and referenced in the Staff’s comment, were discussed within MD&A.

“Increases in component costs,” together with “logistics costs” are disclosed within MD&A on page 54 as follows: “$18.5 million higher incremental cost of sales related to components previously acquired from various brokers to satisfy customer demand.” These costs became a capitalized cost added to the inventory component value which is expensed when sold. In addition, on page 55, when discussing FY 22 compared to FY 21 results, we use more explicit language referencing logistics costs – “Due to the global supply chain constraint, we incurred incremental supply and procurement costs in order to increase our ability to fulfill demands from our customers.”

“Elevated Inventory Balances” is disclosed within MD&A on page 54 as follows: “$17.4 million higher inventory excess and obsolete charges primarily due to company-wide integration efforts as a result of the NeoPhotonics merger and transitions to the next generation of products.”

“Pricing Pressure” is disclosed within MD&A within the Revenue section as follows: “Industrial and Consumer decreased by $276.5 million primarily due to higher market competition and reflects share normalization in the market.”  We used the term pricing pressure in our Risk Factors, but the impacts within MD&A are a combination of pricing pressure and mix shift. In light of the Staff’s comment, to the extent these items continue to be material to our business, we will revise our disclosure to provide additional clarity and quantification of impacts from pricing changes and mix shifts.  Please refer to our response to comment #4 for further details and an example enhanced disclosure.

We have not specifically disclosed impacts from inflation in our MD&A.  While we have seen the pressure of inflation on individual price negotiations with certain vendors, particularly commodity vendors such as electricity, certain chemicals and gases, and semiconductor components, we have not seen enough actual increases to materially impact our results. In future filings we will frame the risk of “inflationary pressures” as a potential impact to our financial results instead of an actual impact if we have not experienced a significant impact. In addition, we will ensure that we more clearly distinguish between potential risks and risks for which we are seeing a significant impact from the disclosure in Item 1A and will ensure that items listed in the future in item 1A are matched to the items large enough to be included in our MD&A disclosures.

4.We note factory underutilization and changes in product mix negatively impacted gross margins during the periods presented and continued to negatively impact gross margins in fiscal 2024. Please revise future filings to more fully address the underlying reasons for and impact of each factor.

Lumentum respectfully acknowledges the Staff’s comment regarding the negative impacts caused by factory underutilization and product mix on gross margins discussed in Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) section of our Form 10-K.

With respect to quantification of underutilization, in future filings, to the extent material, we will quantify the impact of changes.  See example disclosure at the end of this comment response. With respect to the underlying reasons, we refer the Staff to the following disclosures within our Form 10-K for the fiscal year ended July 1, 2023:

Page 54 (comparing fiscal year 2023 to fiscal year 2022) - “Additionally, gross margin was negatively impacted by factory underutilization as a result of a drop in demand as customers actively work to reduce their elevated inventory levels.

Page 55 (comparing fiscal year 2022 to fiscal year 2021) – “driven by higher gross margin from the Lasers segment due to the higher manufacturing levels and improved factory utilization as a result of return in customer demand for our kilowatt class fiber products following the recent recovery in industrial production.

With respect to product mix, we refer the Staff to our response to comment #1 for further information on the underlying reasons for the shift in product mix which led to the lower gross margin related to our imaging and sensing products.

However, with respect to quantification, in light of the Staff’s comments, we will quantify the approximate impact of shifts of product mix on our gross margin in future filings, based on our product families (one level below our Operating Segments), to the extent material. Please see below our example disclosure comparing FY 23 to FY 22.  Note, the example disclosure below is adjusted for the change in operating segments that occurred during the first quarter of FY 24, so this disclosure is an example of what will be disclosed in the upcoming 2024 10-K.  The additional quantification is highlighted in bold.

Gross margin in fiscal 2023 decreased to 32.2% from 46.0% in fiscal 2022. The decrease was primarily due to a less profitable mix of products, including lower sales of higher margin imaging and sensing products, which negatively impacted gross margin by approximately 4%, as well as higher sales of lower margin telecom products due to the merger with NeoPhotonics, which negatively impacted gross margin by approximately 1%. Additionally, gross margin was impacted by higher factory underutilization of $26.0 million as a result of a drop in demand as customers actively work to reduce their elevated inventory levels, $21.5 million higher amortization of intangible assets due to the NeoPhotonics merger and the acquisition of IPG telecom transmission product lines, $18.5 million higher incremental cost of sales related to components previously acquired from various brokers to satisfy customer demand, $17.8 million of amortization of acquired inventory step-up, and $17.4 million higher inventory excess and obsolete charges primarily due to company-wide integration efforts as a result of the NeoPhotonics merger and transitions to the next generation of products.

Liquidity and Capital Resources, Page 59

5.In future filings, please revise your discussion of cash flows from operating activi