Equity

3 Months Ended

Sep. 27, 2025

Equity [Abstract]

Equity

Note 12. Equity

Description of Lumentum Stock-Based Compensation Plans

Equity Incentive Plan

On November 17, 2023, our stockholders approved amendments to the Amended and Restated Equity Incentive Plan (the “2015 Plan”) to increase the number of shares of common stock reserved for issuance by an additional 3.0 million shares. On November 20, 2024, our stockholders approved an amendment to the 2015 Plan to extend the expiration date of the 2015 Plan by one year until June 23, 2026.

In February 2025, our board of directors approved the 2025 Inducement Equity Incentive Plan (the “Inducement Plan”) in accordance with Listing Rule 5635(c)(4) of the corporate governance rules of the Nasdaq Stock Market, which became effective in February 2025. The Inducement Plan has substantially the same terms and conditions as the 2015 Plan, however, the Inducement Plan may only be used for grants to new employees and not for existing employees, executives, directors or consultants.

As of September 27, 2025, we had 4.2 million shares subject to stock options, restricted stock units, restricted stock awards, and performance stock units issued and outstanding under the 2015 Plan. Restricted stock units and performance stock units are performance-based, market-based and time-based or any combination thereof and are expected to vest within four years. As of September 27, 2025, 1.6 million shares of common stock under the 2015 Plan were available for grant.

Stock Options

The Company granted certain employees with stock options, the vesting of which is based on the requisite service requirement and expected to vest within three years. The Company calculates the fair value of stock options using the Black-Scholes option-pricing model, which requires the Company to make estimates of assumptions such as expected volatility, expected term, risk-free interest rate, expected dividend yield, and forfeiture rates. We issue new shares of common stock upon exercise of stock options.

Restricted Stock Units

Restricted stock units (“RSUs”) under the 2015 Plan and the Inducement Plan are grants of shares of our common stock, the vesting of which is based on the requisite service requirement. The fair value of these grants is based on the closing market price of our common stock on the date of grant. Generally, our RSUs are subject to forfeiture and are expected to vest within four years. For annual grants to existing employees, RSUs generally vest ratably on an annual basis, or combination of annual and quarterly basis, over three years.

During the three months ended September 27, 2025, our board of directors approved grants of 1.0 million RSUs, which primarily vest over three years. The fair value of these grants is based on the closing market price of our common stock on the grant date.

Performance Stock Units

Performance stock units (“PSUs”) under the 2015 Plan and the Inducement Plan are grants of shares of our common stock that vest upon the achievement of certain performance and service conditions. For PSUs with performance-based conditions, the fair value of these grants is based on the closing market price of our common stock on the date of grant, and we begin recognizing compensation expense when we conclude that it is probable that the performance conditions will be achieved. We reassess the probability of vesting at each reporting period and adjust our compensation cost based on this probability assessment. For PSUs with market-based conditions, the fair value of these grants is estimated using a Monte-Carlo simulation model, and the compensation expense is recognized ratably over the requisite service period regardless of whether or not the market condition is satisfied, provided the requisite service is rendered. Our PSUs are subject to risk of forfeiture until performance and service conditions are satisfied and generally vest within three years.

During the three months ended September 27, 2025, our board of directors granted 0.1 million PSUs with an aggregate grant date fair value of $13.7 million to certain executive officers and senior management. These PSUs will vest subject to the achievement of earnings per share targets, as well as service conditions, over three years. The number of shares may be increased or decreased based on the results of these measurement targets ranging between 0% and 200% in accordance with the terms established at the date of grant. In addition, the board of directors also approved a grant of 0.1 million PSUs with an aggregate grant date fair value of $33.0 million to certain executive officers and senior management. These PSUs will vest subject to the achievement of the Company’s total shareholder return (or “TSR”) relative to specified peer group, as well as service conditions, over three years. The number of shares may be increased or decreased based on the results of these measurement targets ranging between 0% and 200% in accordance with the terms established at the date of grant. The Company estimated the grant date fair value of these PSU awards using a Monte-Carlo simulation model, which was calculated at $282.85 per share. Accordingly, stock-based compensation expense related to PSUs are categorized as AIP PSUs, TSR PSUs and Other PSUs. AIP PSUs relates to the shares granted to executive and non-executive employees as part of our Annual Incentive Plan (“AIP PSUs”) during fiscal year 2025, which were subject to performance targets and service conditions and vested in August 2025. TSR PSUs relate to shares granted to certain executive officers and senior management, which will vest subject to the achievement of the Company’s TSR relative to specified peer group while Other PSUs relate to shares granted to certain executive officers and senior management, which are subject to financial performance targets (such as Revenue and EPS) and service conditions. Refer to the table below for a presentation of stock-based compensation expense by equity awards for more details.

Employee Stock Purchase Plan

Our ESPP provides eligible employees with the opportunity to acquire an ownership interest in the Company through periodic payroll deductions and provides a 15% purchase price discount as well as a 6-month look-back period. The ESPP is structured as a qualified employee stock purchase plan under Section 423 of the Internal Revenue Code of 1986, as amended. The ESPP will terminate upon the date on which all shares available for issuance have been sold. We estimate the fair value of the ESPP shares on the date of grant using the Black-Scholes option-pricing model. Of the 3.0 million shares authorized under the ESPP, 0.4 million shares remained available for issuance as of September 27, 2025.

Stock-Based Compensation

The impact on our results of operations of recording stock-based compensation by function for the periods presented was as follows (in millions):

	Three Months Ended
	September 27, 2025		September 28, 2024
Cost of sales	$	8.5	$	9.7
Research and development	10.3		9.3
Selling, general and administrative	23.6		16.6
Total stock-based compensation	$	42.4	$	35.6

Our stock-based compensation by equity awards for the periods presented were as follows (in millions):

	Three Months Ended
	September 27, 2025		September 28, 2024
RSUs	$	25.6	$	24.0
AIP PSUs	4.8		4.1
TSR PSUs	2.9		0.2
Other PSUs	9.9		3.0
Total PSUs	17.6		7.3
Options	1.6		1.3
ESPP	1.6		1.2
Sub-total	46.4		33.8
Change in stock-based compensation capitalized to inventory	(4.0)		1.8
Total stock-based compensation	$	42.4	$	35.6

During the three months ended September 27, 2025 and September 28, 2024, we recorded $17.6 million and $7.3 million of stock-based compensation related to PSUs, respectively. The amount of stock-based compensation expense recognized in any one period related to PSUs with performance-based conditions can vary based on the achievement or anticipated achievement of the performance conditions. If the performance conditions are not met or not expected to be met, no compensation expense would be recognized on the underlying PSUs, and any previously recognized compensation expense related to those PSUs would be reversed.

Total income tax benefit associated with stock-based compensation recognized in our condensed consolidated statements of operations during the periods presented was as follows (in millions):

	Three Months Ended
	September 27, 2025		September 28, 2024
Income tax benefit associated with stock-based compensation	$	8.0	$	1.4

Approximately $18.6 million and $14.6 million of stock-based compensation was capitalized to inventory as of September 27, 2025 and June 28, 2025, respectively.

The table below summarizes the unrecognized stock-based compensation cost related to unvested shares and the weighted-average period over which it is expected to be recognized as of September 27, 2025:

	Unrecognized stock-based compensation (in millions)		Weighted-average period (in years)
RSUs	$	197.7	2.1
PSUs	102.7		2.6
Stock options	4.8		1.1
ESPP	0.9		0.1

Stock Award Activity

The following table summarizes our award activities for the three months ended September 27, 2025 (in millions):

	Stock Options			Restricted Stock Units			Performance Stock Units
	Number of Shares	Weighted-Average Exercise Price per Share		Number of Shares	Weighted-Average Grant Date Fair Value per Share		Number of Shares	Weighted-Average Grant Date Fair Value per Share
Balance as of June 28, 2025	0.6	$	8.1	2.6	$	59.9	1.6	$	61.0
Granted	—	—		1.0	118.6		0.2	118.0
Vested/Exercised	(0.2)	7.9		(0.7)	60.9		(0.7)	57.8
Canceled	—	—		(0.1)	61.2		(0.1)	87.1
Balance as of September 27, 2025	0.4	$	8.1	2.8	$	79.4	1.0	$	75.3

A summary of awards available for grant is as follows (in millions):

	Awards Available for Grant
Balance as of June 28, 2025	2.6
Granted	(1.2)
Canceled	0.2
Balance as of September 27, 2025	1.6

Employee Stock Purchase Plan Activity

The ESPP expense for the three months ended September 27, 2025 and September 28, 2024 was $1.6 million and $1.2 million, respectively. The expense related to the ESPP is recorded on a straight-line basis over the relevant subscription period.

During the three months ended September 27, 2025 and September 28, 2024, there were no shares issued to employees through the ESPP.