Erica Mannion - Investor Relations, Sapphire Investor Relations Tim Jenks - Chairman and Chief Executive Officer Ray Wallin - Chief Financial Officer.

Alex Henderson - Needham & Company Richard Shannon - Craig-Hallum Victor Chu - Raymond James Dave Kang - B. Riley Krishna Shankar - ROTH Capital.

Good afternoon, ladies and gentlemen and welcome to the NeoPhotonics 2014 Fourth Quarter and Full Year Conference Call. This call is being webcast live on the NeoPhotonics Event Calendar webpage at www.neophotonics.com.

This call is the property of NeoPhotonics and any recording, reproduction or transmission of this call without the express written consent of NeoPhotonics is prohibited. You may listen to a webcast replay of this call by visiting the Event Calendar page of the NeoPhotonics website.

I would now like to turn the call over to Erica Mannion at Sapphire Investor Relations, Investor Relations for NeoPhotonics..

Good afternoon. Thank you for joining us to discuss NeoPhotonics’ operating results for the fourth quarter of 2014 as well as the company’s outlook for the first quarter of 2015. With me today are Tim Jenks, Chairman and CEO and Ray Wallin, Chief Financial Officer. Tim will begin with a review of the fourth quarter results.

Ray will provide a financial update, including results for the fourth quarter and the outlook for the first quarter of 2015. And then, Tim will summarize before opening the call up for questions. All material contained in the webcast is the sole property and copyright of NeoPhotonics Corporation, with all rights reserved.

Certain statements in this conference call, which are not historical facts, may be considered forward-looking statements that involve risks and uncertainties.

Forward-looking statements include statements regarding the business results, future levels of sales and profitability, subsequent events, product and technology development, future customer demand, inventory levels and economic and industry projections.

Various factors could cause actual results to differ materially from what is set forth in such forward-looking statements.

Some of the factors that could cause or affect the company’s results have been set forth in our press release dated March 3, 2015 and will also be described in detail in the company’s SEC filings, including our Quarterly Report on Form 10-Q for the quarter ended September 30, 2014, which we filed on November 10, 2014, our S-1 which we filed on December 19, 2014 and our Annual Report for the year ended December 31, 2013, which we expect to file on or before March 16, 2015.

Listeners who do not have a copy of the fourth quarter 2014 earnings press release may obtain a copy of the press release by visiting the company’s website. Summary financial slides will be available after the call on the company’s Investor Relations webpage. Now, I will turn the call over to CEO, Tim Jenks..

Thank you for joining us today. Several quarters ago, I articulated two broad objectives we had to be a leader in 100-gigabit product solutions and to deliver sustained profitability. I believe our fourth quarter results demonstrate that we are on our way to achieving these objectives.

NeoPhotonics achieved record fourth quarter revenue of $79 million, which came in at the high-end of a range. We significantly expanded gross margins in the quarter, recording a non-GAAP gross margin of 30.3%, which reflects a 3.9 percentage point sequential expansion.

We also decreased non-GAAP operating expenses in the period by $1.2 million, driving significantly improved profitability in the quarter on a non-GAAP basis with earnings of $0.19 per diluted share. We generated $11.6 million of EBITDA during the fourth quarter and we generated approximately $9.5 million of cash from operations.

Furthermore, in debt restructuring actions completed subsequent to December 31, 2014, we have added approximately $22 million of unrestricted cash to our balance sheet. Ray will provide details on these debt restructurings in a few minutes.

In our 2Q and 3Q conference calls, we affirmed our commitment to build NeoPhotonics into a company with sustaining profitability. We believe our 4Q results show excellent progress towards this goal.

Today, NeoPhotonics is a market share leader for key products used in coherent 100-gigabit transmission, including integrated coherent receivers and narrow line-width tunable lasers. Our broad suite of 100-gigabit products are used not only in long-haul and metro transport, but also in datacenter and enterprise applications.

We believe our product and technology leadership in advanced hybrid photonic integration is second to none and continues to drive our leading market share position in coherent transmission.

We further strengthened our market position with the acquisition of the tunable laser products of EMCORE on January 2, including the industry’s narrowest line-width tunable laser, favored for use in 100-gigabit networks and now in 400-gigabit applications using advanced modulation formats as well.

With this acquisition, NeoPhotonics is shipping approximately half of the global market for both 100-gigabit coherent receivers and 100-gigabit narrow line-width tunable lasers. And we expect that going forward, inclusive of the acquired EMCORE products, our 100-gigabit product suite will represent more than half of our company’s revenue.

As a reminder, with the EMCORE acquisition we did not acquire any manufacturing facilities, real estate obligations or assembly operations. And within the first month following the transaction close, all personnel and equipment associated with this EMCORE transaction had been fully relocated to existing NeoPhotonics facilities.

For manufacturing, we are continuing to utilize EMCORE’s mostly outsourced manufacturing partners. For the fourth quarter, revenue attributable to our Speed and Agility product group was approximately 75% of total revenue, and was up $7.5 million on a year-over-year basis and was down $1.3 million from the prior quarter.

Of this, revenue from our High Speed products was $35.7 million or 45% of total revenue in the fourth quarter of 2014, which we believe is the highest in the industry and is a 16% increase over the fourth quarter of 2013.

Our Access product group was also strong at approximately 19% of total revenue, which was down $2.1 million on a year-over-year basis and down $1.7 million over the prior quarter. Beginning in Q1 of 2015, recognizing our focus on growth in High Speed products, we will report 100G and Beyond products and All Other products.

Ray will provide a reconciliation of these product groups shortly. NeoPhotonics is a 100-gigabit product company and we remain excited about the pace of 100-gigabit adoption and the dynamics in our end-use markets. The deployment cycles here are driving our performance and growth. Therefore, I would like to comment about specific products.

First, since closing the transaction in early January, we have seen a steady build in our backlog for the products we acquired from EMCORE. With this demand strength, we are actively increasing capacity to support this important product line.

Second, two new small form factor coherent receivers and our high power micro-tunable laser, each of which we have previously announced, are now moving to general availability.

These and other products in our newest generation of compact coherent optical components enable high-performance pluggable coherent CFP2 modules, which allow customers to use their own digital signal processors, or DSP, solutions.

Turning to client and datacenter applications, we also saw increases in demand for our 100-gigabit CFP2 modules, which began production in the third quarter. At the same time, we are launching our 100-gigabit CFP4-LR4 transceiver. We also saw continued strength in Access in the fourth quarter due to strength primarily in China.

For our Access business, we see LTE back-haul in China as softer in 2015 after a strong 2014. And we view Fiber-to-the-Home or FTTX as a mature, high volume, but declining segment. Moving to higher speeds beyond 100-gig, 400-gig transmission will become a reality both for transport and for client and datacenter applications.

Our high-performance integrated coherent receivers and ultra-narrow line-width micro-tunable lasers are now being designed into 400-gig transport tests and early applications that employ advanced modulation schemes, such as 16QAM.

And for client and datacenter applications, we are pursuing PAM4-based 100-gigabit transceivers, which will form the basis for 400-gig transceivers in small form factors. Turning to switching applications, I have previously described our 4x4 and cascadable 4x16 multicast switches for CDC, or colorless, directionless, contentionless ROADMs.

As our multi-cast switch modules are moving to general availability, we are seeing CDC ROADMs moving toward acceptance and potentially wide deployment in 100-gig coherent networks. We are optimistic about the potential for this product line. We had a strong and profitable quarter and second half of 2014.

We grew revenue, expanded margins, reduced operating expenses and generated cash. And we have significantly strengthened our balance sheet both with operating cash flows and debt restructuring completed after year end.

We continue to take the long view on the market opportunities ahead of us by investing in next generation products to serve the growing adoption of coherent networks and the use of high-speed modules on the client side, and we remain focused on our cost structure and our execution path to sustained profitability.

I will now turn the call over to Ray Wallin, our Chief Financial Officer..

revenue in the range of $75 million to $81 million; non-GAAP gross margin in the range of 26% to 30%; GAAP diluted loss per share in the range of $0.18 to $0.07 cents, and non-GAAP diluted income loss per share in the range of a loss of $0.09 to earnings of $0.02 reflective of approximately $0.09 of after-tax non-GAAP adjustments.

I would like to provide more color on our guidance. And for revenue, as Tim noted, we are pruning products which will lead to diminishing revenue from these products through the first half. And our guidance reflects both the decreases in pruned products and our annual ASP impacts.

For gross margin, recall that our results can be impacted by a variety of factors, including ASP changes, pruning of low margin products, product mix, volume and manufacturing utilization, and ongoing manufacturing process improvements, all of which are reflected in our guidance.

In particular, we expect that the increasing 100G long-haul and 100G metro deployments in the U.S. and Europe and our ITLA products to be favorable to gross margin.

With our vertically integrated manufacturing model, we had typically achieved 1 to 2 percentage points of gross margin improvement per quarter from Q1 to Q4 driven by ongoing process improvements and cost reductions.

And the first calendar quarter is typically our seasonally lowest gross margin quarter following price negotiations in the fourth calendar quarter of the previous year. Now, this decrease in Q1 is traditionally followed by quarter-to-quarter gross margin improvement throughout the year as we realize ongoing manufacturing process improvements.

As we see increasing adoption of 100G products as well as the volume adoption of our new products, we would expect overall gross margins to expand to achieve our long-term operating model average levels.

From an operating expense perspective, as it is typically the case for us in the first calendar quarter, we expect sequential increase in spending dollars reflecting new year payroll tax effects and audit fees as well as other period items.

In addition, we completed the acquisition of the tunable laser product line of EMCORE in early January 2015, all of which result in our non-GAAP operating expense run-rate increasing by approximately $2 to $2.5 million per quarter. In addition, we anticipate approximately $0.3 to $0.5 million of acquisition-related costs in the first quarter.

Our first quarter guidance assumes a tax rate of approximately 15% and a diluted share count of 33.4 million shares.

And for the full year, based upon profits in foreign jurisdictions and considering that the company has net operating losses in the United States, we typically anticipate a tax provision in the range of 10% to 15% of pre-tax income or loss. I will now turn the call back to Tim for some wrap up comments:.

Thank you, Ray. We have made significant progress on improved profitability, solid cash flow generation and operating expense reductions. We want to have a strong balance sheet while minimizing dilution. In this regard, we have restructured our debt and improved our cash flow through better expense and margin management.

We further want to accelerate our growth at an efficient cost of capital. However, in January we acquired the tunable laser product line of EMCORE and we added a $16 million note in that transaction that is payable within two years. Using our increased borrowing capacity we have the flexibility to reduce or remove this note.

We have been developing a presence in Russia together with our partner Rusnano that includes certain manufacturing operations. We had an investment milestone set at March 31 in our original agreement. As the parties are currently working to refine longer term plans, we have changed this initial date to June 30, 2015.

Please refer to our Form 8-K submission on this matter filed today, March 3, 2015. Separately, as part of the Rusnano investment we received in 2012, we have an obligation to register their shares, which we expect to do with a separate S-1 filing by April 15, 2015 thereby fulfilling our registration obligation. We are optimistic for 2015.

Our 100-gigabit business will continue to grow as we see metro launches and switching growth. While some of this growth is offset by the approximately $25 million of products we are pruning, net at this time and including our EMCORE product acquisition, we reasonably expect to grow in mid single-digits over 2014.

We are focused on sustained profitability and we will continue to work to this goal and in line with our target operating model. This concludes our formal comments. And now, I would like to ask the operator to open up the line for questions.

Greg?.

Thank you, sir. [Operator Instructions] And first from Needham & Company, we have Alex Henderson..

Thank you very much. So, I have got a couple of questions.

The first one as you outlined number of things that are going to increase sequentially from 4Q to 1Q in terms of the cost structure, some of which sounded like they are somewhat temporary, yet you made the comment that the expenses were going to increase and the term you used with per quarters is implying that it was going to happen multiple quarters.

I would think that some of those expenses would step down after the increase in costs in the first quarter, for instance, the EMCORE expenditures should be probably higher on the first period of integration than in following quarters, the accounting stuff that you talked about being 1Q, have you heavily weighted we think would step down again in the second quarter, second half.

Can you talk a little bit about whether you meant that to be a per quarter step-up function each quarter or do you mean that to step up and then come back down? How should we think about that?.

Yes. So, Alex, this is Ray. So, a couple of dynamics here and what’s happening as you recall we acquired tunable laser business from EMCORE. And as we have the principally R&D expenses associated with that and some of the marketing costs, so those will be permanent increases throughout the year.

And in the first quarter, you have that plus all the other quarter going forward, but in the first quarter you also have some special items which drives it a little bit higher in the sense that we are completing our year end audit. Those costs are significant in the first quarter.

So, we have that plus you have the payroll tax effects, just starting the New Year essentially. And then there are some other kind of period items.

You have talked about the acquisition costs that we will have one-time costs, not necessarily in G&A or operating expenses, but we do have a bunch of costs in the first quarter, but it will be little bit lower in the quarters going forward, because you just really have the EMCORE costs remaining primarily..

I see, okay.

Second question the commentary around China, it was a little bit vague, I was wondering if you could clarify it a little bit sounded like most of the weakness you are expecting out in China is in the Fiber-to-the-Home side of the market or I assume that you are still expecting strength out of the 100-gig side of the market out of China?.

Yes, indeed. Thanks, Alex. First of all, on the 100-gig side, what we see based on our forecast and our customer’s forecast is we see an increasing number of 100-gig ports being deployed in China. There is a slightly increased number of new ports.

It’s in the range of 25,000 to 30,000 ports and then there are some additions to prior installations, perhaps another 10,000 ports. So, we do see strength in the 100-gig space. In the number of base stations that are going in for wireless back-haul LTE, we see that as softer in 2015 versus 2014.

And then the access business has been strong and sometimes up on a quarter-to-quarter basis, but the long-term trend year-over-year is down.

And so my point there was to highlight, while we might be up one quarter a little bit and down one quarter a bit, the long-term trend is that it’s basically a mature large, but mature and slowly declining business..

One last question and then I will see the floor.

Ray, could you talk a little bit about what you have seen in terms of what actions you have been able to take to improve the visibility to the business model as you are going through this transition, to what extent you have made things more granular in terms of the way you are approaching the business units and the like? It seems to me like that’s a key variable here..

Yes, sure, Alex, I would be happy to. I think first of all, we have added a significant number of financial people into the organization here. As you recall, we split our company into what we call B, 1B or 2, it’s basically aligning the client. But we put in the business unit controllers who strengthened our financial planning process in the company.

We have strengthened our monthly review of financials in the company. We have improved our bottoms-up forecasting process in the company. A lot more emphasis on analyzing the product elements of it and the gross margin where the leakages are, what we call, OCN&IS, which is the cost provided [ph] in salary, we kind of count the term here.

But anyway but a lot more focus in on those elements in the business and more people looking at it and more reviews taking place. So, it really had the effect of focusing management into areas that need focus and restructuring and earnings so on and so forth.

So, it’s been a – naturally been what we have done here just put a lot more focus into those kinds of things..

Thanks..

Thank you, Alex..

And our next question comes from Richard Shannon with Craig-Hallum..

Alright gentlemen, how are you guys doing..

Good Richard. Thanks..

I mean, maybe a few questions for me.

Maybe I will start with gross margins look like a pretty good number you had in the fourth quarter, wondering if you could help us understand the effect on just the gross margin aspect from foreign currency effects?.

So, the foreign currency effect is you are referring primarily I think to the business that where we manufacture in Japan. And so there is some favorable impact there for foreign currency both on a dollar basis slightly lower cost to manufacture.

The primary effects though on gross margin is what Ray talked about in the Q1 to Q4 sequential productivity and cost reduction, so from the first quarter to the fourth quarter this year we increased our gross margin by about 8.4 percentage points.

Probably two-thirds of that is just the impact of quarter-to-quarter productivity and cost improvement and then maybe the other third is divided a bit from the pruning of products as well as some favorable mix. Those are the main impacts as opposed to specifically the foreign exchange..

Okay, that’s helpful.

And then if I can take that going forward here, you have given us a pretty good starting point for our gross margins this year, I wonder if you could help us understand how this will go throughout the rest of the year, I think Ray you talked about generally you see improvements in gross margin – cost reductions that you normally get, wondering also about any other programs you have that reduce structural cost and also mix and where do you think your gross margins could go by the end of the year?.

Yes. So, Richard this is Tim just continuing briefly. As we detailed we have done product pruning activities and we – these things do take time. So, as Ray described the end-of-life process for a number of products is timing out here in the first half.

And so we will have about $5 million of products with de minimis margins that we will continue to sell in the first and second quarters. As those come to an end actually, there has a small uplift effect on margin.

We will continue with the cost reduction and productivity improvements and we have certainly on our 100-gig portfolio we have increasing volumes, which put upward tension on our fab utilization and are favorable to margin as well.

Generally speaking, first quarter to the fourth quarter are favorable absent other factors and then we do see a decrease in margin from the fourth quarter to the first quarter with the ASP decline and so our guidance reflects both that ASP decline and the addition of new products.

So, I would expect to see a continued trend and obviously we are starting in 2015. Based on our guidance on the first quarter, we are starting at a meaningfully higher level than we did in the year ago period..

Okay, great. I appreciate the detail.

But one last question for me and I will jump on the line, related to EMCORE on the purchases you just finished early this year, curious that any impacts you expect from essentially having pretty high share if you could talk about 50% a little bit higher? Are you seeing any effects from customers who were – who are maybe trying to find other suppliers as well as do you expected loosening revenues from that any other comments after a couple of months of owning the EMCORE assets and the outlook there please?.

Well, it’s the point here was that NeoPhotonics prior to that acquisition had good share position in the narrow line with tunable lasers for 100-gig. And then of course, EMCORE similarly had very strong share. So, we put the two together and that does cause us to be – we estimate more than half the volume in the industry.

Now, the principle thing that is happening in the industry though is a transition that is moving in form factor from a traditional as we referred to it ITLA, integrated tunable laser assembly through a new form factor, which is the micro-integrated tunable laser assembly or micro-ITLA. That is really the primary driver.

And as customers are trying to use this new smaller form factor, which is essentially one quarter besides of the prior one, the first thing for them is to secure supply. And so that is having a favorable effect on us in driving that increase in backlog, which we have seen grow steadily from the time of the acquisition.

It is certainly something that we think about with respect to share and the potential for some erosion, but the market is growing strongly. So, we would expect to see net-net continuing gross business in tunable lasers. Hence my comments about expanding capacity, it is a strong position..

Okay, I appreciate that detail, Tim. I think I will jump on line. Thanks..

Thank you, Richard..

And next from Raymond James, we will take Simon Leopold..

Hi, guys. This is Victor Chu in for Simon Leopold. I just wanted to follow-up – hi, guys.

I just wanted to follow-up of Alex’s question regarding OpEx, did you – I am sorry if I missed it, did you guys quantify what the increase would be?.

Yes, this is Ray. Yes, we did. In the script we said that about $2 million to $2.5 million per quarter going forward. So, the first quarter will be a little higher than the other quarters..

Okay. And then it potentially could come down from the first quarter, is that….

Yes, that is correct..

Alright, got that.

And then just circling back to gross margin for a second, you mentioned a number of variables driving the upside such as the manufacturing efficiency, mix shift and the product pruning, was there a particular variable that was more material in the quarter that was a particularly strong driver that drove the upside and going forward, I guess, how would you rank those variables in terms of the most impactful backlog [ph] to the gross margin?.

So, Victor, so the – this is Tim, if we look at the improvement in margin through the course of the year, first year – first quarter to fourth quarter, I noted earlier that was about 8.4%. And two-thirds of that is from quarter-to-quarter productivity cost reduction based on both productivity and produced materials and vendors.

The remaining that’s two-thirds of 8.4 margin points, the remaining third is then divided between the impacts of product pruning and the impacts of product mix and it’s about half of each.

So, you can take two-thirds of 8.4, put it in the productivity quarter-to-quarter, you can take one-sixth of 8.4 and that’s product mix and one-sixth of 8.4 and that’s product pruning..

And also as we said going forward, we like – we probably see 1 to 2 points a quarter from the first factor and then of course the mix effects and the other effects we talked about would also weigh in on that going forward..

Regarding the cash, I am sorry the debt restructuring what was – I might have missed this, was the net effect essentially that you increased your borrowing capacity by $9 million and you increased the restructuring on unrestricted cash is that kind of the net effect you got?.

There are multiple effects, so let me just start the first and probably most significant effect was relative to the Comerica term loan that we eliminated and replaced it with a line of credit. It also removed the restrictions on the cash. We had tied up there at Comerica at the end of the year $17.5 million of restricted cash.

So now that’s being completely released. So, that’s really usable by the company doing things we want at this point. In addition because of that arrangement we added another $9 million of borrowing capability there on top of it.

And in addition to that, we added in our Japan mortgage as we call is a $5.8 million mortgage and we replaced it with $12.6 million borrowings. So, we generated additional cash through that. And then on top of that, because we restructured the debt in both places and we got – we also reduced our annual debt service significantly.

This as you recall the mortgage in Japan had two payments remaining, each from March 1, with half of the amount right now with those restructurings we are on a interest only on 3-year, while proceed [ph] from our 8-K filing and interest in principal on the 10-year.

So, we kind of took a year and a quarter loan and stretched out on kind of an average of 6 years to 7 years combination of principal and interest, but also the Comerica was the term loan now the line of credit. So, it’s interest-only, it’s not interest and principal.

So the combination of all of those changes from that on the servicing was another $8 plus million a year. So, you can kind of add all those up. It was a very significant change in our liquidity for the company. The cash that we have on our balance sheet here at the year end of $64 million is higher, but it also is fully usable by the company, so.

And on top of that, which we also mentioned in the script, we generated a significant amount of free cash flow in the last two quarters.

I remember exactly it was like 13 something – $13.3 million free cash flow, you take our total operating cash flow of $18 million something minus the spending on capital and $15.3 million is what we generated free cash flow. So, that’s on top of all the other debt restructurings that I talked about..

Got it, great. Thank you very much..

Thank you, Victor..

Next we have Dave Kang from B. Riley..

Thank you. Good afternoon..

Hi, Dave..

Hi.

So, let’s see, first of all the question is on Rusnano, so how much investments are – do you need to make this year?.

So, the two parties we are working on a long-term plan, the specific amounts that are required this year or in following years are really subject to the long-term plan that we are working on with them. And so it’s not a specific amount at the moment..

Okay.

Because my understanding was that it’s going to be several million dollars, is that going to be materially changed after your discussion with them or for this year?.

Well, there are a lot of moving parts in that country as you can appreciate at the moment..

Sure..

And we had an investment milestone that was previously said at March 31 and we have been working with them together on the development presence there over an extended period of time and so we both agreed to move the initial milestone out to the end of June.

And while we try and finalize the specific plan going forward, but as I am talking to you right now, it’s not finalized..

Got it.

And then regarding CapEx pool for 2015, should we be back to – should we assume 5% of revenues once again or is it going to be lower than that?.

Yes, I would assume that as 5% of revenue..

5%?.

Yes..

Yes, I think Dave the 5% is a pretty good number we were a little bit late in 2014, we might be a little bit heavy in 2015, so 5% to 6%, but it was a reasonable range..

Okay.

And then just couple of more, can you just talk about the competitive landscape in the 100G, especially the ITLA market as well as receiver market, it sounds like some of your competitors are getting more vocal, especially in the micro-ITLA?.

Well, I’d say, I think that in micro-ITLA business, I would describe there are a couple of different technologies that go into them and there are couple of different applications. The applications start with long-haul transport and then go to metro transport and then go to pluggable application.

The specifications are the most challenging from long-haul transport and they are in a couple of cases they can be perceived as a little bit more forgiving in the pluggable. We have two different platforms now in NeoPhotonics. We have a DFB, distributor feedback laser platform, which has been in the company for a number of years.

And then with the EMCORE transaction, we had an external cavity laser and the external cavity does have the industry’s narrowest line-width that is very important for the higher speeds. And so it enjoys both a very strong market position and a number of very dedicated customers. I have to underscore the fact that this is a rapidly growing market.

And so we do see both new entrants and desirous new entrants for the new form factors as well as trying to put tunable lasers into pluggable modules so-called coherent CFP2, also CFP, but by nearly CFP2. And so there are both U.S. competitors and Japanese competitors.

There have been for a number of years and we don’t expect to see that diminish, the real keys here are being able to have the narrow line-width very controllable performance in the smallest form factor at competitive price. And we think we are very good at that..

Got it.

And do you still believe micro, there is a separate market for micro and regular ITLAs or you think micro will eventually cannibalize regular ITLAs?.

Well, there are two markets. However, the micro-ITLA will win. And the reason is relatively simple. New designs are primarily used in the micro-ITLA.

And the traditional ITLA enjoys design positions in legacy designs, but as those designs either of chassis or line cards within systems as those get replaced by new generation systems, the new generations will use the smaller form factor. So, over time, ITLA will diminish and micro-ITLA will continue to grow at an impressive rate..

Got it.

And the last question is regarding well, you got all these debt restructuring and operational improvement, do you still – are you still planning to go ahead with the offering or where would you stand on that?.

Let me take that one, Dave. So, in our commentary, we did try to make it clear that we are focused on sustained profitability for the company. And as we have noted we have achieved significant improvements in our operating performance.

And in addition, during the last two quarters, we have generated $18.4 million of cash from operations and $13.3 million of free cash flow. And in addition, our actions to restructure our debt have increased unrestricted cash by an added $22 million and also we have reduced our debt service cash outflows by over $8 million.

So, that being said with those significant improvements in our liquidity position, we really can’t discuss the offering on this call due to SEC restrictions and communications while S-1 is on file.

And so – but I can’t say at this point, our financial numbers in the S-1 are stale and we would need to be updated for our 2014 audit, which is not yet completed..

Got it. Alright, thank you..

Thanks, Dave..

[Operator Instructions] Next from ROTH Capital, we have Krishna Shankar..

Yes. Congratulations on the good results.

Tim, is there any difference in your products for the datacenter versus the telecom market? Can you talk about the requirements in the datacenter market? And what portion of your revenues, are attributed to the datacenter and enterprise right now?.

Sure. So, first of all in the case of enterprise and datacenter, there are an increasing number of applications that use single-mode modules and NeoPhotonics is a company does have particular products that are single-mode as opposed to multi-mode.

The – some of the applications that we pursue are, for example, inter-datacenter connecting datacenters to transport networks as well as inter-datacenter interconnection. Channels for these also include tails to the network equipment manufacturers who sell the datacenters.

The difference is there are different requirements in data rates, there is different requirements on reliability, generally speaking cost performance matters substantially.

But the products that we refer to as the range of products that we refer to as client side which are single-mode transceivers, those products and their variance are often datacenter and enterprise applications..

And what portion of revenues does that constitute now?.

Well, we specifically talk about Speed Agility, Access, Other Telecom, and going forward, we will talk about products that are 100-gig and beyond and less than 100-gig. We don’t specifically breakout what portion goes to which customer group unless they are 10%.

I would highlight though that we don’t have multi-mode products which for transceivers in particular are the larger share of the datacenter market..

Okay.

And then my follow-on question is the same technology that you have in DFB and in narrow line-width lasers applicable to 400-gig or do you need to develop some new technologies to target the 400-gig market?.

Well, I think you are referring specifically to tunable lasers, Krishna?.

Right..

Okay. So, in tunable lasers, as I commented earlier, the line-width is a particularly important attribute and then depending on the architecture power as well, we offer the industry’s narrowest line-width product, which is based on the external cavity laser.

We also have on our – we have a high power version of a micro-ITLA, which is based on the DFB platform and so in some cases where there is a desire to either split signal for receiver and oscillator perspective that uses the higher power for – it can be for 400-gig, similarly the ECL or the external cavity narrow line-width, it can be used for 400-gig.

So, it depends on the system architecture, it’s not a one size fits all situation. On the – as we go from 100-gig to 400-gig on the datacenter side, these are ones where our activity is really focused on the PAM4 architecture..

Okay.

And Ray, did you actually give revenue guidance for 2015, did you give a range for revenue guidance for 2015?.

I did say in the prepared notes that considering the range of activities that we have we would expect that our growth would be in the range – would be for 2015 would be mid single-digits over 2014..

Okay, great. Thank you..

Very good. Thank you..

And there are no further questions at this time. I would like to turn it back to Mr. Tim Jenks CEO for any additional or closing remarks..

Thank you, Greg. So in closing, I would like to thank everyone for taking time today to join our call. We look forward to updating you on our progress on our next quarterly call and appreciate the diligent effort of our employees in our current results. Have a good day..

Thank you very much..

Once again ladies and gentlemen, that does conclude today’s conference. Thank you for your participation..