Investment Rating - The report assigns a positive investment rating to Coherent, indicating an expectation of outperforming the market in the next 12-18 months [19]. Core Insights - Coherent delivered an outstanding performance in FY2Q26, achieving revenue of $1.69 billion, surpassing the consensus estimate of $1.64 billion, and setting a new record high. Non-GAAP EPS reached $1.29, exceeding the market expectation of $1.20. The non-GAAP gross margin climbed to 39%, reflecting strong profitability driven by lower raw material costs and improved operational efficiency [1][8]. Summary by Relevant Sections Financial Performance - In FY2Q26, Coherent's revenue was $1.69 billion, exceeding expectations and marking a historical high. Non-GAAP EPS was $1.29, above the anticipated $1.20. The gross margin increased to 39%, benefiting from reduced raw material costs and enhanced production efficiency [1][8]. Business Segments - The data center and communications business segment accounted for over 70% of total revenue, with a revenue increase of 14% quarter-over-quarter and 36% year-over-year, driven by strong demand for 800G and 1.6T optical modules [2][9]. Order Demand - The order-to-shipment ratio for the data center business exceeded 4:1, with demand visibility at an all-time high. Orders are scheduled through the end of 2026, with significant long-term demand forecasts from major customers extending into 2028 [3][10]. Capacity Expansion - Coherent aims to double its internal InP production capacity by Q4 2026, currently achieving 80% of this target ahead of schedule. The 6-inch InP production line shows significant advantages, including a fourfold increase in chip output compared to 3-inch wafers [4][11]. Future Outlook - For FY3Q26, Coherent expects revenue between $1.7 billion and $1.84 billion, in line with market consensus. The non-GAAP gross margin is projected to be between 38.5% and 40.5%, maintaining profitability advantages. Non-GAAP EPS is anticipated to reach $1.28 to $1.48, exceeding the consensus of $1.40 [5][12].

Core Insights - Coherent Corp. (COHR) achieved a record revenue of $1.7 billion in Q2 FY26, exceeding the Zacks Consensus Estimate by 3% and reflecting a 17.5% year-over-year growth [1][9] - The company reported an EPS of $1.29, marking a 35.8% increase year-over-year and surpassing consensus estimates by 5.7% [2][9] Revenue Growth - The datacenter & communications segment saw a significant 33.5% year-over-year revenue increase, contributing 72% to the total revenue, up from 63% in the previous year [3][9] - The industrial business also showed signs of recovery, with a 4% sequential revenue increase, although it remained flat year-over-year on a pro forma basis [6] Margin and Financial Health - Coherent's operating income rose by 8.8% sequentially and 26.8% year-over-year, leading to a margin expansion of 40 basis points from the previous quarter and 147 basis points from the same quarter last year [7][9] - The company maintained a strong cash position of $863.7 million, up from $852.8 million in the previous quarter, with long-term debt remaining stable at $3.2 billion and a reduced debt leverage ratio of 1.7X compared to 2.3X a year ago [8][9] Competitive Position - Coherent's stock has increased by 110% over the past year, significantly outperforming the industry average growth of 3.8% [9] - The company is well-positioned in the market with a strong product portfolio and vertical integration, focusing on high-speed data transmission technologies [14][15] Investment Recommendation - Given the impressive fiscal discipline, deleveraged balance sheet, and robust fundamentals, Coherent is recommended as a buy for investors [15][16]

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Core Viewpoint - Coherent has secured a significant procurement order from a leading AI data center client for its CPO solutions, which includes high-power continuous wave lasers produced at its Sherman, Texas facility. This order is expected to generate initial revenue by the end of the calendar year and contribute significantly in the following years [1][12]. Financial Performance - In Q2, Coherent reported record revenue of $1.69 billion, a 7% increase from Q1 and a 17% increase year-over-year, driven by demand from AI data centers and communications [21]. - Non-GAAP gross margin for Q2 was 39%, up 24 basis points from the previous quarter and 77 basis points year-over-year, reflecting improvements in product input costs and manufacturing efficiencies [21][22]. - Non-GAAP earnings per share for Q2 were $1.29, an increase from $1.16 in Q1 and $0.95 in the same quarter last year [22]. Business Segments Data Center and Communication - The data center and communication segment, which accounts for over 70% of revenue, saw a Q2 revenue increase of 11% quarter-over-quarter and 34% year-over-year, driven by strong growth in the data center market [7][14]. - The company experienced a significant acceleration in data center revenue growth, with a 14% quarter-over-quarter increase and a 36% year-over-year increase in Q2 [9][14]. CPO and OCS Products - Coherent's CPO and OCS products are expected to be key contributors to long-term growth and profitability, with strong demand signals and ongoing collaborations with multiple clients [12][13]. - OCS backlog orders increased in Q2, with over 10 clients engaged, and revenue is expected to grow in the current and upcoming quarters due to rapid capacity expansion [13]. Industrial Business - The industrial segment saw a 4% quarter-over-quarter revenue increase, with expectations for improvement driven by strong orders from semiconductor equipment clients [15][16]. Capacity Expansion - Coherent is rapidly expanding its InP capacity, with plans to double internal InP capacity by the end of the calendar year, which is expected to support significant revenue growth and margin expansion in the coming quarters [10][11][30]. - The company is also investing in expanding assembly capacity for transceiver modules in Malaysia and Vietnam to meet growing demand [46][47]. Market Outlook - The company anticipates continued strong revenue growth in FY2026 and FY2027, driven by robust customer demand and rapid capacity expansion [5][18]. - Coherent expects to see ongoing demand for 800G and 1.6T transceivers, with significant growth projected for both products in the current calendar year [31][32].

分组1 - Coherent reported quarterly earnings of $1.29 per share, exceeding the Zacks Consensus Estimate of $1.22 per share, and up from $0.95 per share a year ago, representing an earnings surprise of +5.74% [1] - The company achieved revenues of $1.69 billion for the quarter ended December 2025, surpassing the Zacks Consensus Estimate by 2.97%, compared to $1.43 billion in the same quarter last year [2] - Coherent has consistently outperformed consensus EPS estimates over the last four quarters, achieving this four times [2] 分组2 - The stock has increased approximately 24.2% since the beginning of the year, significantly outperforming the S&P 500's gain of 1.1% [3] - The current consensus EPS estimate for the upcoming quarter is $1.31 on revenues of $1.7 billion, and for the current fiscal year, it is $5.11 on revenues of $6.7 billion [7] - The Zacks Industry Rank indicates that the Technology Services sector is currently in the bottom 40% of over 250 Zacks industries, which may impact stock performance [8]

Financial Data and Key Metrics Changes - Revenue for Q2 was a record $1.69 billion, up 7% sequentially and 17% year-over-year, driven by growth in AI data center and communications demand [24] - On a pro forma basis, excluding revenue from the divested aerospace and defense business, Q2 revenue increased 9% sequentially and 22% year-over-year [24] - Non-GAAP gross margin was 39%, a 24 basis point improvement sequentially and a 77 basis point improvement year-over-year [24] - Non-GAAP EPS was $1.29, compared to $1.16 in the prior quarter and $0.95 in the year-ago quarter, reflecting an 11% sequential growth and 35% year-over-year growth [27] Business Segment Data and Key Metrics Changes - In the data center and communication segment, which accounts for over 70% of revenue, Q2 revenue grew by 11% sequentially and 34% year-over-year [10] - Data center revenue grew 14% sequentially and 36% year-over-year, driven by strong execution and demand for 800G and 1.6T transceivers [10][11] - The communications market saw Q2 revenue grow 9% sequentially and 44% year-over-year, driven by data center interconnect and traditional telecom applications [18] - The industrial segment revenue grew 4% sequentially but was flat year-over-year on a pro forma basis, with expectations for improving demand in the future [20] Market Data and Key Metrics Changes - The book-to-bill ratio exceeded 4x in Q2, indicating strong demand and visibility for future orders [11][35] - Demand for 1.6T transceivers is expected to ramp significantly, with initial phases driven by EML and silicon photonics-based transceivers [12] - The optical circuit switch (OCS) platform backlog grew sequentially, with over 10 customer engagements, indicating strong future revenue potential [17] Company Strategy and Development Direction - The company is focused on expanding production capacity, particularly in indium phosphide, with plans to double capacity by the end of the calendar year [13][28] - The strategy includes optimizing pricing and reducing product input costs to enhance gross margins [25][76] - The company aims to streamline operations by exiting underutilized sites, having exited 10 sites in the last quarter [23] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in sustained strong revenue growth due to exceptional demand from customers and rapid expansion of production capacity [7][8] - The company expects fiscal 2027 revenue growth rate to exceed that of fiscal 2026, driven by strong demand in both data center and industrial segments [8] - Management highlighted the extraordinary visibility of demand, with long-term forecasts extending into 2028 from major customers [35] Other Important Information - The company completed the sale of its Munich-based product division, which is expected to be accretive to gross margin and EPS [22][28] - Capital expenditures in Q2 were $154 million, with expectations for increased spending to support customer demand [27] Q&A Session Summary Question: Demand visibility and capacity ramp for indium phosphide - Management characterized demand visibility as extraordinary, with bookings extending into 2027 and long-term forecasts going out to 2028 [35] - The company is at 80% of its target capacity for indium phosphide ramp, with strong progress in wafer starts [38] Question: OCS backlog and revenue impact - Management indicated strong demand for OCS, with expectations for revenue growth throughout the calendar year and contributions to revenue next year [41][42] Question: 1.6T transceiver growth and competitive landscape - Management expects continued growth for both 800G and 1.6T transceivers, with 1.6T ramping significantly in the second half of the year [49] Question: CPO market opportunities - Management noted active engagements in scale-up opportunities for CPO, with significant growth potential as networks transition from electrical to optical [52] Question: Indium phosphide capacity and industry supply-demand balance - Management does not foresee supply-demand balance in the indium phosphide market this calendar year or next, indicating a sustained period of imbalance [69]

Financial Data and Key Metrics Changes - Revenue for Q2 fiscal 2026 was a record $1.69 billion, up 7% sequentially and 17% year-over-year, driven by AI data center and communications demand [24] - On a pro forma basis, excluding revenue from the divested aerospace and defense business, Q2 revenue increased 9% sequentially and 22% year-over-year [24] - Non-GAAP gross margin was 39%, a 24 basis point improvement sequentially and a 77 basis point improvement year-over-year [24] - Non-GAAP EPS was $1.29, compared to $1.16 in the prior quarter and $0.95 in the year-ago quarter, reflecting an 11% sequential and 35% year-over-year growth [27] Business Segment Data and Key Metrics Changes - In the data center and communication segment, which accounts for over 70% of revenue, Q2 revenue grew by 11% sequentially and 34% year-over-year [10] - Data center revenue grew 14% sequentially and 36% year-over-year, driven by strong demand for 800G and 1.6T transceivers [10][11] - The communications market saw Q2 revenue grow 9% sequentially and 44% year-over-year, driven by data center interconnect and traditional telecom applications [18] - The industrial segment revenue grew 4% sequentially but was flat year-over-year on a pro forma basis, with expectations for improving demand [20] Market Data and Key Metrics Changes - The book-to-bill ratio for data center bookings exceeded 4x, indicating strong demand and visibility for future revenue [11][34] - Demand for 1.6T transceivers is expected to ramp significantly, with initial production driven by EML and silicon photonics-based transceivers [12][48] - The optical circuit switch (OCS) platform backlog grew sequentially, with over 10 customer engagements, indicating strong future revenue potential [17][18] Company Strategy and Development Direction - The company is focused on expanding production capacity, particularly in indium phosphide, with plans to double capacity by the end of the calendar year [13][39] - Strategic initiatives include portfolio optimization, with the recent sale of a product division expected to be accretive to gross margin and EPS [22][28] - The company aims to drive meaningful operating leverage, expecting EPS growth to outpace revenue growth [9] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in sustained strong revenue growth due to exceptional demand visibility and ongoing production capacity expansion [7][8] - The company anticipates fiscal 2027 revenue growth to exceed fiscal 2026 growth rates, driven by strong demand in both data center and industrial segments [8][20] - Management highlighted the importance of long-term supply agreements with customers, enhancing visibility and demand certainty [35] Other Important Information - The company is investing in expanding production capacity in multiple locations, including Malaysia and Vietnam, to meet growing demand [16] - The transition to six-inch wafer production is expected to significantly enhance cost efficiency and production output [13][80] Q&A Session Summary Question: Demand visibility and capacity ramp for Indium Phosphide - Management characterized demand visibility as extraordinary, with bookings extending into calendar 2027 and long-term forecasts from customers going out to 2028 [34] - The company is at 80% of its target capacity for indium phosphide, with a strong ramp in wafer starts [39] Question: OCS backlog and revenue impact - Management indicated strong demand for OCS, with expectations for revenue growth throughout the calendar year and contributions to revenue next year [41][42] Question: 1.6T transceiver growth and competitive landscape - Management expects continued growth for both 800G and 1.6T transceivers, with 1.6T ramping significantly in the second half of the year [48] Question: CPO opportunities and market engagement - Management noted active engagements for CPO solutions, with significant growth expected in the Scale-Up market [51][52] Question: Indium Phosphide capacity and industry supply-demand balance - Management does not foresee supply-demand balance in the indium phosphide market this calendar year or next, indicating a sustained period of imbalance [68]

Financial Data and Key Metrics Changes - Revenue for Q2 fiscal 2026 was a record $1.69 billion, up 7% sequentially and 17% year-over-year, driven by growth in AI data center and communications demand [22] - On a pro forma basis, excluding revenue from the divested aerospace and defense business, Q2 revenue increased 9% sequentially and 22% year-over-year [22] - Non-GAAP gross margin was 39%, a 24 basis point improvement sequentially and a 77 basis point improvement year-over-year [22][23] - Non-GAAP EPS was $1.29, compared to $1.16 in the prior quarter and $0.95 in the year-ago quarter, reflecting an 11% sequential and 35% year-over-year growth [25] Business Segment Data and Key Metrics Changes - In the data center and communication segment, which accounts for over 70% of revenue, Q2 revenue grew by 11% sequentially and 34% year-over-year [9] - Data center revenue grew 14% sequentially and 36% year-over-year, driven by strong execution and demand for 800G and 1.6T transceivers [9][10] - The industrial segment saw revenue grow 4% sequentially but was flat year-over-year on a pro forma basis, with expectations for improving demand in the future [18] Market Data and Key Metrics Changes - The company reported a book-to-bill ratio exceeding 4x in the data center business, indicating strong demand and visibility for future orders [10][32] - Strong demand signals were noted for both 800G and 1.6T transceivers, with expectations for significant growth in calendar 2026 [11][45] - The communications market saw Q2 revenue grow 9% sequentially and 44% year-over-year, driven by data center interconnect and traditional telecom applications [16] Company Strategy and Development Direction - The company is focused on expanding production capacity, particularly in indium phosphide, with plans to double capacity by the end of the calendar year [12][34] - Strategic initiatives include portfolio optimization, with the recent sale of a product division expected to be accretive to gross margin and EPS [20][26] - The company aims to drive meaningful operating leverage and expects EPS growth to outpace revenue growth [6][7] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in sustained strong revenue growth due to exceptional demand from customers and rapid expansion of production capacity [5][6] - The outlook for fiscal 2027 is expected to exceed the growth rate of fiscal 2026, driven by new product ramps and ongoing demand in the industrial business [6][18] - Management highlighted the importance of long-term supply agreements and detailed forecasts from customers, enhancing visibility for future growth [32][33] Other Important Information - The company is investing in expanding production capacity in multiple locations, including Malaysia and Vietnam, to meet growing demand [14] - The ramp of six-inch indium phosphide production is expected to significantly enhance revenue growth and margin expansion [12][13] - The company is also focused on developing new technologies and products, including CPO and OCS solutions, which are anticipated to contribute to long-term growth [14][15] Q&A Session Summary Question: Demand visibility and capacity ramp for Indium Phosphide - Management characterized demand visibility as extraordinary, with bookings extending into calendar 2027 and long-term forecasts from customers going out to 2028 [32] - The ramp of six-inch indium phosphide capacity is ahead of schedule, with 80% of the target capacity already achieved [34] Question: OCS backlog and revenue impact - Demand for OCS is strong, with expectations for revenue growth throughout the calendar year and contributions to revenue next year [38][39] Question: 1.6 terabit growth and competitive landscape - Both 800G and 1.6T are expected to grow, with 1.6T ramping significantly in the second half of the year [44][45] Question: Indium phosphide capacity and industry supply-demand balance - Management does not foresee supply-demand balance in the indium phosphide market this calendar year or next, indicating a sustained period of imbalance [65] Question: Pricing and gross margins - The company is experiencing higher input costs but expects internal indium phosphide production to offset these costs, leading to a positive net effect on gross margins [69][70]

Core Insights - Coherent Corp. reported strong second-quarter earnings, with earnings per share (EPS) of $1.29, exceeding the Street estimate of $1.21 by 6.79% [2] - The company achieved quarterly revenue of $1.69 billion, surpassing the analyst consensus estimate of $1.64 billion [2] - CEO Jim Anderson highlighted robust year-over-year revenue growth driven by strong demand in the data center and communications segment [2] Financial Performance - The reported EPS of $1.29 indicates a positive performance compared to analyst expectations [2] - Revenue of $1.69 billion reflects a solid increase, contributing to the overall positive financial outlook for the company [2] Future Outlook - Coherent anticipates third-quarter adjusted EPS in the range of $1.28 to $1.48, slightly above the analyst estimate of $1.32 [3] - Projected revenue for the third quarter is expected to be between $1.7 billion and $1.84 billion, compared to the analyst estimate of $1.71 billion [3] - Following the earnings report, Coherent's stock price increased by 5.21% to $221.29 in extended trading [3]

FORWARD-LOOKING STATEMENTS This presentation contains forward-looking statements relating to future events and expectations, including our expectations regarding our estimates and projections for our business outlook for the third quarter of fiscal 2026, each of which is based on certain assumptions and contingencies. The forward-looking statements are made pursuant to the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995 and relate to the Company's performance on a going-f ...