当前业绩指引暗示数据通信销售额将环比增长5000万至1亿美元，这一预测虽显谨慎，但实际结果可能 更好。更重要的是，该机构认为周四股价下跌反应过度，因数据中心/数据通信互联(DCI)需求趋势强劲 且预计持续至2026年。 B. Riley Securities分析师Dave Kang则关注到网络业务细节：该板块收入环比增5%至9.45亿美元，其中 数据通信(Datacom)业务环比增3%，低于第三季度的11%。尽管管理层将增速放缓归因于季度波动，但 B. Riley认为可能存在其他因素——参考Fabrinet(FN.US)5月初提到的"因产品转型导致英伟达 (NVDA.US)需求疲软"，而Coherent作为英伟达800G光模块的主要供应商，或同样面临来自英伟达的需 求压力。基于此，B. Riley维持"中性"评级，并将目标价从77美元上调至85美元。 Stifel分析师Ruben Roy团队则更关注公司运营优化。他们提到，Coherent正通过降本、扩销、优化定价 等措施提升利润率，典型案例是以4亿美元出售航空航天与国防业务(A&D)给Advent国际，所得资金将 用于减少债务并增加每股收益，该交易预计本季度 ...

Part I [Business Overview](index=8&type=section&id=Item%201.%20BUSINESS) Coherent Corp. manufactures lasers, transceivers, and materials for diverse high-tech markets, realigning to two segments in FY2026 - Coherent is a vertically integrated manufacturer of lasers, transceivers, optical devices, and engineered materials for diverse high-tech markets[24](index=24&type=chunk)[26](index=26&type=chunk) - For fiscal year 2025, the company operated with three reporting segments: Networking, Materials, and Lasers. A realignment to two segments, Datacenter and Communications and Industrial, will be effective for fiscal year 2026[27](index=27&type=chunk)[42](index=42&type=chunk)[46](index=46&type=chunk) Employee Distribution as of June 30, 2025 | Department | Number of Employees | Percent of Total | | :--- | :--- | :--- | | Manufacturing | 25,210 | 83% | | Research and development | 2,660 | 9% | | Sales, general and administrative | 2,346 | 8% | | **Total** | **30,216** | **100%** | - The company's primary markets are Communications (driven by AI/ML in datacom), Industrial (precision manufacturing, semiconductor equipment), Instrumentation (life sciences, research), and Electronics (consumer devices, display equipment)[47](index=47&type=chunk)[52](index=52&type=chunk)[55](index=55&type=chunk)[56](index=56&type=chunk) - In fiscal year 2025, two customers each contributed more than **10%** of the company's total revenue[63](index=63&type=chunk)[95](index=95&type=chunk) Research and Development Expenditures (FY2023-FY2025) | Fiscal Year | R&D Expense (in millions) | | :--- | :--- | | 2025 | $582 | | 2024 | $479 | | 2023 | $500 | [Risk Factors](index=18&type=section&id=Item%201A.%20RISK%20FACTORS) The company faces material risks from customer concentration, supply chain issues, regulatory inquiries, substantial debt, and preferred stockholder influence - A significant portion of revenue comes from a small number of large customers, with two customers each accounting for over **10%** of total revenues in fiscal 2025. The loss or reduction of business from these customers could significantly harm the business[95](index=95&type=chunk) - The company depends on highly complex manufacturing processes and strategic materials from limited or sole-source suppliers, creating risks of disruption and cost increases[104](index=104&type=chunk)[105](index=105&type=chunk)[109](index=109&type=chunk) - In January 2025, the company received an inquiry from the U.S. Bureau of Industry and Security (BIS) concerning past product sales to Huawei. The company has stopped shipments to Huawei and is cooperating with the inquiry, but the outcome and potential penalties are currently unpredictable[115](index=115&type=chunk)[149](index=149&type=chunk)[150](index=150&type=chunk) - The company is undergoing significant restructuring through its 2023 and 2025 Plans, which involve site consolidations, workforce reductions, and other cost-saving measures. These actions carry risks such as higher-than-anticipated costs and operational disruptions[131](index=131&type=chunk)[132](index=132&type=chunk)[133](index=133&type=chunk) - As of June 30, 2025, the company had approximately **$3.7 billion** of outstanding indebtedness. This substantial debt could adversely affect financial condition, limit operational flexibility due to covenants, and make it difficult to fulfill obligations[162](index=162&type=chunk) - Holders of Series B Preferred Stock can exercise significant control, including voting rights on an as-converted basis and consent rights over key corporate actions, which could influence outcomes in a manner that may conflict with common stockholders' interests[187](index=187&type=chunk)[188](index=188&type=chunk)[189](index=189&type=chunk) [Unresolved Staff Comments](index=46&type=section&id=Item%201B.%20UNRESOLVED%20STAFF%20COMMENTS) The company reports no unresolved staff comments from the Securities and Exchange Commission - None[191](index=191&type=chunk) [Cybersecurity](index=46&type=section&id=Item%201C.%20CYBERSECURITY) Coherent's cybersecurity program aligns with NIST-CSF, with Board oversight, and no material incidents reported - The company's cybersecurity program is aligned with the NIST-CSF framework and includes processes for assessing, identifying, and managing material risks from cybersecurity threats[192](index=192&type=chunk) - The Board of Directors administers its cybersecurity risk oversight through the Nominating and Corporate Governance (NCG) Committee, which is briefed quarterly by management[198](index=198&type=chunk)[199](index=199&type=chunk) - The company has not experienced any cybersecurity incidents that have been determined to be material[197](index=197&type=chunk) [Properties](index=47&type=section&id=Item%202.%20PROPERTIES) The company lists principal U.S. and foreign properties supporting manufacturing, R&D, and distribution Principal Properties by Location and Size (Approx. Sq. Footage) | Location | Approximate Square Footage | | :--- | :--- | | **U.S. Properties** | | | Sherman, TX | 700,000 | | Easton, PA | 281,000 | | Saxonburg, PA | 235,000 | | **Foreign Properties** | | | China | 3,310,650 | | Germany | 892,000 | | Malaysia | 889,205 | | Vietnam | 719,000 | [Legal Proceedings](index=47&type=section&id=Item%203.%20LEGAL%20PROCEEDINGS) The company is involved in various legal claims but expects no material impact on its financial condition or operations - Management does not expect ongoing legal proceedings to have a material effect on the company's financial condition or results of operations[202](index=202&type=chunk) [Mine Safety Disclosures](index=47&type=section&id=Item%204.%20MINE%20SAFETY%20DISCLOSURES) This item is not applicable to the company - Not applicable[203](index=203&type=chunk) Part II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=48&type=section&id=Item%205.%20MARKET%20FOR%20REGISTRANT'S%20COMMON%20EQUITY,%20RELATED%20STOCKHOLDER%20MATTERS%20AND%20ISSUER%20PURCHASES%20OF%20EQUITY%20SECURITIES) Coherent's common stock trades on NYSE, with no anticipated common stock dividends, but preferred stock dividends were paid - The company's common stock is traded on the New York Stock Exchange (NYSE) under the symbol "COHR"[205](index=205&type=chunk) - The company does not currently pay cash dividends on its common stock and does not anticipate doing so in the future[205](index=205&type=chunk) - No shares of common stock were repurchased during the fiscal year ended June 30, 2025[208](index=208&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=50&type=section&id=Item%207.%20MANAGEMENT'S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) In fiscal 2025, revenue grew **23%** to **$5.81 billion**, with improved gross margin and a return to net earnings, despite restructuring charges [Trends and Other Matters Affecting our Business](index=50&type=section&id=Trends%20and%20Other%20Matters%20Affecting%20our%20Business) Strong AI datacenter demand drives Communications market growth, while the company executes significant restructuring plans - The company experienced strong demand in its Communications market throughout fiscal 2025, driven by AI datacenter buildouts[215](index=215&type=chunk) - The company is executing multiple restructuring initiatives, including the 2023 Plan and the 2025 Plan, which involve site consolidations and workforce reductions to streamline the business model[217](index=217&type=chunk)[219](index=219&type=chunk) Restructuring and Impairment Charges in Fiscal 2025 | Plan/Action | Charge (in millions) | | :--- | :--- | | 2023 Plan | $53 | | 2025 Plan | $107 | | Synergy and Site Consolidation | $17 | | Impairment of Assets Held-for-Sale | $85 | [Fiscal Year 2025 Compared to Fiscal Year 2024](index=53&type=section&id=Fiscal%20Year%202025%20Compared%20to%20Fiscal%20Year%202024) In FY2025, total revenues increased **23%** to **$5.81 billion**, with gross margin improving to **35%**, and net earnings of **$30 million** Consolidated Financial Highlights (FY2025 vs. FY2024) | Metric | FY 2025 | FY 2024 | Change | | :--- | :--- | :--- | :--- | | Total Revenues | $5,810 M | $4,708 M | +23% | | Gross Margin | 35% | 31% | +400 bps | | Net Earnings (Loss) | $30 M | ($159 M) | N/A | | Diluted EPS | ($0.52) | ($1.84) | N/A | - Revenue growth was primarily driven by a **51%** increase in the communications market, fueled by strong AI datacenter demand[237](index=237&type=chunk) Segment Revenue Performance (FY2025 vs. FY2024) | Segment | FY2025 Revenue (M) | FY2024 Revenue (M) | YoY Change | | :--- | :--- | :--- | :--- | | Networking | $3,421 | $2,296 | +49% | | Materials | $954 | $1,017 | -6% | | Lasers | $1,435 | $1,395 | +3% | Segment Profit Performance (FY2025 vs. FY2024) | Segment | FY2025 Profit (M) | FY2024 Profit (M) | YoY Change | | :--- | :--- | :--- | :--- | | Networking | $644 | $354 | +82% | | Materials | $355 | $297 | +19% | | Lasers | $317 | $207 | +53% | [Fiscal Year 2024 Compared to Fiscal Year 2023](index=57&type=section&id=Fiscal%20Year%202024%20Compared%20to%20Fiscal%20Year%202023) In FY2024, total revenues decreased **9%** to **$4.71 billion**, with a net loss of **$159 million** and diluted EPS of **($1.84)** Consolidated Financial Highlights (FY2024 vs. FY2023) | Metric | FY 2024 | FY 2023 | | :--- | :--- | :--- | | Total Revenues | $4,708 M | $5,160 M | | Gross Margin | 31% | 31% | | Net Loss | ($159 M) | ($259 M) | | Diluted EPS | ($1.84) | ($2.93) | - Revenue decreased **9%** in fiscal 2024 compared to fiscal 2023, with declines in all four markets, most notably a **43%** drop in the electronics market due to a design change by a significant customer[256](index=256&type=chunk)[257](index=257&type=chunk) [Liquidity and Capital Resources](index=60&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains strong liquidity with **$1.63 billion** in cash and restricted cash, and **$3.69 billion** in total debt Key Liquidity and Debt Metrics (as of June 30, 2025) | Metric | Amount (in millions) | | :--- | :--- | | Cash and cash equivalents | $909 | | Restricted cash | $724 | | Total debt obligations | $3,687 | | Available borrowing capacity | $315 | - Net cash provided by operating activities was **$634 million** for the fiscal year ended June 30, 2025[276](index=276&type=chunk) - In December 2023, the company's subsidiary, Silicon Carbide LLC, received **$1.0 billion** in cash from two investors in exchange for a **25%** equity stake, which will be used to fund capital expansion[287](index=287&type=chunk) - During fiscal 2025, the company made total debt payments of **$433 million**, including **$400 million** in voluntary prepayments on its Term Facilities[284](index=284&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=64&type=section&id=Item%207A.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) The company is exposed to foreign currency and interest rate risks, pausing its balance sheet hedging program as of September 2024 - The company is exposed to market risks from foreign currency exchange rates and interest rates[294](index=294&type=chunk) - The company paused its balance sheet foreign exchange hedging program indefinitely as of September 30, 2024[294](index=294&type=chunk) - A hypothetical **100 basis point** increase in interest rates on variable-rate borrowings would have resulted in an additional **$30 million** in interest expense for the year ended June 30, 2025, if not for hedging instruments[295](index=295&type=chunk) [Financial Statements and Supplementary Data](index=65&type=section&id=Item%208.%20FINANCIAL%20STATEMENTS%20AND%20SUPPLEMENTARY%20DATA) This section presents the audited consolidated financial statements for FY2025, including balance sheets, income statements, and cash flows Consolidated Balance Sheet Summary (as of June 30, 2025) | Category | Amount (in millions) | | :--- | :--- | | **Total Assets** | **$14,910.936** | | Total Current Assets | $3,927.154 | | Goodwill | $4,471.084 | | **Total Liabilities** | **$6,429.653** | | Total Current Liabilities | $1,794.841 | | Long-term debt | $3,498.615 | | **Total Equity** | **$5,998.022** | Consolidated Statement of Earnings Summary (Year Ended June 30, 2025) | Metric | Amount (in millions) | | :--- | :--- | | Revenues | $5,810.115 | | Gross Profit | $2,043.322 | | Earnings Before Income Taxes | $94.181 | | Net Earnings | $30.057 | | Net Loss Available to Common Shareholders | ($80.562) | | Diluted Loss Per Share | ($0.52) | Consolidated Statement of Cash Flows Summary (Year Ended June 30, 2025) | Category | Amount (in millions) | | :--- | :--- | | Net cash provided by operating activities | $633.6 | | Net cash used in investing activities | ($414.215) | | Net cash used in financing activities | ($451.726) | - In the fourth quarter of fiscal 2025, the company classified several entities as held-for-sale and recorded a non-cash impairment charge of **$85 million**. Subsequently, on August 2, 2025, an agreement was reached to sell the aerospace and defense business for **$400 million**[492](index=492&type=chunk)[493](index=493&type=chunk) [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=110&type=section&id=Item%209.%20CHANGES%20IN%20AND%20DISAGREEMENTS%20WITH%20ACCOUNTANTS%20ON%20ACCOUNTING%20AND%20FINANCIAL%20DISCLOSURE) The company reports no changes in or disagreements with its accountants on accounting and financial disclosure - None[498](index=498&type=chunk) [Controls and Procedures](index=110&type=section&id=Item%209A.%20CONTROLS%20AND%20PROCEDURES) Management concluded that disclosure controls and procedures were effective as of June 30, 2025, with no material changes - Management concluded that the company's disclosure controls and procedures were effective as of June 30, 2025[499](index=499&type=chunk) - There were no changes in internal control over financial reporting during the most recent quarter that have materially affected, or are reasonably likely to materially affect, internal controls[502](index=502&type=chunk) [Other Information](index=110&type=section&id=Item%209B.%20OTHER%20INFORMATION) This section discloses the termination and adoption of Rule 10b5-1(c) trading plans by CTO Julie Eng in May 2025 - Discloses the termination and adoption of Rule 10b5-1(c) trading plans by CTO Julie Eng in May 2025[503](index=503&type=chunk) Part III [Items 10-14](index=111&type=section&id=Item%2010,%2011,%2012,%2013,%2014) Information for Items 10-14 is incorporated by reference from the forthcoming 2025 Proxy Statement - Information for Items 10 (Directors, Executive Officers), 11 (Executive Compensation), 12 (Security Ownership), 13 (Certain Relationships and Related Transactions), and 14 (Principal Accountant Fees and Services) is incorporated by reference from the forthcoming 2025 Proxy Statement[506](index=506&type=chunk)[511](index=511&type=chunk)[512](index=512&type=chunk)[513](index=513&type=chunk)[514](index=514&type=chunk) Part IV [Exhibits and Financial Statement Schedules](index=112&type=section&id=Item%2015.%20EXHIBITS%20AND%20FINANCIAL%20STATEMENT%20SCHEDULES) This section lists all financial statements, schedules, and exhibits filed as part of the Form 10-K report - This item lists all financial statements, schedules, and exhibits filed with the Form 10-K, including material contracts and certifications by the CEO and CFO[516](index=516&type=chunk)[518](index=518&type=chunk) [Form 10-K Summary](index=115&type=section&id=Item%2016.%20FORM%2010-K%20SUMMARY) The company indicates that there is no Form 10-K summary - None[523](index=523&type=chunk)

Core Viewpoint - Coherent's recent performance raised concerns due to slowing growth in a key business segment, despite slightly beating analyst estimates for fiscal Q4 2025 [1][3]. Financial Performance - For fiscal Q4 2025, Coherent reported revenue of $1.53 billion, a record high and a 16% increase year over year [3]. - The company's non-GAAP net income grew by nearly 9% to $192 million, equating to $1.00 per share, which also exceeded analyst estimates of $1.51 billion for revenue and $0.92 for adjusted EPS [3]. Growth Drivers - Coherent attributed its revenue improvements to strong performance in areas such as AI data centers [4]. - However, revenue growth in the data center segment showed a decline, dropping to 24% in Q4 from previous rates of 39%, 46%, and 58% in the three preceding quarters [4]. Analyst Sentiment - Analyst Vivek Arya from Bank of America Securities downgraded his recommendation on Coherent's stock from buy to neutral due to the slowing growth in the data center space [5]. Future Guidance - Coherent management provided guidance for the current first quarter, expecting revenue between $1.46 billion and $1.6 billion, and adjusted EPS between $0.93 and $1.13, both significantly above Q4 fiscal 2024 figures [6]. - The average analyst estimates for the current quarter are $1.55 billion for revenue and $1.03 per share for adjusted EPS, which fall within the company's guidance ranges [6].

Core Insights - Coherent Corp. (NYSE: COHR) has experienced a notable decline of 21% in its stock price despite reporting another quarter of double-beat results [1] - The stock is currently priced at $90, reflecting a 17% increase since the initial coverage a year ago and a 2% increase since February [1] Financial Performance - The company has consistently delivered strong financial results, indicated by the term "double-beat quarter," which suggests that it has exceeded both revenue and earnings expectations [1] Market Position - The current stock price movement indicates a disconnect between the company's strong performance and market perception, highlighting potential investment opportunities or market inefficiencies [1]

Group 1 - The average returns from public articles show a significant increase over the years, with 2023 at 8.4%, 2022 at 6.9%, and 2021 at 29.9% [2] - The flagship products include "Top DIY Picks," which focus on undervalued stocks with upcoming catalysts that the market does not expect [2] - "Dividend-income Champs" are highlighted for their long history of dividend growth, accompanied by a printable calendar and quantitative scores [2] Group 2 - "DIY Risky Picks" are designed for speculative allocations, aiming for positive momentum that could lead to triple returns [2]

智通财经APP获悉，周四，Coherent(COHR.US)暴跌超20%，4月以来一度累涨近80%，现报89.79美元。 消息面上，该公司宣布以4亿美元出售航空航天与国防业务，资金用于偿还债务，引发业务调整担忧。 此外，该公司2026财年第一季度营收指引14.6亿至16亿美元，中值15.3亿美元，低于市场预期的15.5亿 美元。 ...

Core Insights - Coherent reported $1.53 billion in revenue for the quarter ended June 2025, a year-over-year increase of 16.4% [1] - The EPS for the same period was $1.00, compared to $0.61 a year ago, indicating significant growth [1] - The revenue exceeded the Zacks Consensus Estimate of $1.51 billion, resulting in a surprise of +1% [1] - The company also delivered an EPS surprise of +7.53%, with the consensus EPS estimate being $0.93 [1] Performance Metrics - Coherent's shares have returned +21.3% over the past month, outperforming the Zacks S&P 500 composite's +3.1% change [3] - The stock currently holds a Zacks Rank 1 (Strong Buy), suggesting potential for further outperformance in the near term [3] Revenue Breakdown - Networking revenues reached $945.2 million, surpassing the four-analyst average estimate of $930.18 million, with a year-over-year change of +39% [4] - Laser revenues were reported at $348 million, slightly below the four-analyst average estimate of $358.41 million, reflecting a year-over-year decline of -2.1% [4] - Materials revenues totaled $236.2 million, exceeding the four-analyst average estimate of $231.23 million, but showing a year-over-year decrease of -15.4% [4]

Core Insights - Coherent reported quarterly earnings of $1 per share, exceeding the Zacks Consensus Estimate of $0.93 per share, and showing an increase from $0.61 per share a year ago, resulting in an earnings surprise of +7.53% [1] - The company achieved revenues of $1.53 billion for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 1.00% and up from $1.31 billion year-over-year [2] - Coherent has consistently outperformed consensus EPS and revenue estimates over the last four quarters [2] Financial Performance - The earnings surprise for the previous quarter was +5.81%, with actual earnings of $0.91 per share compared to an expected $0.86 [1] - Coherent shares have increased approximately 23% since the beginning of the year, significantly outperforming the S&P 500's gain of 9.6% [3] Future Outlook - The current consensus EPS estimate for the upcoming quarter is $1.02 on revenues of $1.54 billion, and for the current fiscal year, it is $4.56 on revenues of $6.46 billion [7] - The estimate revisions trend for Coherent was favorable ahead of the earnings release, resulting in a Zacks Rank 1 (Strong Buy) for the stock, indicating expected outperformance in the near future [6] Industry Context - The Technology Services industry, to which Coherent belongs, is currently ranked in the top 39% of over 250 Zacks industries, suggesting a favorable environment for stock performance [8]

Financial Data and Key Metrics Changes - Full year revenue for fiscal 2025 increased by approximately 23% year over year to a record $5,810,000,000, driven by strong growth in data center and communications business [6][27] - Q4 revenue was a record $1,530,000,000, up 2% sequentially and 16% year over year [27] - Non-GAAP EPS for Q4 approximately doubled year over year to $1 per share, while full year non-GAAP EPS was $3.53, representing a 191% year over year growth [6][30] - Non-GAAP gross margin for Q4 was 30%, down 43 basis points sequentially but up 220 basis points year over year; full year gross margin was 37.9%, up 358 basis points from 2024 [27][28] Business Line Data and Key Metrics Changes - Data center and communications revenue grew by 51% in fiscal 2025, with Q4 revenue increasing 39% year over year [9] - Communications revenue increased 23% for fiscal 2025, with Q4 growth of 42% year over year [15] - Industrial related markets saw a revenue decrease of 2% for the year, with Q4 revenue down 8% year over year [17] Market Data and Key Metrics Changes - Strong growth in AI data centers and communications was noted, with full year data center revenue increasing by 61% [9] - Initial revenue shipments of new 1.6T transceivers began in Q4, with expectations for ramping volumes throughout the calendar year [10] - The company expects revenue from a new multiyear agreement with Apple for VCSEL products to begin in 2026 [13] Company Strategy and Development Direction - The company is focused on photonics technology, which is critical for applications in AI data centers, communications, and industrial applications [8] - A strategic decision was made to sell the Aerospace and Defense business for $400,000,000 to streamline the portfolio and concentrate investments in high-growth areas [19][32] - The company plans to use proceeds from the sale to pay down debt, which is expected to be accretive to EPS [30] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strong demand signals for data center and communications, expecting sequential growth in the upcoming quarter [40] - The company views its U.S. manufacturing footprint as a competitive advantage, particularly in light of recent tariff policies [21][22] - Management remains optimistic about achieving long-term financial targets and gross margin improvements, aiming for greater than 42% gross margin in the future [90] Other Important Information - The company has tripled its indium phosphide capacity year over year and is ramping production at its new six-inch indium phosphide line in Sherman, Texas [12] - The company is experiencing strong bookings and demand forecasts across data center customers, particularly for transceivers [10] Q&A Session Summary Question: What is the growth outlook for the data center business in fiscal 2026? - Management noted strong demand signals and expects data center and communications to be up sequentially, driven by 800 gig and 1.6T transceivers [40][41] Question: Can you provide an update on the six-inch indium phosphide platform? - Production began in August, with expectations for increased capacity and lower costs as the ramp progresses [46][47] Question: What product categories might be down sequentially in the guidance? - Industrial markets are expected to be flat to down sequentially, with a cautious view due to macroeconomic factors [58] Question: How much incremental revenue is expected from the Apple relationship? - Revenue from the expanded partnership is expected to kick in during the second half of the next calendar year [51][66] Question: What are the competitive advantages of the OCS technology? - The OCS technology is based on digital liquid crystal, offering higher reliability and performance compared to traditional mechanical solutions [74][76] Question: What is the outlook for gross margins? - Management expects gross margins to benefit from the Apple arrangement and ongoing gross margin expansion initiatives [90]

Financial Data and Key Metrics Changes - Full year revenue for fiscal 2025 increased by approximately 23% year over year to a record $5,810 million, driven by strong growth in data center and communications business [5][25] - Q4 revenue was a record $1,530 million, up 2% sequentially and 16% year over year [25] - Non-GAAP EPS for Q4 approximately doubled year over year to $1 per share, while full year non-GAAP EPS was $3.53, representing a 191% year over year growth [5][28] Business Line Data and Key Metrics Changes - Data center and communications revenue grew by 51% in fiscal 2025, with Q4 revenue increasing 39% year over year [7][13] - Communications revenue increased 23% for fiscal 2025, with Q4 growth of 42% year over year [13] - Industrial related markets saw a revenue decrease of 2% for the year, with Q4 revenue down 8% year over year [15][16] Market Data and Key Metrics Changes - In the data center market, full year revenue increased by 61%, with Q4 growth of 38% year over year [7] - Strong demand for AI data centers and communications was noted, with significant bookings and demand forecasts [7][8] - The industrial laser products segment experienced growth driven by display capital equipment and semi-cap equipment markets, despite a decline in silicon carbide demand [15][16] Company Strategy and Development Direction - The company is focused on photonic technology, which is critical for applications in AI data centers, communications, and industrial applications [6] - A strategic decision was made to sell the Aerospace and Defense business for $400 million to streamline the portfolio and concentrate investments in areas of long-term growth [17][29] - The company plans to use proceeds from the sale to pay down debt, which is expected to be accretive to EPS [29] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strong demand signals for data center and communications, expecting sequential growth in the upcoming quarter [38][82] - The company anticipates continued growth in fiscal 2026, driven by innovations in photonic technology and strong customer demand [22][23] - Management noted that the current tariff policy environment is not expected to significantly impact operations, with potential competitive advantages from recent semiconductor tariff announcements [18][20] Other Important Information - The company has ramped up indium phosphide production capacity, which is expected to enhance supply chain resiliency and lower costs [10][46] - Initial revenue shipments of new optical circuit switch products began, representing a $2 billion expansion of the addressable market opportunity [12] - The company has entered into a multiyear agreement with Apple for VCSEL products, expected to contribute to revenue starting in 2026 [11][65] Q&A Session Summary Question: What is the growth outlook for the data center business in fiscal 2026? - Management indicated strong demand signals and expected sequential growth, with specific drivers including 800 gig transceivers and initial revenue from 1.6T transceivers [38][40] Question: What is the status of the six-inch indium phosphide platform in Sherman, Texas? - Production began in August, with expectations for increased capacity and lower costs as the ramp progresses [45][46] Question: What product categories might be down sequentially at the midpoint of guidance? - Industrial markets are expected to be flat to down sequentially, with caution due to macroeconomic factors [56][96] Question: How much incremental revenue is expected from the Apple relationship? - Revenue from the expanded partnership is expected to begin in the second half of 2026, with a multiyear partnership structure [65][66] Question: What are the competitive advantages of the optical circuit switch technology? - The non-mechanical digital liquid crystal technology offers higher reliability and performance compared to traditional MEMS solutions [71][72] Question: What is the outlook for gross margins in fiscal 2026? - Management expects improvements in gross margins driven by ongoing cost reductions and pricing optimization, with a long-term target of greater than 42% [87][88]