Core Viewpoint - Cohu, Inc. plans to offer $200 million in convertible senior notes due 2031 in a private offering aimed at qualified institutional buyers [1] Company Summary - Cohu, Inc. is a global supplier of equipment and services that enhance semiconductor manufacturing yield and productivity [1]

Core Insights - Cohu, Inc. has announced that its Eclipse platform has been selected by a leading U.S.-based semiconductor manufacturer for production testing of next-generation processor devices [1] - The Eclipse systems utilize Cohu's proprietary T-Core Active Thermal Control (ATC) solution, which enhances yield through precise thermal management [1]

Group 1 - The article discusses Cohu, Inc. (NASDAQ: COHU) and reiterates a 'Sell' rating due to bearish technical indicators, declining revenues, and a negative earnings growth trajectory [1] - The last analysis on Cohu was conducted in May of this year, highlighting ongoing concerns regarding the company's financial performance [1] Group 2 - The focus is on the semiconductor test equipment sector, where Cohu operates, indicating challenges faced by companies in this industry [1]

Group 1: Earnings Performance - Cohu reported quarterly earnings of $0.02 per share, exceeding the Zacks Consensus Estimate of a loss of $0.02 per share, representing an earnings surprise of +200.00% [1] - The company posted revenues of $107.68 million for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 1.59% and showing an increase from $104.7 million year-over-year [2] - Over the last four quarters, Cohu has surpassed consensus EPS estimates two times and topped consensus revenue estimates twice [2] Group 2: Stock Performance and Outlook - Cohu shares have declined approximately 28.9% since the beginning of the year, contrasting with the S&P 500's gain of 8.2% [3] - The company's earnings outlook is crucial for investors, as it includes current consensus earnings expectations for upcoming quarters and any recent changes to these expectations [4] - The current consensus EPS estimate for the upcoming quarter is $0.05 on revenues of $116.5 million, and for the current fiscal year, it is $0.11 on revenues of $435.6 million [7] Group 3: Industry Context - The Electronics - Manufacturing Machinery industry, to which Cohu belongs, is currently ranked in the bottom 25% of over 250 Zacks industries, indicating potential challenges for stock performance [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can impact Cohu's stock performance [5][6]

Financial Data and Key Metrics Changes - Revenue for Q2 2025 was approximately $107.7 million, in line with guidance, with a non-GAAP gross margin of 44.4% [14][15] - Recurring revenue represented 63% of total revenue, indicating a stable revenue stream [15] - Operating expenses for Q2 were $47.7 million, also in line with guidance [15] - Cash and investments increased by $8 million during Q2 to $29 million, primarily due to $16 million of cash flow from operations [16][18] - Non-GAAP EPS for Q2 was $0.02 [15] Business Line Data and Key Metrics Changes - Cohu's systems revenue saw a sequential increase across mobile, computing, and industrial segments [7] - The Eclipse handler received a $28 million design win order, expanding presence in mobile and automotive end markets [9][10] - The software business booked $360,000 in Q2 with an annual recurring revenue opportunity of $530,000 [12] Market Data and Key Metrics Changes - Estimated test cell utilization increased by three points quarter over quarter to 75%, indicating a potential industry recovery [5] - Orders improved across all segments in Q2, particularly in mobile and automotive, with a significant increase in the automotive and industrial segments [30] - The company secured its first system order from a customer in India for silicon carbide test, opening new geographical opportunities [6] Company Strategy and Development Direction - Cohu is focusing on capturing new customer opportunities and investing in new products to address future market needs [13] - The company is in the process of transferring product manufacturing from the U.S. and Europe to Asian factories to drive efficiencies [13] - The introduction of the new Eclipse handler model aims to expand market share at test subcontractors [6] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about prospects for 2026, despite acknowledging potential seasonal slowdowns in Q4 [13][31] - Customers are rationalizing inventory levels and showing signs of a steady recovery in the automotive and industrial markets [47] - The company expects a 16% increase in revenue quarter over quarter for Q3, driven by recent system orders [19] Other Important Information - Total debt remained flat at $18 million, and capital expenditures for Q2 were $2.7 million [17][18] - The company is maintaining an annual CapEx target of $20 million [18] - A one-time year-to-date true-up for tax provision will be recorded in Q3 due to changes in capitalized R&D [20] Q&A Session Summary Question: Can you break down the $28 million order and its timing? - Cohu shipped and recognized about $4 million of that order in Q2, with $12 million expected in both Q3 and Q4 [24][26] Question: What is driving the recent order increases? - Orders improved across all segments, particularly in mobile and automotive, with significant increases in the automotive and industrial segments [30] Question: What seasonal slowdown is expected in Q4? - A mid-single-digit pull down in Q4 is anticipated, but it is too early for full guidance [42] Question: How are customers viewing their business for 2026? - Customers are generally optimistic about a steady, progressive recovery in the auto and industrial markets, with no expectation of a V-shaped recovery [47] Question: What are the capabilities of the Eclipse Gen 2.5? - The Eclipse Gen 2.5 offers configurability across various applications and can dissipate up to 3,000 watts, catering to high-end compute requirements [52][54]

Financial Performance - Q2'25 revenue reached $107.7 million[8, 15], reflecting a year-over-year and quarter-over-quarter increase[23] - Non-GAAP gross margin for Q2'25 was 44.4%[9, 22], compared to 44.2% in Q1'25[9, 22] - Adjusted EBITDA for Q2'25 was 3.6%[10, 22], an increase from -2.0% in Q1'25[10, 22] - Q3'25 revenue is projected to be $125 million +/- $7 million[27], representing an approximate 16% increase compared to Q2'25[29] - The company's cash and investments increased to $209 million in Q2'25[24], up from $201 million in Q1'25[24] Business Highlights - Orders increased by 26% quarter-over-quarter, primarily driven by the Mobile end-market[13] - Recurring revenue accounted for approximately $68 million of the Q2'25 revenue[16], representing 63% of the total revenue[15] - Systems revenue was approximately $40 million in Q2'25[16] - The company estimates test cell utilization increased by 3 percentage points quarter-over-quarter to 75%[11]

[Second Quarter 2025 Results Overview](index=1&type=section&id=Second%20Quarter%202025%20Results%20Overview) This section provides a comprehensive overview of Cohu's financial performance, operational achievements, and business outlook for the second quarter of fiscal year 2025 [Financial Performance Summary](index=1&type=section&id=Financial%20Performance%20Summary) Cohu reported Q2 FY2025 net sales of $107.7 million, a GAAP net loss of $16.9 million, and non-GAAP net income of $0.7 million Q2 FY2025 and 6 Months FY2025 Financial Summary | Metric (in millions, except per share) | Q2 FY2025 | Q1 FY2025 | Q2 FY2024 | 6 Months FY2025 | 6 Months FY2024 | | :------------------------------------ | :-------- | :-------- | :-------- | :-------------- | :-------------- | | **GAAP Results** | | | | | | | Net sales | $107.7 | $96.8 | $104.7 | $204.5 | $212.3 | | Net loss | $(16.9) | $(30.8) | $(15.8) | $(47.7) | $(30.4) | | Net loss per share | $(0.36) | $(0.66) | $(0.34) | $(1.02) | $(0.65) | | **Non-GAAP Results** | | | | | | | Net income (loss) | $0.7 | $(0.8) | $(0.6) | $(0.1) | $0.0 | | Net income (loss) per share | $0.02 | $(0.02) | $(0.01) | $(0.00) | $0.00 | - Total cash and investments at the end of second quarter 2025 increased by **$8.6 million** to **$209.4 million**[4](index=4&type=chunk) [Operational Highlights and Strategic Wins](index=1&type=section&id=Operational%20Highlights%20and%20Strategic%20Wins) Q2 FY2025 results aligned with guidance, driven by increased test cell utilization and significant design-win orders - Estimated test cell utilization increased by **3 points quarter-over-quarter** to **75%**[6](index=6&type=chunk) - Secured a **$28 million design-win order** from a customer serving mobile and automotive end-markets, with shipping through Q4'25[5](index=5&type=chunk)[6](index=6&type=chunk) - Opened new opportunities with the **first system sold in India**, introduced a new Eclipse handler model, and qualified ULTRA-S contactor for precision analog IC test[5](index=5&type=chunk) [Third Quarter 2025 Business Outlook](index=1&type=section&id=Third%20Quarter%202025%20Business%20Outlook) Cohu anticipates third quarter 2025 sales to be within a range of $125 million +/- $7 million - Cohu expects third quarter 2025 sales to be in a range of **$125 million +/- $7 million**[5](index=5&type=chunk) [Company Profile and Disclosures](index=3&type=section&id=Company%20Profile%20and%20Disclosures) This section outlines Cohu's business, its use of non-GAAP financial measures, forward-looking statements, and investor communication details [About Cohu](index=3&type=section&id=About%20Cohu) Cohu is a global technology leader providing test, automation, inspection, and metrology products and services to the semiconductor industry - Cohu is a global technology leader supplying test, automation, inspection and metrology products and services to the semiconductor industry[8](index=8&type=chunk) - Cohu's products enable optimized yield and productivity, accelerating customers' manufacturing time-to-market[8](index=8&type=chunk) [Use of Non-GAAP Financial Information](index=3&type=section&id=Use%20of%20Non-GAAP%20Financial%20Information) Cohu uses non-GAAP measures to provide insights into operational trends and financial performance by excluding specific charges - Non-GAAP financial measures supplement GAAP results by excluding charges for share-based compensation, amortization of purchased intangible assets, restructuring costs, manufacturing transition and severance costs, impairments, acquisition-related costs, depreciation of purchase accounting adjustments, fair value adjustment to contingent consideration, pension curtailment gain, amortization of cloud-based software implementation costs, and loss on extinguishment of debt[9](index=9&type=chunk) - Management uses non-GAAP measures to evaluate operational trends, financial performance, cash generating capacity, make operational decisions, determine executive compensation, forecast future results, and compare to annual operating plans[10](index=10&type=chunk) [Forward-Looking Statements and Risk Factors](index=3&type=section&id=Forward%20Looking%20Statements) The report contains forward-looking statements subject to risks including industry volatility, market erosion, and supply chain challenges - Forward-looking statements include projections regarding test cell utilization, revenue growth in vertical markets, new market entries, product introductions, and the FY2025 outlook[11](index=11&type=chunk) - Key risk factors include new product investment success, semiconductor industry seasonality and volatility, erosion in mobile, automotive and industrial market sales, supply chain management, inflationary pressures, intense competition, customer concentration, geopolitical instability, and cybersecurity breaches[12](index=12&type=chunk) - Actual results and future business conditions could differ materially due to various factors, as discussed in Cohu's SEC filings (Form 10-K and 10-Q)[12](index=12&type=chunk)[13](index=13&type=chunk) [Conference Call and Investor Information](index=1&type=section&id=Conference%20Call%20Information) Details regarding Cohu's Q2 2025 earnings conference call and investor relations contact information are provided - A live conference call and webcast to discuss Q2 2025 results was held on July 31, 2025, at 1:30 p.m. Pacific Time/4:30 p.m. Eastern Time[6](index=6&type=chunk) - Investor relations information and press releases are available on Cohu's website at www.cohu.com[14](index=14&type=chunk) - Investor Relations contact: Jeffrey D. Jones at 858-848-8106[14](index=14&type=chunk) [GAAP Consolidated Financial Statements](index=6&type=section&id=GAAP%20Consolidated%20Financial%20Statements) This section presents Cohu's GAAP consolidated statements of operations and balance sheets for the reported periods [Consolidated Statements of Operations (GAAP)](index=6&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20OPERATIONS) Presents Cohu's GAAP net sales and net loss for the three and six months ended June 28, 2025, including the Tignis acquisition Consolidated Statements of Operations (GAAP) - Key Figures | Metric (in thousands, except per share) | Three Months Ended June 28, 2025 | Three Months Ended June 29, 2024 | Six Months Ended June 28, 2025 | Six Months Ended June 29, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net sales | $107,680 | $104,701 | $204,477 | $212,315 | | Cost of sales (excluding amortization) | $60,571 | $57,779 | $115,051 | $116,144 | | Research and development | $23,188 | $21,342 | $46,340 | $43,678 | | Selling, general and administrative | $29,866 | $32,118 | $59,877 | $67,200 | | Amortization of purchased intangible assets | $10,081 | $9,748 | $19,933 | $19,543 | | Restructuring charges | $1,210 | $13 | $7,838 | $22 | | Loss from operations | $(17,236) | $(16,299) | $(44,562) | $(34,272) | | Net loss | $(16,880) | $(15,769) | $(47,684) | $(30,404) | | Basic loss per share | $(0.36) | $(0.34) | $(1.02) | $(0.65) | | Diluted loss per share | $(0.36) | $(0.34) | $(1.02) | $(0.65) | - The acquisition of Tignis, Inc. was completed on January 7, 2025, and its results have been included since that date[16](index=16&type=chunk) [Condensed Consolidated Balance Sheets (GAAP)](index=7&type=section&id=CONDENSED%20CONSOLIDATED%20BALANCE%20SHEETS) Details Cohu's assets, liabilities, and equity as of June 28, 2025, highlighting changes in cash, investments, and goodwill Condensed Consolidated Balance Sheets (GAAP) - Key Figures | Metric (in thousands) | June 28, 2025 | December 30, 2024 | | :------------------------------ | :------------ | :---------------- | | Cash and investments | $209,411 | $262,092 | | Accounts receivable | $90,826 | $91,619 | | Inventories | $137,831 | $141,861 | | Total current assets | $491,013 | $534,307 | | Property, plant & equipment, net | $77,111 | $74,786 | | Goodwill | $282,525 | $234,639 | | Intangible assets, net | $96,718 | $110,717 | | Total assets | $1,010,193 | $999,415 | | Short-term borrowings | $9,830 | $633 | | Total current liabilities | $100,565 | $85,184 | | Long-term debt | $7,253 | $7,052 | | Cohu stockholders' equity | $830,543 | $856,891 | | Total liabilities & stockholders' equity | $1,010,193 | $999,415 | - On January 7, 2025, the Company made a cash payment of **$34.9 million**, net of cash received, to acquire Tignis, Inc.[17](index=17&type=chunk) [Supplemental Non-GAAP Reconciliations](index=8&type=section&id=Supplemental%20Reconciliation%20of%20GAAP%20Results%20to%20Non-GAAP%20Financial%20Measures) This section provides detailed reconciliations of GAAP to non-GAAP financial measures for both quarterly and six-month periods [Three Months Ended June 28, 2025](index=8&type=section&id=Three%20Months%20Ended%20June%2028%2C%202025) Provides detailed reconciliations from GAAP to non-GAAP financial measures for the three months ended June 28, 2025 [Net Income (Loss) Reconciliation (Three Months Ended)](index=8&type=section&id=Net%20Income%20%28Loss%29%20Reconciliation%20-%203%20Months) Reconciles GAAP net loss to non-GAAP net income for Q2 FY2025, adjusting for various non-GAAP items and tax effects Net Income (Loss) Reconciliation (Three Months Ended) | Metric (in thousands, except per share) | June 28, 2025 | March 29, 2025 | June 29, 2024 | | :------------------------------------ | :------------ | :------------- | :------------ | | Net loss - GAAP basis | $(16,880) | $(30,804) | $(15,769) | | Non-GAAP adjustments | $17,383 | $21,542 | $16,587 | | Tax effect of non-GAAP adjustments | $1,757 | $8,476 | $(1,400) | | Pension curtailment gain | $(1,530) | - | - | | Net income (loss) - non-GAAP basis | $730 | $(786) | $(582) | | GAAP net loss per share - diluted | $(0.36) | $(0.66) | $(0.34) | | Non-GAAP net income (loss) per share - diluted | $0.02 | $(0.02) | $(0.01) | [Gross Profit Reconciliation (Three Months Ended)](index=12&type=section&id=Gross%20Profit%20Reconciliation%20-%203%20Months) Reconciles GAAP gross profit to non-GAAP gross profit for Q2 FY2025, primarily adjusting for restructuring charges in cost of sales Gross Profit Reconciliation (Three Months Ended) | Metric (in thousands) | June 28, 2025 | March 29, 2025 | June 29, 2024 | | :-------------------- | :------------ | :------------- | :------------ | | Gross profit - GAAP basis (excluding amortization) | $47,109 | $42,317 | $46,922 | | Non-GAAP adjustments to cost of sales | $696 | $482 | $252 | | Gross profit - Non-GAAP basis | $47,805 | $42,799 | $47,174 | | GAAP gross profit (% of net sales) | 43.7% | 43.7% | 44.8% | | Non-GAAP gross profit (% of net sales) | 44.4% | 44.2% | 45.1% | [Adjusted EBITDA Reconciliation (Three Months Ended)](index=12&type=section&id=Adjusted%20EBITDA%20Reconciliation%20-%203%20Months) Reconciles GAAP net loss to Adjusted EBITDA for Q2 FY2025, reflecting adjustments for tax, interest, amortization, and other non-GAAP items Adjusted EBITDA Reconciliation (Three Months Ended) | Metric (in thousands) | June 28, 2025 | March 29, 2025 | June 29, 2024 | | :-------------------- | :------------ | :------------- | :------------ | | Net income - GAAP Basis | $(16,880) | $(30,804) | $(15,769) | | Income tax provision (benefit) | $2,049 | $4,838 | $1,286 | | Interest expense | $126 | $198 | $144 | | Interest income | $(1,386) | $(1,613) | $(2,333) | | Amortization of purchased intangible assets | $10,081 | $9,852 | $9,748 | | Depreciation | $3,377 | $3,232 | $3,413 | | Amortization of cloud-based software implementation costs | $709 | $709 | $709 | | Pension curtailment gain | $(1,530) | - | - | | Other non-GAAP adjustments | $7,302 | $11,690 | $6,827 | | Adjusted EBITDA | $3,848 | $(1,898) | $4,025 | | Net income - GAAP Basis (% of net sales) | (15.7)% | (31.8)% | (15.1)% | | Adjusted EBITDA (% of net sales) | 3.6% | (2.0)% | 3.8% | [Operating Expense Reconciliation (Three Months Ended)](index=12&type=section&id=Operating%20Expense%20Reconciliation%20-%203%20Months) GAAP operating expenses for Q2 FY2025 were $64.3 million. After non-GAAP adjustments, non-GAAP operating expenses were $47.7 million Operating Expense Reconciliation (Three Months Ended) | Metric (in thousands) | June 28, 2025 | March 29, 2025 | June 29, 2024 | | :-------------------- | :------------ | :------------- | :------------ | | Operating Expense - GAAP basis | $64,345 | $69,643 | $63,221 | | Non-GAAP adjustments to operating expenses | $(16,687) | $(21,060) | $(16,335) | | Operating Expenses - Non-GAAP basis | $47,658 | $48,583 | $46,886 | [Six Months Ended June 28, 2025](index=10&type=section&id=Six%20Months%20Ended%20June%2028%2C%202025) Provides detailed reconciliations from GAAP to non-GAAP financial measures for the six months ended June 28, 2025 [Net Income (Loss) Reconciliation (Six Months Ended)](index=10&type=section&id=Net%20Income%20%28Loss%29%20Reconciliation%20-%206%20Months) For the first six months of FY2025, GAAP net loss was $47.7 million. After non-GAAP adjustments, the non-GAAP net loss was $0.1 million Net Income (Loss) Reconciliation (Six Months Ended) | Metric (in thousands, except per share) | June 28, 2025 | June 29, 2024 | | :------------------------------------ | :------------ | :------------ | | Net loss - GAAP basis | $(47,684) | $(30,404) | | Non-GAAP adjustments | $38,925 | $33,821 | | Tax effect of non-GAAP adjustments | $10,233 | $(3,399) | | Pension curtailment gain | $(1,530) | - | | Net income (loss) - non-GAAP basis | $(56) | $18 | | GAAP net loss per share - diluted | $(1.02) | $(0.65) | | Non-GAAP income (loss) per share - diluted | $(0.00) | $0.00 | [Gross Profit Reconciliation (Six Months Ended)](index=13&type=section&id=Gross%20Profit%20Reconciliation%20-%206%20Months) For the first six months of FY2025, GAAP gross profit was $89.4 million. With non-GAAP adjustments, the non-GAAP gross profit was $90.6 million Gross Profit Reconciliation (Six Months Ended) | Metric (in thousands) | June 28, 2025 | June 29, 2024 | | :-------------------- | :------------ | :------------ | | Gross profit - GAAP basis (excluding amortization) | $89,426 | $96,171 | | Non-GAAP adjustments to cost of sales | $1,178 | $475 | | Gross profit - Non-GAAP basis | $90,604 | $96,646 | | GAAP gross profit (% of net sales) | 43.7% | 45.3% | | Non-GAAP gross profit (% of net sales) | 44.3% | 45.5% | [Adjusted EBITDA Reconciliation (Six Months Ended)](index=13&type=section&id=Adjusted%20EBITDA%20Reconciliation%20-%206%20Months) For the first six months of FY2025, Cohu reported an Adjusted EBITDA of $2.0 million, after various non-GAAP adjustments Adjusted EBITDA Reconciliation (Six Months Ended) | Metric (in thousands) | June 28, 2025 | June 29, 2024 | | :-------------------- | :------------ | :------------ | | Net loss - GAAP Basis | $(47,684) | $(30,404) | | Income tax provision | $6,887 | $(414) | | Interest expense | $324 | $433 | | Interest income | $(2,999) | $(5,042) | | Amortization of purchased intangible assets | $19,933 | $19,543 | | Depreciation | $6,609 | $6,842 | | Amortization of cloud-based software implementation costs | $1,418 | $1,418 | | Pension curtailment gain | $(1,530) | - | | Loss on extinguishment of debt | - | $241 | | Other non-GAAP adjustments | $18,992 | $14,254 | | Adjusted EBITDA | $1,950 | $6,871 | | Net loss - GAAP Basis (% of net sales) | (23.3)% | (14.3)% | | Adjusted EBITDA (% of net sales) | 1.0% | 3.2% | [Operating Expense Reconciliation (Six Months Ended)](index=13&type=section&id=Operating%20Expense%20Reconciliation%20-%206%20Months) GAAP operating expenses for the first six months of FY2025 were $134.0 million. After non-GAAP adjustments, non-GAAP operating expenses were $96.2 million Operating Expense Reconciliation (Six Months Ended) | Metric (in thousands) | June 28, 2025 | June 29, 2024 | | :-------------------- | :------------ | :------------ | | Operating Expense - GAAP basis | $133,988 | $130,443 | | Non-GAAP adjustments to operating expenses | $(37,747) | $(33,346) | | Operating Expenses - Non-GAAP basis | $96,241 | $97,097 |

Financial Performance & Targets - FY24 revenue was $402 million[8] - FY24 gross margin was approximately 45%[8] - The company targets a mid-term (3-5 years) revenue of $600-$800 million[15, 47] - The mid-term gross margin target is 48-50%[47] - The company has an effective capital allocation strategy with R&D investment and share repurchase[49] Market & Growth Opportunities - The company estimates its serviceable addressable market (SAM) to be approximately $2 billion in 2024[13] - The company is expanding its market opportunities from $2 billion to $3 billion SAM[20] - The company estimates the HBM market to be approximately $4 billion in 2024 with a CAGR of 68% through 2030[22] - The company estimates the SiC market to be approximately $3.6 billion in 2024 with a CAGR of 14% through 2030[27] Recurring Revenue - Approximately 65% of total revenue for FY24 is recurring revenue[8] - The annual renewal rate on service contracts is approximately 93%[45]

Group 1: Earnings Performance - Cohu reported a quarterly loss of $0.02 per share, significantly better than the Zacks Consensus Estimate of a loss of $0.16, representing an earnings surprise of 87.50% [1] - The company posted revenues of $96.8 million for the quarter ended March 2025, missing the Zacks Consensus Estimate by 0.21% and down from $107.61 million year-over-year [2] - Over the last four quarters, Cohu has surpassed consensus EPS estimates two times and topped consensus revenue estimates just once [2] Group 2: Stock Performance and Outlook - Cohu shares have declined approximately 40.1% since the beginning of the year, compared to a decline of 5.3% for the S&P 500 [3] - The current consensus EPS estimate for the upcoming quarter is -$0.08 on revenues of $101.2 million, and for the current fiscal year, it is $0.02 on revenues of $430.3 million [7] - The estimate revisions trend for Cohu is currently unfavorable, resulting in a Zacks Rank 4 (Sell) for the stock, indicating expected underperformance in the near future [6] Group 3: Industry Context - The Electronics - Manufacturing Machinery industry, to which Cohu belongs, is currently in the bottom 5% of over 250 Zacks industries, suggesting a challenging environment [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which could impact Cohu's stock performance [5]

Financial Data and Key Metrics Changes - Revenue for Q1 2025 was approximately $97 million, with a non-GAAP gross margin of approximately 44% [5][11] - Q1 non-GAAP net loss was approximately $800,000, with a non-GAAP EPS of a $0.02 loss [12] - Cash and investments decreased by $61 million during Q1, primarily due to acquisitions and share repurchases [13] Business Line Data and Key Metrics Changes - Revenue was split 63% recurring and 37% systems, with systems revenue increasing sequentially in automotive and consumer segments, offset by declines in computing, industrial, and mobile [6][11] - Recurring orders increased by 28% quarter over quarter, indicating strong non-capital equipment revenue streams [7] Market Data and Key Metrics Changes - Estimated test cell utilization was down 1 point quarter over quarter to 72% [7] - The automotive and industrial market accounted for more than 10% of sales from one customer in Q1 [12] Company Strategy and Development Direction - The company implemented a restructuring program to reduce manufacturing and operating expenses, with benefits expected to start in Q2 [5][6] - The focus is on expanding into new market segments and enhancing technology portfolios, particularly in the memory market and AI process monitoring [8][10] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about business prospects due to design wins and increased recurring orders, with no significant changes in customer buying patterns due to tariffs [10][15] - The second quarter is expected to see a revenue increase of approximately 10% quarter over quarter, with guidance set at approximately $106 million [15] Other Important Information - Total debt increased by approximately $9 million due to a revolving credit facility used for facility purchases [13] - The company is exploring strategic acquisition opportunities and has paused share buybacks for Q2 [80] Q&A Session Summary Question: Revenue increase in Q2 guidance - Approximately half of the $9 million revenue increase is attributed to improvements in recurring revenue and half to systems [19] Question: Multi-unit order for inspection - Projecting about $8 million of revenue in HBM this year, with discussions ongoing with a second customer [20][21] Question: Connection between recurring revenue and equipment demand - An increase in recurring orders is expected to lead to improved utilization, which may indicate future capital equipment demand [24] Question: Segments with recurring order pickup - The recurring order pickup is predominantly in the mobile segment and is fairly concentrated among a few customers [28] Question: Power probe card design win - The opportunity for revenue from the power probe card is estimated at about $2 million per year per customer, with initial revenue expected to be a fraction of that this year [32] Question: Handler business in China - The company has captured a small number of startup fabless companies in China, with total design wins expected to generate $6.5 million in orders this year [35] Question: Customer needs for systems and recurring products - Customers are showing increased interest in systems, but management remains cautious about predicting future demand [40][42] Question: Test cell utilization rates - Uptick in buying is usually dictated by utilization, with OSATs typically leading in recovery cycles [67] Question: Automotive market turnaround - The automotive market is expected to recover slowly, with utilization and recurring orders anticipated to increase [69] Question: Restructuring impact on revenue levels - After restructuring, operating expenses are expected to be around $47 million at a revenue level of $100 million [75] Question: Capital allocation and buyback strategy - The company is reviewing acquisition opportunities and has paused buybacks for now, focusing on offsetting dilution from equity compensation plans [80]