Key Takeaways Coherent posted $5.8B in fiscal 2025 revenues, up 23% y/y, driven by AI and datacom demand.Data center revenues soared 61% y/y, highlighting COHR's strength in high-performance computing.COHR began shipping 1.6T transceivers and is generating revenues from its Optical Circuit Switch platform.Coherent Corp. (COHR) is well-positioned to capitalize on the growing AI and high-performance computing markets. COHR’s shifting focus toward AI and datacom is yielding tangible results.In fiscal 2025, the ...

Key Takeaways Symbotic posted 26% revenue growth in Q325, driven by its $22.4 B backlog.Coherent's revenues rose 23% in fiscal 2025, fueled by AI datacenter and telecom recovery.COHR trades at a cheaper valuation than SYM and benefits from a strong product portfolio.Symbotic (SYM) and Coherent Corp. (COHR) are well-established names in the Zacks Technology Services industry. Symbotic, based in Wilmington, MA, develops, commercializes, and deploys innovative, comprehensive technology solutions for improving ...

Key Takeaways COHR shares gained 13.9% in 3 months, beating its industry and the S&P 500 Composite.Revenues soared 51% in fiscal 2025, led by a 61% surge in the data center market.COHR trades at a discount to peers with stronger ROE, ROIC and liquidity than the industry.Coherent Corp.'s (COHR) stock price has increased 13.9% in the past three months, outperforming the industry's 12% rise and the 9.3% growth of the Zacks S&P 500 Composite.COHR’s industry peers, Microvast (MVST) and Vimeo (VMEO) , have lost 2 ...

Financial Data and Key Metrics Changes - Fourth quarter revenue reached $910 million, exceeding guidance and up more than 20% year-over-year and 4% sequentially [5][12] - Full fiscal year 2025 revenue was a record $3.4 billion, representing a 19% increase from the prior year [6][18] - Non-GAAP EPS for Q4 was $2.65, a new quarterly record, while full year non-GAAP EPS hit $10.17 [6][12] Business Line Data and Key Metrics Changes - Optical Communications revenue was $689 million in Q4, up 15% year-over-year and 5% sequentially [13] - Telecom revenue reached $412 million, a 46% increase from a year ago and 1% from Q3, driven by data center interconnect (DCI) products [9][13] - DCI revenue was reported for the first time at $107 million, representing 12% of overall revenue [13] - Datacom revenue was $277 million, down 12% year-over-year but up 10% sequentially [14] - Non-optical communications revenue was $221 million, a 41% increase year-over-year [16] Market Data and Key Metrics Changes - Telecom business momentum is expected to continue into Q1, particularly with the ramp-up of a next-generation system program [9][21] - Datacom demand is anticipated to surge, although temporary component supply challenges are being faced [10][21] - Automotive revenue was $128 million, showing a slight decline but better than expected [16] Company Strategy and Development Direction - The company is evaluating options to accelerate the completion of Building 10 to meet increasing customer demand [8][19] - A significant partnership with Amazon Web Services is expected to be a meaningful revenue driver in fiscal year 2026 [6][8] - The introduction of a new revenue category for high-performance computing (HPC) is planned for Q1 [21][22] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism for fiscal year 2026, citing strong demand across multiple growth drivers [11][38] - Temporary supply constraints are expected to impact Datacom revenue in Q1, but these issues are anticipated to be short-lived [21][56] - The company remains confident in maintaining excellent execution while continuing to grow revenue and earnings [11][21] Other Important Information - The company returned $126 million to shareholders through a buyback program, with continued repurchases expected [8][20] - The effective GAAP tax rate was 6.5% for the quarter [18] Q&A Session Summary Question: Clarification on Datacom revenue dip - Management clarified that the expected dip in Datacom revenue for Q1 does not include contributions from the new HPC segment, which will be reported separately [26][27] Question: Future hyperscaler transceiver opportunities - Management indicated that future opportunities will predominantly focus on 1.6 terabit speeds, while 800 gig opportunities will still be pursued [28][30] Question: Growth prospects for fiscal year 2026 - Management remains optimistic about growth prospects, citing strong demand trends and new customer wins [36][39] Question: Impact of component shortages on Datacom - Management acknowledged that component shortages are significant enough to impact Datacom revenue but are expected to be temporary [56][105] Question: Amazon business potential - Management believes the Amazon PCB business could represent a significant opportunity, with revenue expected to ramp in fiscal Q1 [83][84]

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]

Company Overview - Coherent Corp. (COHR) is set to report its third-quarter fiscal 2025 results on May 7, with revenue expectations of $1.4 billion, reflecting a year-over-year growth of 19.1% and earnings per share (EPS) estimated at 86 cents, indicating a 62.3% increase from the previous year [1] - The company has a strong earnings surprise history, having surpassed the Zacks Consensus Estimate in the last four quarters with an average surprise of 20.3% [2] Earnings Estimates - Current earnings estimates for Q1 and Q2 are 0.86 and 0.92 respectively, with full-year estimates of 3.47 and 4.28 [2] - There have been no recent changes in analyst estimates, with a slight downward revision of -0.29% for F1 and -0.70% for F2 [2] Market Performance - COHR shares have increased by 23.7% over the past year, outperforming its industry growth of 24.6% and the Zacks S&P 500 composite's 10% growth [6] - The stock is currently trading at a trailing 12-month price-to-earnings ratio of 2.67X, which is higher than the industry average of 1.76X and Alithya Group's 1.28X, but lower than AirJoule Technologies' 7.83X [9] Industry Insights - The telecom segment is expected to drive revenue growth, with a reported 11% year-over-year increase in Q2 fiscal 2025, attributed to strong demand for new products like 100G, 400G, and 800ZR/ZR+ coherent transceivers [5] - The rise in data traffic due to AI workloads is anticipated to boost investments in higher-capacity interconnects, benefiting Coherent's optical transport networks [10] Future Outlook - Management projects that 1.6T transceivers will be a key contributor to revenue in 2025, ensuring growth beyond the current 800G cycle [12] - The demand for high-speed optical transceivers is expected to increase as hyperscalers expand their AI training and inference workloads [11] Investment Considerations - Despite the positive outlook, potential revenue growth may be hindered by delayed AI infrastructure spending and geopolitical risks, particularly between the U.S. and China [13] - The company is viewed as fundamentally strong but carries a premium valuation, suggesting that investors may benefit from holding the stock while waiting for a more favorable entry point [15]