Financial Data and Key Metrics Changes - Consolidated revenue for Q3 2025 reached $126.2 million, exceeding guidance and reflecting a sequential improvement for the fourth consecutive quarter [11][6] - Non-GAAP gross margin was reported at 44.1%, consistent with guidance, indicating the value differentiation of products and resilience of the recurring business model [11][6] - Operating expenses for Q3 were $48 million, which was $2 million lower than guidance due to timing of R&D material [11][12] - Cash and investments decreased by $11.2 million during Q3, primarily due to cash used in operations to support a 17% growth in sales quarter over quarter [12] Business Line Data and Key Metrics Changes - Recurring revenue accounted for 55% of total revenue in Q3, driven by strength in interface solutions and test handler spares systems [11][4] - Systems revenue represented 45% of total revenue, with notable orders for NEON HBM inspection tools and Eclipse handlers [6][5] - New business wins included approximately $1.7 million in orders for automated test equipment and optical inspection systems [7][8] Market Data and Key Metrics Changes - Revenue from customers based in China accounts for only a low single-digit percentage of total consolidated results, indicating limited exposure to geopolitical risks [9] - The company anticipates a seasonal slowdown in Q4, partially offset by ongoing market recovery, particularly in computing and high bandwidth memory inspection [9] Company Strategy and Development Direction - The company announced a strategic convertible notes offering, raising gross proceeds of $287.5 million to support future growth and strategic initiatives [13] - The focus is on advancing growth initiatives including mergers, acquisitions, and partnerships, with a new Vice President of Strategy appointed [4] - The company is pivoting towards AI applications, particularly in high-performance computing and generative AI, with expectations of increased revenue contribution from these areas in 2026 [23][41] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in sustaining top-line momentum into 2026, particularly in the HBM business and new customer engagements [21][23] - The company expects Q4 revenue to be approximately $122 million, reflecting a seasonal decline but continued growth in recurring revenue [14] - Management noted that the cyclical recovery in automotive and industrial markets remains muted, but there are signs of initial demand returning in early 2026 [58] Other Important Information - The company is maintaining its 2025 capital expenditure target of approximately $20 million, which includes a facility purchase completed in Q1 [12] - The repayment structure of the convertible notes includes net share settlement, limiting shareholder dilution [13] Q&A Session Summary Question: What is driving the improved system revenue momentum? - Management indicated that the momentum was largely associated with the Eclipse handler and NEON HBM inspection tools, with confidence in continued progress in the HBM business [21][22] Question: How does the Eclipse handler's thermal control subsystem contribute to wins? - The higher wattage requirements for newer AI processors are driving demand, and the platform is designed to scale with these advancements [24][26] Question: What is the expected revenue contribution from computing in 2026? - Management expects computing to contribute in the low teens percentage of revenue, indicating growth potential in this segment [28] Question: How will the recent convertible raise be utilized? - The company plans to pursue both organic development and acquisitions, with a focus on strengthening the balance sheet and being opportunistic in M&A [45] Question: What is the outlook for automotive and industrial markets? - Management noted that while recovery has been elusive, there are signs of initial demand returning, particularly in Q1 and Q2 of next year [58]

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]